LyrArc Article Gist
Ahmari points out that with Iran's right to enrich uranium accepted by the Obama administration the goals of the Iranian government have been achieved.

LyrArc Article Gist
Pollock's interview with Geroge Shultz, Reagan's senior economic advisor and Secretary of State, at his office in the Hoover Institution, Stanford University. He says the U.S. can find its way out of the current economic crisis the way it did during the early Reagan years. On the Fed's loose monetary policy he says the Bernanke Fed's contribution to the economic crisis was very easy money. Now that we have it we realize that its going to take something different from easy money to get the economy moving- not just more money. Three quarters of the debt issued by the U.S. in the last year was bought by the Fed, and the Fed is monetizing debt when it buys debt because at some time this ends up getting out into the economy. Shultz sees the tax rules as being about more than rates. Corporate tax rates should be lowered by cleaning up preferences. But what is most important is predictability and an environment where business feels there is less uncertainty when investing. Shultz says Romney should read his memo to Reagan before Reagan assumed office, excerpted in the WSJ, "Advice to a New President," May 26, 2012. He also recommends John Taylor's new book- "First Principles: Five Keys to Restoring America's Prosperity." ...

LyrArc Article Gist
The automakers are still stuck with dependence on pickups like the Dodge Ram which provides 17% of domestic vehicle sales and the F-150 pickup truck for Ford which provides 26% of domestic vehicle sales. Even though they earn estimated $5000 to $10,000 per pickup this dependence has hurt the automakers, as they are losing money due to the neglect of the rest of their lineup. In 2008 the domestic pickup sales will decline 10% to 2 million units from 2.2 million according to Global Insight. Sales to customers now will almost entirley be to construction industry users in a bad construction market, as other customers who used pickups for general use are shifting to other vehicles.

LyrArc Article Gist
This report by Landon Thomas Jr. of the NYT describes what happened in the days before and the 48 hours before the referendum decision was announced by June 27, 2015. It shows talks progressing right up to Monday, June 22, 2015. By June 23 Greece received a paper marked in red from the IMF, EU and the ECB on their proposal of June 22. The Greek proposal of June 22 rejected pension cuts and removal of tax breaks for Greek islands, but proposing instead a series of tax increases and increase in pension contributions to be made by companies in Greece. The reply marked up disagreement areas on the paper which voiced objections to too many tax increases as hurting business growth, need to simplify value added taxes, and insisting on pension cuts and reforms. The two advisors Tsipras had used were a complete contrast to the new advisor and finance minister Mr. Tsakalotos he was to use in negotiations after July 7, 2015. Nikos Pappas is described here as an academic with a temper and Varoufakis as a person who would not hesitate to confront and lecture the creditors negotiators. Varoufakis who already had arguments and shouting matches with his counterparts on the other side, had a difficult relationship with the Dutch finance minister, Dijsselbloem, who was the chief of eurozone finance ministers. Dijseelbloem especially objected to Varoufakis lecturing on the need for a debt haircut. Varoufakis was removed from the discussions for a period of several weeks as a result and his reintroduction on June 25 was to have a negative effect on the EU and German negotiators. The same issue of debt came up again in discussions on June 25, 2015, and Varoufakis confronted the EU ministers by calling on the IMF's Christine Lagarde to state if the debt was sustainable. Before that Dijsselbloem had already told him flatly that any discussion on debt reduction would make a deal impossible. At one point German finance minister Schauble argued with EU official Pierre Muscovici of France about his favorable comments on the Greece proposal, saying he could not get the Greek proposal through the German parliament, and saying the ony solution now was capital controls. IMF's Christine Lagarde responded by saying that debt reduction needed to be considered. According to this report the Dutch finance mnister did not wait for Lagarde to explain- he told Varoufakis that it was take it or leave it....

LyrArc Article Gist
Emperor Akihito's efforts to remind Japanese about Japanese war history after the Manchurian Incident in 1931. In his New Year's address Akihito tried to address the importance of learning from history as memories of the war fade with the young generation- "It is important for us to take this opportunity to study and learn from the history of this war, starting with the Manchurian Incident of 1931, as we consider the future direction of our country." The Abe administration's effort to revise Article 9 of the constitution to allow "collective self-defense" is unpopular in Japan, and the Emperor nudges the Japanese people in the right direction.

LyrArc Article Gist
In Spain it is not the big banks like Banco Santander or BBVA that funneled a lot of the mortgage lending. Its the Cajas or non profit lending instituions that do more than half of all the loans. The Cajas had $330 billion in loans to developers in Sept. 2009, up from $50 billion in 2000. As home prices plunge the 45 Cajas are suffering losses, amounting to estimated $3.4 billion in 2010.

LyrArc Article Gist
Spain's borrowing costs increase reaching a high of 7.180% on yields for 10 year Spanish government bonds. There is considerable uncertainty about the bad loans in Spain's banking system and fears that the bad loans could be much larger than previously expected. Consultants hired by the Spanish government of prime minister Mariano Rajoy are expected to report on their findings this week about the extent of bad loans.

LyrArc Article Gist
A Nikkei poll shows only 36% of people in Japan support a reinterpretation of Article 9 of the Japanese Constitution to allow "collective self defense," and 51% disapprove. Prime minister Abe cites the need for "thorough debate," and legislative moves in this area will be held back, to gain support for reforms in the agriculture and other sectors. Abe appears to have lost some goodwill for reform measures to launch the Third Arrow. In an address to the Australian parliament in English Abe made a committment to the principle underlying Article 9 by saying- "This vow that Japan made after the war is still fully alive today." He also stated that Japan woud never let the horrors of World War II be repeated. Japan and Australia have agreed to share military equipment, and Japan has a role in developing a submarine fleet for the Australian navy of 30 billion Australian dollars (US $28.1 billion). At about this time in Beijing U.S. leaders for the foreign and finance ministries, Lew and Kerry, met for the Strategic and Economic Dialogue sixth round in Beijing's Diaoyutai State guest house. China's president Jinping, probably aware of the waves created by its own assertive stance in the region and the response of neighbors and Japan, said that the Pacific was large enough to accomodate both the U.S. and China....

LyrArc Article Gist
Matteo Renzi, recently elected chief of Italy's ruling Democratic party, is likely to be the next prime minister as current prime minister Letta resigns. Letta's administration had come under increasing criticism from business and public opinion about the slow pace of economic changes in Italy. Italy's 2 trillion debt, or about $2.7 trillion, at 130% of GDP, and the declining GDP with little or no economic growth, is a problem for the eurozone. At the current pace of economic change the IMF forecast estimates only 0.5% annual growth in GDP till 2018. Foreign direct investment 2005-2011 is about one third of the eurozone average, according to the IMF, and Italy has failed to attract foreign investment for the last two decades with its weak political system and lack of competitiveness. By comparison Spain has seen an increase in exports and increasing foreign investment as it positions itself for a recovery. The austerity measures adopted by the Monti and Letta adminstrations in 2011-2013 helped to improve confidence in capital markets and lower borrowing rates, however this is clearly not the answer to Italy's problems of slow or no growth in the economy for the last decade. This is the problem Matteo Renzi, the 39 year old Mayor of Florence, is pushing to tackle as the mood in the country calls for aggressive action. Renzi's economic advisor is Filippo Taddei, who has a doctorate from Columbia University. He says at the core the issues are about what kind of "productive identity" Italy should have. Taxation that promotes higher rates of business investment is needed to promote growth, and creating a business climate that encourages investment in human capital and new technology. Payroll and business taxes take up about two thirds of a company's earnings leaving less for investment. Renzi is planning to take the centre left Democratic party in a new direction, "the road less travelled," as he put it in a televised speech, with innovative solutions including pro-market approach. As a first step he negotiated a deal with former premier Berlusconi for electoral reforms that would give a party or coalition winning electoral support a strong mandate to make and execute policy, without being hobbled in the way previous administrations were in the post war period. Lucrezia Reichlin, former head of research at the ECB, and Lorenzo Bini Smaghi, a former member of the ECB executive council, are candidates to be the economics minister in the Renzi administration....

LyrArc Article Gist
Inflation in the eurozone is running at 0.7%, well below the target of 2%. In a opening speech for a 2 day conference organized by the ECB in May 2014, ECB president Draghi said the increase in the value of the euro since 2011 has made commodities like oil cost less in euros, contributing to lower inflation. A key concern referred to in Draghi's speech is the data from Spain and Portugal about the difficulty for business to get loans in Spain and Portugal. About 25% of Spanish businesses and 33% of Portgual's businesses have difficulty getting loans. Even profitable companies have difficulty getting loans. One way the ECB could tackle this is to make cheap loans available to eurozone banks conditional on the money being lent to businesses and not invested in government bonds, as has happened during prior ECB efforts to capitalize banks.

LyrArc Article Gist
Declan Walsh describes the role of the military in Egypt, Turkey and Pakistan which has marginalized political parties and democratic process. The shift in Pakistan towards a democratic state shows the limits of the military's role in politics. Throughout Asia and Latin America, beyond just the Arab world, S. Korea, Brazil, Chile, Argentina, Colombia, the movement is towards democratic processes of government. As political parties mature a more centrist position was adopted in Chile, Brazil, Argentina, and Islamist parties in Turkey, a similar trend is likely in the rest of the Muslim world as political parties are able to mature and deliver in economic terms and improving living conditions. The Saudis and UAE may be able to deliver in economic terms because of oil prices and supplies, each country and the people in the region has to determine how it will tackle its economic problems and move forward or fall behind in a rapidly developing global economy. Egypt, Pakistan, Turkey and India are no exception....

LyrArc Article Gist
In a closely watched election Mr. Wilders of the far Right in Netherlands gains 20 seats, far behind centre right People's Party for Freedom and Democracy of prime minister Rutte who won 33 seats. The Dutch Green party which is strongly pro- Europe went from 4 seats to 14 seats, the Christian Democratic Appeal party gained 19 seats and the pro-European Democrats 66 party also gained 19 seats. In the 150 member parliament Rutte needs 76 seats to form a new coalition government, and he is likely to ally with these other parties to form a new government that supports strongly the European Union. This editorial in the NYT says the people of the Netherlands turned out in large numbers to support pro-European Union parties. Next the focus is on France and Marie Le Pen's challenge from the far Right. Cyber threats from Russia are seen as a way to discredit otherwise strong candidates, and the French government is taking this seriously. Chancellor Merkel said she "was very happy that a high turnout led to a very pro-European result," and president Hollande said this was "a clear victory against extremism."  ...

LyrArc Article Gist
Biden's student loan cancellation plan is targeted at low income people who are struggling to make a living and for whom it means putting less food on the table. The plan eliminates the debt of millions of borrowers because about one third of borrowers owe about $10,000. The plan cancels $10,000 in debt for people making below $125,000 and extends this to $20,000 for the poorest borrowers who received Pell Mell grant loans. A Columbia University study shows that the loan default rate for borrowers without a college degree is 40% and that for borrowers with a college degree is 8%. Biden said when unfolding the plan that these people have the worst of both worlds no college degree and student loans to pay off. College degrees give borrowers a much higher income. Biden's plan is to also cap payments on loans to 5% of discretionary income as opposed to 10% or 15% that it is today. The effects are also not understood by most economists. For a society to do well over the next 10 years to 20 years, 2030 or 2035, it has to increase opportunities for all its citizens. Young people with these burdensome loans grew up in a period when unrestrained so called "free markets" distorted markets and manipulated public opinion to favor a small segment of the people, leading to a false concept that 12 years of universal instruction were enough. Biden pointed this out and the importance of higher education beyond these 12 years to compete in the world in manufacturing and technology. The income and wealth generated by this investment in the people is what made America what it was in the early post war years. The income and wealth created will more than pay for not just removing a big part of this burden but also extending universal instructiuon beyond 12 years in future legislation. Rerouting some of the waste in capital allocation of so-called "free markets" alone could more than pay for most of these investments, with extra for additional investments in science and technology that would make the US what it was, the most advanced and highly educated society in the world. ...

LyrArc Article Gist
With his dwindling popularity and failure to support the socialist parties alliance Macron has made the party En Marche his own creation, a failed project. Macron started out in the Socialist Party in Amiens, France, was a minister in the Socialist government of Francois Hollande 2012-2017. Socialist voters twice voted for Macron in 2017 and 2022 elections to keep the Le Pen National Rally out. After the last election 2022 Macron faced union protests on pension age changes and on issues related to fairness for workers as he failed to take cost of living action and protect workers. He now faces a divided parliament and becomes a lame duck president till the next presidential election in 2027. He called the party he created during the last year of socialist Hollande's term as president initially En Marche, later En Marche El Republique and Renaissance, initially tapping into support for reviving France with younger people in political life. Yet he failed to live up to this instead put himself at odds with working class people and families and the problems they face across rural and urban areas of France. He has run out of support after the yellow vest protests, union protests, and protests over the pension age during his first and second terms. By calling the socialist parties of which he was a member in derogatory terms Macron increased his isolation and created a situation in which the RN of Le Pen is vying to be the leading party in the National Assembly. Only by making large investments in the French economy of $140 billion that the Socialist parties alliance proposes can France's economy and infrastructure be revived, not by the programs of either the RN or En Marche which make no effort to increase investment in the French infrastructure and economic strength. A modest tax on the top 1-4% of the wealthy finances this investment of $140 billion which RN, En Marche and Macron seek to avoid calling this program in derogatory terms to protect a tiny minority of the affluent who in the right way would want to contribute a fair share to the growth and revival of France. ...

LyrArc Article Gist
China's breakneck growth was enabled by housing construction, and coal in a way that created problems of climate change. Now China's largest housing developers Evergrande and Country Garden together have a staggering $500 billion in debt and in serious financial trouble in or near default. How will China's government respond? It let Evergrande who had defaulted on debt payments build 300,000 apartments last year, just to protect home buyers. Now it's founder Mr. Xu is taken in for questioning and "illegal crimes." Making sure that the apartments on which people made deposits are built would cost another $72 billion, says Nomura. Yet suppliers, painters, builders and brokers are owed another $390 billion, in one estimate. And foreign creditors are getting together for complicated restructurings. Evergrande had entered wealth management promising 8 or 9% returns and has stopped making payments. All this is affecting public confidence in the future and China's growth story. For decades China depended on housing construction for high growth rates. Now the process is unwinding with both in financial difficulties. This NYT report says that after Evergrande's default, Country Garden failed to make a payment on $200 billion in debt last week and has 400,000 apartments that it sold but has not finished building. ...

LyrArc Article Gist
Here are 11 big infrastructure projects that are planned across the country. They are part of the $2.2 trillion of projects to build or repair infrastructure, that is estimated by the American Society of Civil Engineers as needed by America today. But there is only $100 billion for infrastructure spending in the Stimulus Plan, and much of this will go to keeping existing infrastructure, a dilapidated bridge here or road there in repair. Only $50 billion is available for transportation projects. The rapid transit planned for California with trains twice as fast as Acela for a 800 mile track is estimated at $45 billion, but there is only $11 billion in the Stimulus for mass transit aand cities like Washington DC for Dulles airport with its need for a airport train, and other mass transit projects around the country wil compete for the same money. As a result most will go unfunded. The Second Avenue Subway in New York at $4.35 billion, Miami Port Tunnel at $1 billion, Bridge to Canada from Detroit for $1.8 billion, Hudson Rail Tunnel for New York at $8.75 billion, Seattle Highway Tunnel at $4.24 billion, Gulf ports at New Orleans and Gulfport, Mississippi at $2.04 billion, tens of billions for new California aqueduct bypassing the delta around Sacramento to bring water from north to arid Southern part of California, NestGen Air Traffic Control for $15 billion to $22 billion, are the other projects on this list. Many of these are badly needed and have been waiting for years to get the necessary investment. This is only a partial list, and suggests that there are a lot of projects that can productively use government investment, so that wasteful spending does not occur. It appears that the projects are there because these areas were neglected for a long period, more like the situation faced during the post Thatcher period in the UK, where infrastructure and services had been neglected for so long that Labor governments could productively channel new investment in these areas to avoid wasteful spending. And it appears that the situation is very different from Japan where the Liberal Democratic Party had a vested interest in keeping its farm and rural base happy with new projects, like a bridge to nowhere, that led to wasteful spending for a decade or more, leading to rising deficits and investments that did not create productive returns in terms of economic growth. By contrast these projects have potential to generate productive returns for years into the future and also are large enough to create jobs and be spread out over a number of years. This could end up being a real bright spot in the current situation. Felix Rohatyn, who helped New York rebuild its finances afte a crisis, has a new book "Bold Endeavors: How our Government Built America, and Why It Must Rebuild Now", using examples like the rebuilding of the Erie Canal, the transcontinental railroad, and the Interstate Highway System, and says the US needs to build for the future with more ambitious, better planned projects today. He says, that infrastructure is not an expense, it has to be seen as a vitally needed and productive investment. People like Rohatyn and others see the Stimlulus plan as a missed opportunity because a lot of these projects mentioned here and the numerous others not shown here will simply not see much money from the government to support them and get them off the ground. The idea that this is wasteful government spending that is spreading, may be a danger to this vision and opportunity. At the same time the reality is that if all this was happening during the time of the Erie Canal or the postwar period of the Interstate Highway System it would have been much easier to support. The banking crisis fix is taking away so many of the dollars that could have gone here, that this may be the missed opportunity, the lack of room for visionary investments because of the danger of pushing the government deficit to 60% of GDP with the current spending plans. ...

LyrArc Article Gist
Some insights into the thinking of Robert Rubin from an interview by Ken Brown and David Enrich with the former Treasury Secretary in the Clinton administration about the 2008 financial crisis. As Justice John Paul Stevens. the longest serving Supreme Court justice on the bench once said, those who administer the judicial system form the backbone of the law. In a like manner those who administer the financial and economic system form its backbone, which is why Rubin faces some tough questions in this interview. At the time he was Treasury Secretary, the NYT magazine ran a story on Robert Rubin, as the kind of person who liked to put things down rationally on a note pad, and think things through on the basis of this rational analysis. This is how he approached the Mexican financial crisis of 1994 and the 1997 Asian financial crisis. Here is some of that note pad Rubin, in the context of CDO's and risk taking, with something gone awry. Risks that according to this NYT report Rubin encouraged at Citigroup in 2004 and 2005, on the basis of the idea that Citi's competitors were taking on more risk and making bigger profits. His note pad approach appears to have led to conclusions by Rubin that considering the additional profits that could be made by Citi by ramping up the risk taking in 2004 and 2005 and afterwards like its competitors, it could lead to losses if things went wrong, but these losses would'nt come close to wiping out the profits made during the good times. The cyclical downturn he expected to see in 2004 and 2005 when he is reported to have added his voice to others that the bank take on more risk, was a cyclical downturn of the type he had seen during the 1994 Mexican devaluation and the 1997 Asian financial crisis. He had no idea that it would be a cyclical undervaluing of risk added on to a housing bubble, and to a triple A ratings issuance that was misguided. Rubin says here that there was hardly anyone who saw that low-probability event as a possibility. Was the housing bubble a low probability event, and were the issuance of ratings by the credit ratings agencies compromised by the drive for more business a normal pattern, or would some digging up of facts and some innate skepticism of the prevailing current in favor of one's own instincts that something was overdone missed in the notepad analysis of a supposedly rational approach? Or was there a feeling that somehow the U.S. with its long tradition of technology, its work ethic and sophisticated financial system was somehow immune to something as severe as what the Asian countries were experiencing in 1997, or what happened in the 1930's. Asked about his view of what happened Rubin says that looking back there was an enormous amount that needs to be learned. Rubin is also in a quandary when he has to respond to the public concerns about excessive executive compensation. Rubin made $115 million in pay since 1999, excluding stock options, while under his purview as the highest ranking board member Citigroup let some of the problems that it faces now accumulate. As Citigroup faces $20 billion in losses in 2008, a bear raid on its stock by short sellers who ironically were able to do this because of some of the lax regulation set in motion in the Rubin Greenspan years leading to the suspension of the Uptick rule, and the $45 billion government bailout last week. Rubin may have helped Citi but in a different sort of way. He was able to persuade Treasury- Treasury Secretary Paulson was a fellow executive at former employer Goldman Sachs- through the days before the bailout, ensuring government help was on its way. Citigroup shares had dropped to $3.77 a share in the third week of November 2008, losing 50% of their value in one week, as the discussions took place. ...

LyrArc Article Gist
Companies have to work hard to retainthe best young people and the best employees as good talent is scarce in India.