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"There is'nt another planet to export to," is what Paul Krugman of the New York Times says, when referring to the impossibility of all countries keeping up exports and reducing imports at the same time. In crises similiar to what the US faces today, countries have increased exports as a way to stage an economic recovery. But this time countries are depressing their currencies to gain or preserve a large share of global demand achieved through high exports. China has resisted demands for a significant revaluation of the yuan, and persists in efforts in currrency markets to keep the value of the yuan low. This cuts off one avenue of recovery. Bloomberg Business Week and Bloomberg News interviewed Edmund Phelps, Jan Hatzius, Krugman, and other economists, with the idea of figuring out how the US could stage an economic recovery. Krugman is not optimistic, considering the effects of the financial crisis being really protracted. Krugman points out that when comparing the US currently to the eaarly stages of Japan's lost decade, the US is doing worse. Unemployment is worse, and overall he says, a weaker policy response. And he says Japan is still a depressed fragile economy 18 years after its financial crisis. Jan Hatzius of Goldman Sachs, predicts that the unemployment rate will rise back to 10% in early 2011, with a 30% chance that the economy will fall back into a recession. He says that in the postwar economy, there has never been an increase in the unemployment rate of one third of one percentage point that did not result in a recession. Phelps and Hatzius see one way the US could stage a recovery is with replacement old structures and equipmet as wear and tear and obsolescence takes place. Phelps sees the possibility of technological innovation resultig in a new burst of activity. Robert Gordon of Northwestern University, is less optimistic about this, and predicts a lower growth rate of 1.5% over the next 20 years. ...

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Public opinion experts in Israel say President Obama's policy in the Middle East is seen by a majority of Israelis as reflecting a sound judgement. Obama's approval ratings in Israel are up 13 percentage points compared to 2010. It is now 54%, according to December opinion polls by Mr. Telhami, a University of Maryland professor who supervised the surveys on Israeli opinion. Only 19% of Israelis now support Israel attacking Iran's nuclear facilities without U.S. support, according to the University of Maryland survey by Mr. Telhami of 500 people, that was annouced last week.

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Under IMF and US presssure S. Korea's government took tough steps to resolve its banking crisis in 1997. The government closed or restructured 12 of the 32 largest banks and put in $60 billion to write off bad loans and replenish cash reserves of remaining banks, says Prof. Eichengreen. The Korea Asset Management Corporation, a public fund, bought about two-thirds of the problem loans on the bank's books, to free up capital for new loans. This was also done in a compressed period of time under US pressure. In the US because of heavy lobbying influence in Washington and with the Bush and Obama administrations, and the lack of any external pressures such as S. Korea experienced, the banking industry has not undergone a serious restructuring. Volcker recommended reforms have actually been watered down. The difference in the two approaches is striking. S. Korea had the advantage of being able to rebound with exports to a growing US and Europe during that period. A serious restructuring of the banking industry was the first step, something that has not taken place in the US. And there is a failure to cleanup the problem of mortgage backed securities in the US financial system. ...

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Heizo Takenaka, head of the supervising agency for banks in Japan under prime minister Koizumi, took strong action to get banks to disclose the full extent of bad loans. This was needed to repair the banking system as piecemeal efforts had failed from 1996 to 2002. Takenaka says he realized that the economy could not recover with stimulus efforts until the banking system was cleared of bad debt and functioned normally to lend to business and consumers. He tells the NYT's Tabuchi that he stood firm and told the banks he was not ready for negotiation even when the banks called him absurd. He describes his experience with the banks, and says he cannot understand why the U.S. is not taking firm action with the banks.

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The Obama administration was slow to respond to the democracy movement in Libya. France's Sarkozy and Britain's Cameron led the effort to support the Libyan rebels with airpower, no -fly-zones, and military assistance. As the Assad regime uses fighter planes, helicopter gunships and artillery against its own people and heavily populated areas, the Europeans distracted by the economic crisis, and the Obama administration following its earlier pattern of slow response in supporting democracy efforts, have failed to take an active role in helping the democracy movement in Syria.

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The growing number of women in their 40's who are childless, one person homes, "child-free" adults, higher rates of divorce, are not limited just to Western Europe, the U.S. and Japan. This is spreading rapidly in lower income countries in the Arab world and Asia also. In Europe the progress is relentless. With divorce rates higher and fewer women marrying, the probability of a women of reproductive age getting married in Belgium is about 40%, and divorce at about 50%, according to Eurostat. So that the probability of women getting married and staying married is about 20%. This is true of other European countries also. There is a huge increase in "child-free' adults, men and women choosing voluntarily to not have children. The proportion of childless women in their 40's is highest in Berlin and Hamburg, nearly 33%, about 25% in Italy, and 20% in Sweden. One person homes are increasing in Western Europe, with about 32% in Europe and 45% in Denmark, not from aging alone as in Denmark as many as twice the number of one person homes are under age 65 than over 65. The UN population Division's "World Marraige Data 2012," shows that places like Morocco, Libya, and other parts of the Arab world are also experiencing these trends, with income and schooling levels much lower than in Europe and the U.S. These trends are now worldwide and affecting traditionally conservative societies like China....

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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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Australia's minimum wage is set for 2015 at $16.87 Australian dollars per hour, or $13.55 U.S. dollars for people over the age of 20. This is 30% higher than the minimum wage of $10 in California, and almost double the federal minimum wage in the U.S. For years since the late 1990's it has been increased as Australia benefitted from a commodities boom. With the lower employment in the mining and other sectors in 2015, and a fading of the commodities boom, experts say the minimum wage needs to be restrained to reflect the changes in the economy. Unemployment at 4% in 2008, is now 6.1%. Unemployment for people 15-24 not attending school increased to 14.1% in Nov. 2014, declining to 13.1% in Dec. Workers under 21 are paid much less significantly lower on a sliding scale, an idea that could be borrowed in the U.S. as the minimum wage is raised higher to provide adequate income for workers with families to support. Experts point to high unemployment in the 1990's even when there was a low minimum wage. As a matter of fairness the wage setting body in Australia takes into account the median wage. It was 54% of the median wage in 2013, compared to 37% for the U.S., according to the OECD....

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According to a senior defense industry official Defense Secretary Robert Gates worries that counterinsurgency may not work in Afghanistan. According to the official even 40,000 troops would not give enough troop on the ground to protect the Afghns if the north and west continue to deteriorate. Gates is concerned about sending large amounts of additional US troops to Afghnistan. This is acountry with people very sensitive to occupying powers. A veteran of the soviet intervention there says they have an allergy to foreigners and attributes the soviet defeat to this. See the links in Intelilinks He is aware of the the dangers of this, if the expanded military footprint is seen as that of an occupying power especially when the government in Kabul is hugely unpopular, then this would galvanize new armed opposition to the US and draw US forces and NATO forces into aguerilla war of the type the soviet union faced there. It may do much worse if it galvanizes opposition in side Pakistan. The question Obama is focussing on is whether there is athreat to the US homeland security if other options than expanding troop strength are explored....

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Fomer U.S. Census Bureau officials Gordon Green and John Coder released a study by the firm Sentier Research. The study looks at two groups of Census data from 2005-2007 and 2008-2010, which has information on interviews with 3.5 million households for each period. The study shows 38 states with household income declining. The losses in income are greatest in the midwestern states affected by the loss of manufacturing industries. Incomes fell by 5.7% in the midwestern region of Indiana, Illinois, Michigan, Ohio and Wisconsin. Oil, shale and other energy producing states- Louisiana, Oklahoma, Texas- saw incomes rise by 0.3% from 2007 to 2010. This report looks at pretax income levels in 2010 dollars for all 50 states and 297 metropolitan areas. Michael Greenstone, professor of environmental economics at MIT, says the regional shocks from the economic crisis can last for a couple of decades. The Midwestern states showed median annual household household income decrease by 4.7% to $49,710 and the Southern states showed a drop of 2.5% to $47,389. Nationally for the U.S. the drop in annual median household income from 2007 to 2010 was 3.5% to $51,287. Another finding of the study was that of the top ten metropolitan areas with the highest percentile of incomes, nine were in Connecticut, New York and New Jersey, a region where the financial industry is based. Silicon Valley in California comes in at No. 10 in this list of metropolitan areas. In terms of growth of households reflecting migration patterns and new families the Mountain States of Arizona, Colorado, Idaho, New Mexico, and Nevada did as well as the oil patch states of Texas, Louisiana and Oklahoma, showing an increase in households from 2007 to 2010 of 5.8%....

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An assessment of the Financial Regulatory Reform that is emerging in House and Senate Bills. Yes reforms will be passed but will they prevent another crisis and are they tackling the root causes of the financial crisis. The assessment here is that they fail on both accounts. According to Christopher Whalen of the Institutional Risk Analyst it tackles the symptoms more than it responds to the causes of the crisis. He sees the response in the areas of derivatives trading, credit ratings agencies, consumer proteciton agency, as inadequate to meet a future crisis.

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Overheard about Bair and Citigroup CEO Vikram Pandit.

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China's vice premier, Li Keqiang, wil visit Spain Jan 4-6, 2011. In an editorial page article for El Pais, Li wrote that China will continue to purchase Spain's public debt in the future. China is a large buyer of Spain's sovereign debt, owning about 10% of the total foreign holdings. Spain's central government will need to raise 170 billion euros in 2011, and its regional governments an additional 30 billion euros. Natixis expects 824 billion of eurozone government bonds to be auctioned in 2011. For China the eurozone is its largest market and it is concerned abou the impact of a eurozone crisis on imports from China. A declining euro would make Chinese exports less competitive and costlier in European markets. And China is wary of the impact on its export industries at a time when its economy is trying to make a soft landing, and strains are showing with an asset bubble in real estate, too much bank lending and high inflation.

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A 93 year old hero of the French Resistance, Stephane Hessel, publishes a pamphlet called "Indignez-Vous!," released by a small publishing house from the publisher's home. He calls for resisting the "international dictatorship of the financial markets" and "defending the values of modern democracy." He protests France's treatment of illegal immigrants, the influence on the media by the affluent, cuts to the social safety net, French educational reforms. It was first published in October, and now has sold 1.5 million copies, all through word of mouth advertising. It has been translated into Spanish, Italian, Portuguese, and Greek. New editions are planned for Slovenian, Korean, Japanese, Swedish and other languages. In Britain, it was published with the title "Time for Outrage." The pamphlet is about 4000 words and only 14 pages of text. Its timing is good, as the French are debating what to do in their politics with an election approaching and Sarkozy's standing at new lows. The short length and low price are a big plus, at $4 it made a convenient Christmas gift. Britain, Spain, Portugal and Greece are going through austerity cuts. Public sentiment has been aroused by the cuts, and by the overarching influence of financial markets on the economies of these countries. Some of these countries referred derisively as piigs- Portugal, Ireland, Greece, Spain -countries in the financial markets. The economic impact has fallen disproportionately on the young, with high jobless rate for young people from Italy to Spain, and cuts in funding for universities and schools in the UK also fall heavily on young people. A sense that something has gone wrong in the free market system and the western world. Austerity cuts in spending in the U.S. create a similiar feeling and joblessness among young people is also high in the U.S....

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Jennifer Rubin of the Washington Post cites the Pew poll of September 3-7, 2015, on the Iran nuclear deal of July 2015, showing increase in skepticism about the deal's provisions by people who are informed to some extent (a little or a lot) about its details- 57% opposing to 27% supporting. The strongly partisan opinion on the issue, and the lobbying on both sides, including bringing Iraq WMD into the picture as noted by Dana Milbank in another column in the Washington Post, overstates each case. This draws attention away from the actual provisions. About 30% have no opinion it appears because the issue of this magnitude involving nuclear weapons proliferation has become politicized when it should be examined only on its merits, where public opinion would be shaped by the details of the deal itself, not who has negotiated it. The Pew Research Center poll shows 21% support the agreement negotiated with Iran, 49% disapprove, 30% offer no opinion. This compares with a poll taken 6 weeks before in July 2015 showing 33% supporting it and 45% opposing it. ...

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Miller says the whole thing about the super-committee, the polemics between Republicans and President Obama about deficits and billionaires, could end up being a charade with Obama hoping to squeeze by in the 2012 presidential elections and the Republicans equally intent on getting 51%. In the end Obama's poor handling of the debt ceiling, including an unwillingness to go ahead with raising the debt ceiling even if it went to court, says Miller, shows a basic failure of the Obama presidency. In the end he thinks its not that the centre-left is going to be mad at Obama, they will be mad at themselves for believing he was going to be any different.