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Seib comments on the rising nationalism in Europe, with a quarter of the votes in France going to the National Front of Marie La Pen, and a large share of votes to the Independence Party in the UK. This is partly a result of the austerity policies in Europe and declining confidence in the leading parties in the UK and France. Nationalism is increasing in Russia. Parties such as Putin's party in Russia are also appealing to nationalist sentiments to reduce the pressures from urban activists and anti-corruption movements in Moscow and other cities, such as the one led by Mr Navalny. The loss of confidence in ruling governments and in political parties in the age of mobile phones and internet communication- after austerity policies in Europe, and slowing growth and corruption in Russia- is leading to a protest vote in Europe, and a effort to deflect criticism in Russia by turning to nationalist issues. Nationalist issues in Asia stem from the more assertive stance taken by China and Japan, following the election of the LDP's Abe government in Japan, with a mandate to revive the economy....

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That former Fed chairman Volcker considered CEO attestation a critical part of the Volcker Rule is reflected in his advice about its implementation- to keep broad and let the responsibility for seeing that the proper activity takes place on bank management. CEO attestation is now part of the final form of the Volcker Rule requiring CEO's to sign off that the financial firm is in compliance. It may lead to a sequence of attestations or sub-certifications from business heads to upper management in actual practice, says Joseph Grundfest at Stanford University. The Financial Stability Oversight Council, created under the Dodd-Frank legislation, proposed this requirement saying that the rule require" public attestation by the CEO that compliance standards are continually being met." The WSJ points out that 5 of the FSOC's members are also top officials at government agencies writing the Volcker Rule. Jacob Lew, Treasury Secretary, leads the council. Lew says about the individual accountability of the top executive- "it puts in place strong compliance requirements that require those in charge of financial institutions to make sure that the 'tone at the top' sends the right signals to the whole firm."...

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Much of the cost for Canadian oil sands are fixed costs and once these costs are incurred production increases can take place over decades say Canadian oil sands company executives. CFO Corey Bieber of Candian Natural, says costs at it large Horizone mine are at $37.13 Canadian dollars per barrel in Jan 2015. He expects to cuts costs by at least $10 Canadian dollars per barrel by higher volume production cutting the operating expenses. Increasing production says Bieber does not mean adding people. As a result most of the Canadian oil sands producers can operate at oil well below US$47 a barrel, as low as $30, and are increasing production in 2015. This means Saudis will have to face competition from Canadian oil. It also means the Keystone pipeline will still be needed to transport Candian heavy oil to Gulf Coast refineries in the U.S. Suncor, the largest Canadian oil-sands producer, is increasing capital spending to C$7.2 and output by 11% in 2015. Canadian Natural is increasing production by 7%, and Syncrude Canada Ltd. is planning a 6% increase for 2015....

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President Obama's proposal on Dec. 17, 2012, in the fiscal cliff negotiations sets the figure at which Bush era tax cuts are permandently extended at $400,000 instead of the $250,000 in earlier proposals. Speaker Boehner's Republican proposal was for a figure of $1 million. The $400,000 proposal would mean that the top tax bracket of 35% would increase to 39.6%. Currently the tax rate increases to 35% from 33% at the cutoff point of $388,500. The White House plan now cuts spending by $1.22 trillion over 10 years. $800 billion comes from cuts to programs, with half of these cuts in federal health care programs, $200 billion in programs like farm price supports, $100 billion in military spending, and $100 billion in other domestic programs over which Congress has control. The White House proposal also supports additional spending on infrastructure, extension of expiring unemployment benefits, protection of "vulnerable populations" such as the disabled and wounded veterans on Supplemental Social Security benefits in inflation calculations, and permanently stop expansion of the alternative minimum tax affecting the middle class. On business investment the president's proposal would make permanent the credit for corporate research and development....

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Shinzo Abe is determined to avoid the mistakes made during his last term as prime minister 2006-2007, which lasted only 10 months and ended with defeat in the upper house elections. The LDP is aware that it won by a landslide because of the splintered opposition. The LDP won only 40% of the vote in the electoral districts in Japan. His focus will be on the economy, on tackling deflation, on central bank policy and efforts to support exporters with a weaker yen, and this time he will be cautious about sounding too nationalistic. Abe told a news conference: "I once fell to rock bottom and was hit with a storm of criticism. Now, I want to prove it's possible to start over again." During 2006-2007 Abe followed a popular LDP leader, Junichiro Koizumi, and hope that he represented a new post war generation of leaders. One approach he might take is to stay close to the U.S. on policies. The early stumble in this respect hurt DPJ's prime minister Yuko Hatoyama after differences with the U.S. shortened his term in office....

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Robert Pape of the University of Chicago political science department points out the facts that show an increase in suicide bombings and roadside bomb attacks witrh asharp escalation as the foreign troop presence increased. He quotes Gen McChrystal's own report, " the increase in firepower and force protection have severely damaged the International Security Assistance Force's legitimacy in the eyes of the Afghan people." In this respect he says McChrystal's request is not bold enough because with further escalation on the ground even more troops than he has requested would be required. THe numbers he gives are- neglibible roadside bombings after 2001, then as US and foreign troops increased 782 in 2005,1,739 in 2006, 2000 in 2007 and 3200 in 2008, all focussed on western targets not Afghan forces. He says the approach of buying support is used by the Taliban, and the US needs to allocate more resources and money to this effort. The switch would be gradual to fewer ground troops as they are seen as foreign occupiers, and America would maintain its military presece but differently avoiding the large forces that would only increase resistance to foreign occupation as its perceived in Afghanistan....

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Obama outlined his views on fuel efficiency goals in his speech to the Detroit Economic Club in May 2007. The thinking of the new President on this issue developed in the last few years as he met with different environmental and conservation groups and studied what was happening in the area of energy. He has used Paul Volcker, Austin Gollsbee, a professor of economics at the University of Chicago, and Joshua Steiner, a former Treasury official with abackground in restructuring, as advisors during the bailout discussions. His speech at the Detroit Economic Club faulted the UAW for joining with management in continuing to stall development of fuel efficient automobiles as retooling costs were high and the companies were being required to support high retiree and health benefits costs. In effect the management-UAW staus quo of continuing to turn out the same mix of pickup trucks and SUV's and leaving the gap in small and medium sized cars without the necessary invesments to turn out winners, may have led GM into the situation it faced even before the credit crisis, when sales of larger vehicles just went over the cliff. ...

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Underwater homes where houses are worth less than the value of the mortgages are estimated at roughly 9 millon. Barney Frank's proposal is for the federal government to step in directly with government guarantee for $300 billion in new cheaper loans. Under this plan homeowners would be issued new mortgages for 90% of the new value of the home, the governmet would get a 5% stake, and the holder of the loan whether a bank or investment pool that holds the mortgage securities gets paid 85% of the new value of the home. Underwater homes would be appraised at market values for the new loans and its important that after this the prices not keep falling much below the ne appraised value. Note also the criteris for eligibility. Under Frank's plan those who took out loans from Jan, 2005 to June 2007 1 million people according to his estimate would be helped. Would lenders face losses? Yes they would have to recognize these losses rightaway but the foreclosures may mean bigger losses for the lenders especially as the downward spiral would probably give them much less than the 85% as appriasal values sink....

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The difficulty in expanding Frontera by diluting 11,000 co-op farmers ownership to 80% from what it is now to raise $1.5 billion from investors. The idea was to build mini Frontera's in other countries like Chile, China and elsewhere where Frontera has small farms. This is because New Zealand doe not have more land to expand with most available pasture already having cows or sheep. Frontera trucks collect more than 10 million gallons of milk daily some of it being sold to companies like Nestle SA. Farmers get dividend checks montly. Revenue was over $10 billion in 2007 amid sharply rising milk prices. Graphs of WSJ show much lower inventories of dairy products like cheese, milk and milk powder, and of grains like barley, corn and rice compared to several years ago and ten years ago. And productiveness of land varies by country with some countries land much less productive for cultivating rice or corn. Even with investor interest its hard to find a vehicle to invest in like the Frontera dairy situation where Frontera coop farmers are not in favor of expansion overseas and already have invested heavily in New Zealand itself....

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In the light of the Irish No vote to the Lisbon treaty for a closer political union in the EU region, and the response from from propornents of the Lisbon treaty that this would delay the process of extension of the EU towards the parts of Eastern Europe still outside the EU, what does this mean for these countries that are looking to join the EU at some point? A new World Bank study says the future for countries that remain outside the EU does not look good. Lack of competition and contacts with the outside world keeps productivity low, poor education systems and an ageing work force, and millions of people in backward regions being left out. An economist at Poland's biggest bank sees closer ties to the eastern countries outside the EU including opening up their labor markets and free trade in goods and services as a way of reinforcing the Eastern partnership that Poland and Sweden and the Czech Republic have supported for closer ties to the EU with Ukraine and other Eastern European countries outside the EU. This means bringing some of the same benefits that have helped integrate Poland into the EU....

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A detailed account of how the Treasury under Secretary Paulson and the Fed under Bernanke worked through the evening of Friday and through Saturday and Sunday, to come up with a plan -coordinated with the heads of Fannie Mae and Freddie Mac and House Financial Services Committee Chairman Barney Frank- to support Fannie Mae and Freddie Mac before both companies ran into serious difficulties. The stock of both companies had been on a serious downward decline in the past 4 trading sessions with Fannie Mae shares losing 45% of their value and Freddie Mac losing 47% of their value. Also rumors in the financial markets on Friday had affected their share prices. Secretary Paulson felt it necessary to send a clear signal to the markets by making an announcement at 6pm Sunday that Treasury would get congressional approval to increase significantly the credit line at Treasury for the 2 companies, and also get approval for Treasury to take equity stakes in the 2 companies. Meantime the Fed Governors met over the weekend and made the decision to open the Fed's discount window to lend to the 2 companies....

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The May 6 episode of the stock market plunge of 900 points in the U.S. and then recovering had the effect of rattling investors nerves especially retirees. The impact of this episode is recorded in the experience of one Charles Schwab broker office in Englewood, Colorado. By the end of that day this broker had 50 calls on his answering machine from a fifth of his clients, all seeking to know what happened. Charles Schwab, who helped launch a period of individual investing in the U.S. after 1982 by cutting fees and going after the average investor, (along with others like Jack Bogle of Vanguard Funds), is also on edge. He says he has not seen anything like this since his early days. Schwab confirms Yale Prof. Shiller who says (see link) that his index for markets shows a lot of nervousness. Saying that 98% of people are still very concerned, coming after the May 6 incident, and the Greece and eurozone crisis that impacted US stock markets. One other factor he points out is the constant flow of headlines that suggest certain business people engaged in fradulent practices, something that fuels a lack of trust. Charles Schwab ponders from his office across the San Francisco Bay Bridge, whether words like safety and soundness mean anything anymore. Another factor of concern, Bogle points out, is that institutional investors now own 70% of American corporations, up from 35% in 1975. And the advantage has veered sharply in their direction as institutions, hedge funds, and investment banks trade on their own account, with wealth moving in that direction. This leaves the individual investor and especially the retiree or those about to retire in a severe predicament....

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Jens Hansegard interviews IKEA China head, Gillian Drakeford. Drakeford an employee of IKEA since 1988, has run the Chinese operations since 2003. She talks about how IKEA approaches the Chinese market. IKEA's Chinese sales in 2011 fiscal year ending Aug 30, were 4.9 billion RMB, 20% larger than in 2010, with 20% growth seen so far in 2012. Its plans are to open in 2nd tier cities with opening stores in Chongqing, and Wuhan. It has opened stores in Chengdu and Tianjin. The way IKEA opens stores is in partnering with its IKEA Centre Group which owns and manages shopping centres. In Wuxi, Beijing and Wuhan it will open stores with shopping centres of this type. The IKEA customer is 25-35 years in age with relatively higher incomes and education who finds a westernized lifestyle appealing. Space is a constraint, and there is the added factor of more stuff needing to be stored with more products available. A multigenerational family may live on 70-90 square metres. IKEA's challenge is to show how to deal with limited space, keep lowering prices to remain competitive with local competitors who are catching up to new retailing trends of IKEA type stores. Because Chinese middle class means much lower incomes than in the EU, the key is to meet affordability goals, and keep lowering prices for value. IKEA's "Lack" table has come down from 120 yuan to 39 yuan, and since 2000 it has cut prices on average by 60%. IKEA uses China's microblogging site Weibo to reach customers- where it puts up announcements and customers ask for tips, suggestions and put up their own pictures....

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Unknowingly many people have ownership in gun manufacturers through their pension funds. Pension funds for public employees in Florida, Texas Wisconsin and Ohio have stakes of less than 1% in American Outdoor Brands, formerly Smith & Wesson, the manufacturer of AR-15 semiautomatic rifles used in mass shootings at schools and other locations. Even a reputed fund such as TIAA representing teachers has small stakes in this company, this report in the NYT shows. New Jersey is one of the states cutting out investments of state pension funds in gunmaker companies. New York state still has small positions in its teacher pension funds in these companies. AS this NYT report shows it is through the use of  broad stock indexes that pension funds end up owning these stocks even when they have not specifically picked out such stocks. Equally or more alarming as reported here is that funds such as Fidelity and Vanguard own large stakes in the gunmaker companies. Fidelity is reported as the top shareholder of Vista Outdoor, with 15% of the company, through actively managed funds.  Vanguard has a 9.5% stake in Sturm Roger, and a 8% stake in American Outdoor Brands. Black Rock and Capital Group also have stakes in gunmaker companies. This points to a larger culture problem in the U.S. as financial companies see this as " a social issue" whatever that is supposed to mean in the minds of investment managers, when it is really an everyday issue for parents and children. In a culture prevalent in parts of the country and American society that sees something as basic as guns in schools and other public areas as "social change" a spokesman for Vanguard can quietly say that "mutual funds are not optimal agents of social change," without arousing a response. ...

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The resignation of U.S. Defense Secretary Mattis comes as a result of Mattis being unable to change plans by president Trump for a withdrawal from both Afghanistan and Syria. WSJ discloses that at a meeting on December 18 at the Pentagon, with John Bolton, White House National Security Advisor, Mike Pompeo, Secretary of State, and John Dunford, chairman Jt. Chiefs of Staff, Mattis could not temper the president's plans. On Thursday December 20th Mr. Mattis decided to resign. He then met Mr. Pompeo and onto the White House to meet president Trump. He and Mr. Trump discussed their contrasting world views in a 45 minute meeting, and Mr. Mattis handed over his resignation letter to Mr. Trump. Military officials were particularrly blindsided by the withdrawal from Syria. U.S. policy has vacillated back and forth in the intervention in Syria with president Obama also hesitant to commit troops in Syria. In the meeting Mattis understood that even a minimal presence in Syria was unacceptable to president Trump who ordered the removal of the 2000 troops there. The withdrawal from Afghanistan was also a result of limited patience with the war there in the 18th year and no sign that the Taliban influence had diminished since the war began- after Trump added 3000 troops to the 14,000 stationed in Afghanistan. The U.S. has 5500 troops in Iraq and there is talk about drawing this number down. The concern for the defense department is that how U.S. allies will see the withdrawal, and their perception of how reliable the U.S. is as a partner. For president Trump the cost is measured in terms of the long period the U.S. was engaged in the region without any tangible results, and U.S. not allies bearing most of the cost.      ...

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President Moon Jae-In of South Korea will meet Mr. Kim of North Korea in a summit in late April after envoys from South Korea visited Pyongyang, North Korea, for 2 days of talks. The talks come against the background of the WInter Olympics in Pyeongchang, South Korea, where the 2 Koreas sent a joint team as part of reconciliation efforts.  North Korea agreed to denuclearize said a South Korean government statement after the talks, saying- "The North Korean side clearly stated its willingness to denuclearize. It made it clear that it would have no reason to keep nuclear weapons if the military threat to the North was eliminated and its security guaranteed." Working level discussions will be held before the Kim- Moon summit meeting and a hotline phone connection will be setup between the two leaders. A recent report in the WSJ shows China for the first time tightening sanctions on the North. Japan has joined the U.S. in taking a tough stand and its foreign minister said that the offer for abandonment of nuclear weapons has come before and North Korea has resumed its nuclear weapons development each time. U.S. experts say that security guarantees were offered by the Clinton administration, including in writing, but this has not prevented the North from moving ahead with its nuclear program. This is the first time Kim, 34 years, has met with senior envoys from the South since assuming power in 2011. The WInter Olympics in Pyeongchang with Mr Kim's sister attending and bringing an offer for a summit meeting, were the first such contacts in years between the 2 Koreas. The new offer comes with an offer to stop nuclear tests, yet leaves open the manufacture of fissile materials say experts. The U.S. and Japan are deeply skeptical and insist on complete and verifiable proof of abandonment of the nuclear program. ...

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This NYT editorial points to the dangers lurking behid the jobless numbers. The House bill that passed recently for $154 billion to extend unemployment benefits- set to expire in Feb 2010- to June 2010, and increases aid to local and state governments. It also includes infrastructure spending and help for small business. But it does not do enough for young people whose joblesness is at all time high. For instance only 4 in 100 low income black students found work in Fall 2009 This according to a study by the Northeastern University Center for Labor Market Studies. According to the analysis done by this Center the employment rates among teenagers has risen four times faster than the rate among adults since 2000, and todayme over 65 are more likely to find jobs than youth of 16-19 years.

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The director of the Institute of Population and Labor Economics at the Chinese Academy of Social Sciences, Cai Fang predicts that by 2009 there would be a widespread shortage of workers, pushing up industrial wages. Figures from the UN Population Division show that China's working age population will decline in the years ahead. There are two things here that matter. The millions of people in a socalled surplus labor force that can be tapped so that industry can hire more people expand and grow without wage inflation, and second the working age population 20-29, younger people being preferred by employers for the long hours, single people who can stay in dorms and can be mobile to move near factories and do not have the restrictions of married people with children. The one child policy has limited the growth of the working age population. After rising by 1.3% a year according to the UN Population Division during the decade to 2005, the population of working age is expected to increase at an annual rate of 0.7% until 2015, and then shrink by 0.1% ayear until 2025. The surplus labor pool figures estimates vary from 150 million people to 200 million people, but the Economist estimates the true figure to be much smaller because government figures for the rural labor force include millios of migrants already in the cities and others working in rural industry not farming. The population of workers in ages 20-29 fell from 233 million in 1990 to 165 million in 2005. Because of this shrinking of supply of eligible labor especially considering the preference of textile and electronics firms to hire young women because they complain less and put up with long hours and for single men preferred by construction firms, Cai Fang believes that this preferred or eligible labor pool is shrinking to the point where it will be a problem in the years ahead. This will have the impact of shrinking the growth rate to around 7% sometime after 2009. Problems that remained under cover because of the Olympics will also become evident as 2008 winds down. Some experts argue that there are other factors that will contine to sustain the pool of available workers, but its this pool of preferred available workers that will be in short supply according to Cai Fang. ...

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Researchers David Autor of the Massachusetts Institute of Technology, Gordon Hanson of the University of California, San Diego, and David Dorn of the Center for Monetary and Fiscal Studies in Madrid, in independent research, studied the impact of trade on 722 clusters of interrelated counties in the U.S. They focussed on the surge in Chinese imports and found a pattern. Counties with higher exposure to Chinese import growth showed higher unemployment and higher expenditures by the government for unemployment benefits, food stamps and disability benefits. Their calculations show the increased government payments amount to one to two thirds of the gains from trade with China. This does not include the losses suffered by people losing jobs who deplete savings as they look for new jobs. Hanson studied the effects of trade and Chinese imports in the 1990's and found the effects were relatively small. This time the effects are large and show counties that lacked local investments in industrial machinery and technologies in which China was still playing catchup such as Caterpillar in Peoria, Illinois, and Boeing in Everett, Washington, were most susceptible to higher jobless rates and in need of government support payments. Autor and Hanson found that from 2000-2007, communities in the 75th percentile- ones with greater exposure to Chinese import growth than 75% of all communities- saw a manufacturing jobless rate of about one-third more than communities in the 25th percentile. The government payments mean higher taxes or larger deficits are needed to support these communities, and long periods of unemployment reduce the incentive to work. Michael Spence, a Nobel prize winning economist from New York University, says the world has never seen such a rapid pace of growth as China experienced between 2000-2011, with rates approaching 12% in some years, making past experience and prevailing theories on trade an insufficient guide to what is happening....

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China shifts its policy to allow 3 children per family after it sees the percentage of people in the population over 60 rising. This WSJ report show that the policy shift is being followed by changes in policies related to education with more equitable educational resources and reduced expenditures for education for families. Policies that were seen as making families hesitant to have more children.  Changes of the Mao era policy of one child, one family, are very recent. Not till 2013 has this policy changed, since its implementation after the Communist Party took over mainland China in 1949. In 2013 the government allowed families to have 2 children if one of the parents was an only child, and two years later in 2015 the policy was changed to allow 2 children per family. Only half of Chinese couples are willing to have 2 children, according to a study by the state backed All China Women's Federation. A once in a decade census shows 12 million babies born in China in 2020. In 2016 there were 17.9 million births. China's leaders noticed a change in the census for people over 60 as a percentage of the population, which was growing much faster than imagined from 13.3% in 2010 to 18.7% in 2020.  The perception of experts and Chinese couples in their thirties shows that the policy is seen as not enough to convince young couples to have another child. Typical is the situation of one parent cited in this report, a Beijing father of two. He says the policy has changed but it does not mean that he would have another child. He says it takes a lot of money and energy to take care of another child. It also affects the standard of living and education of the two children as he has already moved to a new 2 bedroom apartment to be near top schools in the Chinese capital. Another facet of this development is women in China postponing children to pursue their careers. Government policy is now to raise the retirement age with fewer people of working age to support the senior population. The percentage of the population of working age 15 to 59 years dropped from 70% in 2010 to 63% in 2020. Fewer people for working at Chinese factories and manufacturing. China's retirement age is now 60 for men and 50 for women, giving the government room to do this by bringing it up to western levels that are much higher in the US and Europe.   ...

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About 1.17 million jobs were lost in 2008 according to the Labor Department, with half of these job losses in the last 3 months, as unemployment reached 6.5%. Bu the the labor underutilization rate is the one to watch, the measure of total unemployment including parttime workers who seek full time employment but can't get it. This hit 11.8% in October up from 11% a year earlier. This is what happened in Japan where companies began using parttime workers to reduce costs and not to have to pay benefits, a trend that has already started in the US. See link to trend. Over a long period like 5-10 years this can lead to depressed consumer spending as workers see an uncertain future, as ocurred and is still the case in Japan. Also note that the unemployment rate reached 10.8% in the 1981-82 recession and this is shaping up to be something bigger, and half of the 1.2 million job losses ocurring in the last 3 months so this is accelerating. The economy is expected to shrink at an annual rate of 4% in the 4th quarter, and could see these kinds of declines or worse in 2009 and beyond....