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A Peterson Institute of International Economics study on the TPP trade agreement shows it would reduce growth in the U.S. manufacturing sector by a fifth, according to this report in the NYT. Workers incomes and job losses in manufacturing are a key concern for voters and account for the surge in polls for Trump and Sanders in the U.S. presidential election of 2016. All four leading candidates Clinton, Sanders, Trump and Cruz oppose the TPP agreement. Congress will wait till after the election to decide. This is a big issue today because about 5 million jobs have been lost in 1977-2014, according to the Alliance for American Manufacturing. The Peterson study predicts job losses of 50,000 a year, yet another study by Tufts University predicts job losses of 450,000 a year. Another study by the Economic Policy Institute study shows other damaging effects such as labor's share of national income declining from the TPP.

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Baker and Rudoren of the NYT describe how the relationship between Netanyahu and Obama gradually deteriorated over a number of years.

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Israeli prime minister Netanyahu retracts his statement about rejecting a two state solution in an interview with Andrea Mitchell of NBC News. He says he meant that it was not possible under the current conditions with terrorism in the Middle East, Iran pursuing a nuclear weapon, and the Palestinian Authority having an alliance with the militant Hamas movement. In 2009 Netanyahu said he supported a two state solution in a speech at Bar-Ilan University, and the statement before the election was meant to bring out larger number of right wing votes. He also clarified his comments about Israeli Arabs "voting in droves," as meant to bring out large numbers of his own voters to vote, saying Israeli Arabs voting was "sacrosanct." The White House response was to say that it was free to support a two state solution at the United Nations, and U.S. president Obama discussed the comments on Israeli Arabs- seen widely as racist baiting- with Netanyahu in a phone conversation. The rift between the two leaders is now seen as irreparable and bigger than ever....

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Several factors make it likely that oil prices will remain low for an extended period of time into 2016 and beyond. As Ailworth points out nobody is blinking. The Saudis plan no change to their high production. U.S. oil producers in the Gulf of Mexico have already made investments for deep sea drilling wells following the end of the moratorium on drilling in the Gulf. Many of these wells are producing at very low marginal cost as most of the investments have already been made. It makes economic sense to produce even in a low price environment, according to Andarko. Shell continues to invest in the deep waters of the Gulf. Its production is up 10% to 250,000 barrels a day. American shale oil drillers have not cut back as much as expected, partly because many companies with large debts need the cash flow to pay interest on debt. And some of the 1200 wells that were drilled but left untapped may also be brought on stream to slow production declines. As a result the overall production of American crude, according to monthly federal information, has declined by about 3% to 9.3 million barrels from the peak reached in April 2015. This helps the U.S., Europe, China and India, at a time when their economies are experiencing different problems. It hurts Russia, Venezuela, Nigeria, and Iran. Russia is coping as its exporters convert dollars into rubles after the sharp depreciation in the ruble, and helps local industry including steel producers, as well as wheat exports. Venezuela's economy is the worst hit. And Iran now has to produce at high levels in 2016 to improve its economy following the lifting of sanctions....

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India's central bank chief, Rajan, favors a lower inflation target of 4%, with fluctuations of 2% up or down. Lower inflation is critical for India to achieve higher growth rates. The World Bank lowered the rate of growth in the global economy but kept the rate of growth of 6.4% for India unchanged. Rajan also favors creating a more formal system for setting rates, with a committee like the Open Market Committee in the U.S. deliberating over the different factors for such a decision. Rajan was a professor at the University of Chicago, and chief economist at the IMF, before joining the central bank. Central bank policies have helped stabilize India's currency, the rupee. The lower cost of oil for India with an oil import bill of $100 billion is a big boost for economic growth. For the global economy this comes at a time when China's growth rate is slowing to below 7%.

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Su Liping, professor at Tsinghua Unversity, says there were 180,000 protests, riots and other incidents, protesting economic injustice in 2010. Most of the incidents were against land grabs, corruption and abuses by local officials, and unpaid wages. Inflation has hit the poor, migrant workers and people with low incomes hardest. Food prices were up 13.4% in August over the same month prior year. Pork prices were up 52.3%. Other problems are now meshed in with inflation. Local government debt in China, according to the National Audit Office, was 10.7 trillion yuan in June 2011. The National Audit Office estimates 23% of this, or 2.5 trillion yuan, depends on land for repayment. Analysts say China's local government made repayment in 2010 using the 2.9 trillion yuan in revenue from land sales. The same amount of land has to be sold in 2010 to make repayment. At lower prices even more land may have to be sold. The danger say Orlik and Jie, is that inflation and the pressure to acquire more land- and consequently more land grabs- will pose severe risks to the social contract in China....

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Daniel Yergin of consultancy firm IHS describes the geopolitical disputes in the Middle East between Russia, Saudi Arabia, and Iran that are leading to likely continued oversupply of oil in 2016, keeping prices in the $30-$40 range. Saudi Arabia is not likely to change its policy of going after market share, Venezuela is affected but lacks a voice in OPEC decisions, Russia continues its policies in Syria and Iraq under the Putin government affecting other Sunni states, and Iran following the lifting of sanctions is likely to ramp up supply to make up for its lost market share- all leading to an extended period of low prices. This situation benefits China, the European Union countries, India, Turkey and the U.S. in a period of slow economic growth in 2015-2016. Russia looks to use this period of low oil prices to shift to domestic industry after a period of rising imports when oil prices were high. The Saudis seeing their interests in the region threatened by Iran and Russia, and dissatisfied with the foreign policy of president Obama, see a policy of pushing for market share as appropriate in the current geopolitics of the region....

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China's premier, Wen Jiabao, opened the National People's Congress, annual meeting of the Chinese parliament, by saying that China had lowered its growth rate to 7.5% from 8%. GDP growth for 2011 was 9.2%. Wen set an inflation target of 4%. The CPI index increased by 5.4% in 2011. Wen set 14% growth target for M2, China's broadest measure of money supply.

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In this WSJ op-ed, Michael Oren, Israel's former ambassador to the U.S. 2009-2013, describes the difficult moments in the Israel- U.S. relationship during the 7 years of the Obama administration. He says prime minister Netayahu made mistakes, but president Obama acted deliberately against Israel's interests. Oren says two core principles of the Israel-U.S. relationship, that of "no daylight" or no open disagreements, and "no surprises," were broken during the two terms of the Obama administration. One such moment says Oren was in May 2011, when Obama endorsed the 1967 lines with land swaps- a former Palestinian position- as basis for peace-making. M. Netanyahu was seen as lecturing the U.S. president about this the next day, according to Oren, because he was assured by the Israeli ambassador that this was not going to happen and it came as a surprise to Netanyahu.

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By May 2015 the Russsian ruble had recovered to 50 to the dollar from the low of 80 to the dollar in 2014. In August 2015 the ruble declined to 70 to the dollar as oil prices dropped below $40 per barrel. GDP growth showed a decline of 4.6% for the economy in the 2nd quarter of 2015. The ruble has lost close to 50% of its value in 2015 compared to the prior year.

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Speaking at a banking conference, advisors including the head of Russia's largest retail bank Sberbank, German Gref, minister of the economy, Aleksei Ulyukayev, and head of the central bank , Elvira Nabiullina, express deep concern about the economic prospects in 2015. Foreign investment is down from about $90 billion in the 1st quarter of 2013 to a negligible amount in the 3rd quarter of 2014. Capital outflows following the Ukraine crisis are estimated at about $110 billion by former finance minister Alexsei Kudrin. The ruble dropped to its lowest level against the dollar since the 1990's. And the sharp decline in oil prices with Brent crude at about $90 is another risk factor as 50% of the budget comes from oil and gas revenues and 60% of exports are still oil and gas, with no serious or effective effort to diversify under the Putin adminstration. Putin told the banking conference that a deficit free budget and reserves of $460 billion are "fundamental factors supporting stability." Advisors and leading bankers remain unconvinced. The problem is that even at the beginning of 2014 before the Ukraine crisis foreign investment had slowed to a trickle, similiar to what India experienced in 2013. The central bank head says her effort to open up the bond markets in Russia to foreign investors is now in vain because there are few foreign investors. Instead of reversing the situation as is happening in India with the new Modi administration, policy under Putin and the Ukraine conflict may have scared investors away with the increasing western sanctions and stagflation (estimated 8% inflation and about 0.5% growth in 2014). The head of Sberbank Mr. Gref told the banking conference- "The Soviet Union broke apart because of the mind boggling incompetence of the Soviet leadership. They did not respect the laws of economic development." The problem with sovereign reserves is that it can protect a sovereign currency such the Russian ruble or the Brazilian cruzeiro to some extent, but today's vibrant economies need foreign investment and foreign technology for growth. Even a country such as China with a trillion dollars in reserves needs the reserves in its special case because of its billion plus aging population, and is no exception to these laws of economic development about the need for foreign technology and foreign investment. ...

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Barry Ritholtz lists the causes of the financial crisis, He says New York Mayor Bloomberg's exoneration of the financial industry is simply false- what he calls "the Big Lie"- even though Congress, regulators and the Greenspan Fed acted irresponsibly and created favorable conditions for the actions of the financial industry.

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U.S. Senate majority leader Mitch McConnell tells the Washington Post in an exclusive interview that the dynamics surrounding the Trans Pacific Agreement pushed by president Obama have changed. He sees little prospect of it passing Congress before president Obama leaves office, and says it will be up to the next president to take it up after Obama leaves office in Jan. 2017. McConnell said that there is a lot of pushback all over the place. The Republican frontrunners Trump and Cruz both oppose the TPP, and all Democratic candidates including Hillary Clinton oppose it. In addition tobacco interests in McConnell's home state of Kentucky and pharmaceutical interests backing Senator Orrin Hatch, the Republican Finance chairman also oppose aspects of the negotiated deal. Labor unions, the automobile industry, environmental groups, and public interest groups, have strongly opposed provisions of the TPP that hurt workers and the public interest from the beginning, making it a risky proposition for Congressmen coming up for reelection in 2016. The divergence between the Republican establishment and the presidential front runners Trump and Cruz also have diluted support in Congress on the Republican side, making it a no win proposition....

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Compared to the situation in 2008-2009 during the global financial crisis with the excess supply of labor, China in 2012 faces an excess in demand for labor. In 2009 about 20% of migrant workers were unemployed when the crisis hit, and wages dropped 10% for migrant workers, according to the Chinese Academy of Sciences and Stanford University. The situation three years later is one of tight labor markets and higer wages. A large stimulus in not only not needed today in the way it was in 2008-2009 as a way to maintain social stability, it would reduce the benefits of the anti-inflationary steps taken in 2011-2012, by putting more pressure on wages and prices. Manufacturing sector wages increased by 20.1% in 2011, according to China's statistics bureau. This may be why the Chinese government is taking measured steps to avoid creating more bad loans through indiscriminate lending, and being more selective in accelerating development projects in the pipeline. According to Hong Kong's new Chief Executive Officer China plans to have about 7% growth. This shift in approach would help China refocus on growth strategies recommended in the recent Development Reform Commission and World Bank Report on China....

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Alexis Tsipras, leader of Syriza, Greece's second largest party, is interviewed by WSJ's Bret Stephens. Tsipras describes the problems inside Greece. He describes the bribery in healthcare, tax evasion, burden of taxes on the middle class and honest citizens, a large and inefficient bureaucracy. In its current state Greece would build up debt and deficits all over again if the debts were forgiven tomorrow, says Tsipras. He is for Greece remaining in the eurozone. Tsipras understands the problems Germans have with putting money into Greece with the current state of economic management and lack of conscience of its elite, and why they see this as not fair. He suggests as a model for solving the Greece debt crisis, the London Conference of 1953 forgiving half of Germany's debts and putting the rest on a 30 year scheduled repayment. This would have to come with results in cutting bureaucracy, reducing corruption, and efficient tax collection for Greece democracy to work.

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In remarks published in English on the Bundesbank website, Jens Weidmann, Bundesbank president and member of the ECB governing council said: "The ECB should be aware of its independence. This also requires it to respect, and not to overstep its own mandate." This is seen as a pushback by the Bundesbank to ECB president Draghi's comments on July 23, 2012, about doing all that is necessary to keep the eurozone together. Weidmann referring to the situation in France recollecting his days as a student in France in 1987, said there were "two different worldviews colliding." And that this situation prevailed in all political debates right up to the present day. He says about deflationary tendencies -"If these countries go through adjustment processes which result in decreases in wages and prices, then this constitutes one-off shifts in the wage and price structure and not deflation."