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India's loan for the bullet train project is for 81% of the 1.1 lakh crores cost of project  from the Japan International Cooperation Agency, at 0.1% interest rate for 50 years with 15 year grace period. These are extraordinary terms provided by the Japanese government agency as part of its international aid for development. Mr. Modi said at the time in 2019 during inauguration of the bullet train project that anybody told about the terms of the loan would find it "unbelievable."  At the time prime minister Shinzo Abe of Japan was visiting Ahmedabad. The loans even of a generous nature would be of 30 years and at that period comparable to the higher yield on 30 year Japanese government bonds. Loans of 50 years are practically unheard off. It could be considered very close to direct grant aid by Abe to India. It is also how Abe had faith in Vivekananda's, Gandhi's and Modi's vision for India's development. And the future of Japan and India with Australia and the US as anchors for the free world in the Asian region. ...

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Trade is just one aspect of the Biden Economic plan. It covers US manufacturing and jobs, Climate Change Action and Renewable Energy, Cost of Living and Wages for workers, Interest rates and inflation, and Capital Allocation with government partnering with the private sector in key industries such as electric cars, solar panels. It has the overwhelming support of most Americans- seven out of 10 Americans favor it polls show. What is described here in the Washington Post as a change from decades of trade policy since Reagan/Bush, Clinton/Obama, is also a response to the loss of key midwestern states by Democrats to Trump in thepresidential election of 2016, and the upheavals for democracy that Biden calls the struggle for the soul of the nation on the White House website. Biden is simply saying that the old policies were a mistake, a huge mistake, and Biden is correcting the Trump response which was loud but lacked the substance that is in the Biden plan through capital allocation in size and government actions to back this up. In this move he now has the support of both Democrats and Republicans. As Greg Ip has pointed out in the WSj no one during the Clinton administration when it engaged China with the World Trade Organization on trade imagined China would replace America as the dominant nation in manufacturing, the size and th scale also affected the climate, the environment in China, and created huge inequalities in the US and China that both nations are trying to correct, Biden in the US and Xi in China. It could even be said these policies were a failure because the size and scale simply overwhelmed everything else with growth rates in China of 12-14%, and the fallout in the near collapse of the economy in the years ahead from hypergrowth.  ...

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The campaign rhetoric for renegotiating NAFTA and building a wall at the border has had a sharply negative effect on growth in Mexico. Growth slowed in 2016 and is expected to be close to zero in 2017 with declining foreign investment in the economy. The uncertainty is leading to sharp decline in foreign direct investment of 24% in the first 9 months of 2016, according to the Bank of Mexico. Further declines can be expected in 2017. The decline in the value of the peso of 16% since May 2016 has led to 6 interest rate increases in the past year. Inflation on annual basis was at 4.72% in Jan. 2017 and is rising. As Mexico depends on exports for one third of its output growth, and 80% is sent to the U.S., there is a need to diversify with trade agreements made with the European Union and other countries. Mexicans now question the value of NAFTA trade agreement as average growth of 2.6 since NAFTA was signed is below the 4.6% in the 2 decades prior to that. And poverty level is the same with about 60% of people in the underground economy. In addition crime, drug trade, a weak education system, weak rule of law, political corruption, show that Mexico has not made the progress since NAFTA that it should have made. ...

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This Journal editorial looks at the reason why Trusts and shadow banking became systemic risks, with trust products growing 7- fold in 2007-2012. It says money tends to find its way where its needed, and without junk bonds as in the U.S. the additional capital needs were being met by Trusts. The lid on interest rates meant individuals turned to the Trusts for higher rates. And the regulators failed to control the systemic risks posed by Trusts with their low transparency and regulatory control.

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Krugman comments on the Swiss National Bank's decision to give up the peg of 1.20 to the euro made in 2011, and reduce interest rates to a negative 0.75% on Jan. 14, 2015. He points to the dangers of complacency about the deflationary trend in Europe, Japan and the U.S., and deflationary pressures in China in the first quarter of 2015.

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There are four pillars to this fight Biden and Harris are now waging. Biden tackled infrastructure by getting the Congress to pass the Inflation Reduction Act and the CHIPS and Science Act to put trillions of dollars into rebuilding aging and dilapidated American roads, bridges, airports, ports, rural internet. This also tackled Manufacturing and factory jobs in the US neglected for 3 decades, the second pillar. The third pillar for Biden was getting American wages that had fallen behind to catch up by supporting labor in wage negotiations.  Something was missing as Cost of Living for housing, childcare, remained. This is where Harris has stepped in with Jerome Powell of the Fed. Powell cutting interest rates to make housing more accessible and Harris putting in $25,000 for first time homeowners for a down payment, build 3 million new homes, $6000 for childcare for parents, and $50,000 for small businesses to start. Specific programs at specific targets in FDR type "bold, persistent experimentation" activity. Put together the four pillars mean giving strength to the US economy which Powell says is "in solid shape." ...

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Stanley Fischer, former head of the Bank of Israel, is the likely candidate for vice chairman of the U.S. Federal Reserve in 2014. Fischer is author of a 1977 paper in which he supported an activist central bank monetary policy to tackle economic downturns. As deputy director of the IMF he helped build the "Washington Consensus," which supported flexible exchange rates, free capital flows and balanced budgets. The IMF austerity policies came under much criticism in S. Korea, other Asian countries, Russia, and Latin America during this period, especially high interest rates and sharp spending cuts during downturns. He is a former MIT professor and a dual citizen of Israel and the U.S., born in Zambia (Northern Rhodesia).

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From north east Indiana and Indiana University SVB CEO Becker works his way up to a bank in Detroit with offices in California, and joins SVB in his twenties. He opened SVB's office in Boulder in 1996 and became president in 2008. Two things made SVB different. It seemed like the 2008 crisis had never happened. The management at the company Becker, Beck, and another executive Descheneaux hired from Bancwest, acted more like tech entrepreneurs and much less like bankers. They seemed to have mastered the way of optimistic talk to tech entrepreneurs, the language the culture, and did not share the same grasp of the economic environment of others who had weathered the 2008 crisis. For most of 2021 the company did not have a risk officer, according to the WSJ. And did not see the aspects of duration risk in having assets invested in long term Treasury's when interest rates were increased by the Fed rapidly to fight inflation decreasing the value of bonds. Startups and SVB management in their optimism both ignored the risk of not having the backing of FDIC insurance as insurance is limited to $250,000 in deposits, and most of the SVB's deposits were much larger. The US government wary of criticism of a bailout insists the FDIC backing provided to prevent systemic risk will not cost the taxpayers as it will come from a special assessment on banks. Nothing better explains the collapse than a look at the graphs of SVB's deposits in this WSJ report, in 2019 deposits and financial assets increase at about 50%, at about 100% doubling in 2020. Stock performance mirrored this.  By 2020 the supply chain disruptions were real and inflation was taking off, the Fed under Jay Powell was taking up the fight against inflation with sharp rise in interest rates. SVB did not grasp the seriousness of the situation. Venture capital gleaned the risks as they mounted and a bank run with withdrawals of as much of $42 billion led to the collapse.   ...

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Egypt accepts a $8 billion IMF loan. It also free floats its currency and the Egyptian pound goes from 30 to the US dollar to 49 to the dollar. Houthi attacks from Yemen on Red Sea shipping affects Egypt as fewer ships transit through the Suez Canal and lower transit fees and revenues that affect the economy, in addition to the economic conditions of the whole region including Israel deteriorating from the Gaza war. There is also pressure on Egypt with the possibility of Gaza refugees crossing the border. Wealthy Gulf neighbors that supported Egypt's finances were reluctant to continue support leading to the IMF loan. UAE ADQ fund asked for currency to float freely if it was to invest $35 billion in northern Egypt. Inflation is at 30% and this WSJ report says even before this weeks fall of the pound the currency had already lost half its value. Interest rates increased to 27% from 21%.  This has increased poverty in Egypt and inflation is reducing standards of living. ...

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Wages are now consistently up more than inflationary pressures since mid 2023 to July 2024 by about 0.6 to 1.0% in Labor Department graphs about cost of living. This is good news for the US economy. It shows the policy of president Biden investing in rebuilding infrastructure and Science/Chips, and renewable energy is delivering for the American people alongside cost of living actions by the Fed's Powell and Biden. For the first time since 2021US CPI index for inflation from the Labor Department drops below 3%. It drops to 2.9% for July 2024. The Consumer Price Index increasing by 2.9% over the same month in the prior year 2023. This shows a definite trend for the cost of living to moderate after the supply chain events that increased inflation leading to lagging efforts for wages to catch up- cost of living issues for ordinary Americans. The costs of medical care and automobiles, automobile repair, food, all moderating. Housing costs still to moderate with higher interest rates.  ...

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All sides had to make concessions to reach a new agreement on a restructuring of Greece's debt, and new terms for loans to Ireland and Portugal. The agreement was reached after negotiations between France, Germany, the ECB, and eurozone countries with a declaration issued on July 21, 2011. The powers and financing of the European Financial Stability Facility (EFSF) were expanded to be the main mechanism for channeling EU funding to reduce the burden of Greece's debt. Germany will provide new funding and be open to additional commitments, something German chancellor Angela Merkel had resisted since the beginning of the crisis in 2010. Earlier funding had come with high interest rates and only when the situation had reached a crisis, with Germany insisting on the punitive rates and conditions as a way to discourage countries from taking advantage of cheap borrowing. In exchange for commitment of German funds Ms Merkel had insisted that banks and private creditors share in the losses. Private bondholders resisted but finally agreed to take a loss of 20% of principal on a small portion of the bonds. Their larger concession was to take lower interest rates and extend the maturities to 15 years and 30 years on new bonds which are guaranteed by the EU. The specific terms of the agreement are as follows: The EFSF and the IMF will lend Greece 109 billion euros over 3 years at 3.5%. Private creditors including German and French banks will "voluntarily" turn in their old bonds for new ones that mature over 15-30 year periods. These new bonds include 15 and 30 year Greek bonds with varying coupons. Some of the bonds would have a 20% discount on principal. EU leaders say the private sector contribution amounts to 37 billion euros through 2014 and 106 billion euros through 2019. Another part of the program is for the EFSF to buy back some of the Greek bonds on the secondary markets, which would mean Greece would now owe a smaller amount to the EFSF on these bonds. The EFSF will now have additional financial support from Germany and other EU countries and be authorized to provide aid to countries before a crisis situation arises. It would also have power to buy Greek bonds at prices on secondary markets to reduce the Greek debt burden. Ireland and Portugal are also assisted in the agreement. The interest rate for EU aid to Ireland and Portugal is taken down to 3.5%. Ireland is paying about 6% on the EU portion of its 67.5 billon euros bailout and efforts to reduce the rate were resisted earlier. The main theme behind these concessions and provisions is to give Greece, (and Ireland and Portugal) a chance to grow. High interest rates came under strong criticism because it only increased the size of the debt burden of these countries with a shrinking economy and high unemployment. The failure to come together behind a broad and sensible agreement with all parties making serious concessions, the EU, the ECB and the political leadership in these countries especially Greece, was undermining confidence in the euro and the eurozone itself. By mid-July Italy and Spain were feeling the effects of contagion in the financial markets, U.S. debt ceiling negotiations were unsettling global financial markets, the pressure was intense to come up with the workable agreement achieved on July 21, 2011. ...

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More reasons on the Russian side to make a negotiated settlement is the loss in value of the ruble by 25%, and the central bank raisng interest rates to over 20%. War weariness on both sides in Ukraine and Russia, Zelensky's popularity down to 16% and nothing to gain in prolonging this war for the US, NATO or Russia. 

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Turkey's currency Lira dropped to 7.2 to the dollar on August 13, 2018, taking the drop in the currency in 2018 to about 70%. About 90% of Turkey's debt with foreign lenders is denominated in foreign currencies. Turkey is highly dependent on money from overseas to finance growth and credit. 

The risks increase with higher interest rates in the U.S. and the falling value in the Lira which makes it harder to pay off debt. Turkey faces loss of confidence from foreign investors as its relations with the U.S. deteriorate in a tariff war with the U.S. increasing the focus on factors long ignored by American and European investors such as its high dependence on dollar denominated loans.

Analysts say the problems in Turley are unlikely to be systemic for all emerging markets because Turkey's problems are unique with questions about the management of the economy and the authoritarian rule of president Erdogan.  

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With inflation running at 6.7% in Russia, the central bank has decided not to increase interest rates following the U.S. Fed's bond purchase tapering decision in Jan 2014. The ruble declined by 6% in Jan 2014 and 15% for the last year. With the economy slowing the central bank finds it difficult to raise interest rates, and with inflation the bank has less flexibility to lower rates and increase credit availability. The ruble's lower value is a result of a shrinking current account surplus, with the added effect of capital flight from markets seen as riskier by investors. Currency collapse is a sensitive issue for many Russians after the 1997 crisis and collapse of the ruble. Central bank chief Ms. Nabiullina was on television explaining the decline to ordinary Russians, saying- " It's not that the ruble is weakening but the dollar and the euro are rising in price." Economists say the ruble's weakening won't add as much to inflation as slowing demand will make it harder for retail chains to raise prices....

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The Swiss Franc was trading at 1.09 francs to the euro as investors looked to the Swiss currency as a safe haven in August 2011. The Swiss National Bank cut interest rates to nearly zero and injected more liquidity to reduce the appreciation of the franc. The appreciation of the franc- which appreciated 20% against the euro and 33% against the U.S. dollar in 2011- is a threat to Swiss exporters.

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Are bubble type incentives inflating the size of the U.S. auto market in 2012-2013 as happened in the past decade. This could hurt future sales. Japanese automakers have sharply increased incentives to make a come back after the tsunami and earhtquake restricted supplies. U.S. automakers are reluctant to go further down the incentives route that hurt them in the past decade. The result is higher inventories for Detroit automakers, another undesirable result. General Motors had 5 months of Malibu supply at dealers in Nov. 2012 at the current sales rate, Ford 4 months of Fiesta subcompact inventory and 73 days of total inventory overall, Chrysler 6 months of 2013 Dodge Dart inventory. GM has 3 months of Chevy Cruze inventory, and 138 days of Chevy Silverado pickup truck inventory. GM decided to idle one of two plants making the Cruze. In contrast Toyota has 2 months inventory for the Camry and Corolla. The largest incentives in the U.S. market are from Nissan, a 55% jump to average $4,273 in Nov. 2012 from $2,764 in Jan 2012. Honda increased incentives to average $2,428 from $1,978 in Feb. 2012, a 23% increase. Toyota up to average $2,075 in Nov 2012 from $1717 in Jan. 2012, a 21% increase, according to TrueCar.com, with zero percent interest rates not counted in these numbers. Ford offers $2895 off its 2013 Focus sedan, which has 2 months inventory. General Motors offers between $2900 and $3500 in average incentives , according to TrueCar.com....

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Compared to the Trump Putin meeting in Helsinki when Trump went in casually into the meeting and Putin was late by half an hour, this meeting had a lot of preparation. Jill Biden when asked about it said "Oh my gosh he was overprepared." The meeting with Putin also came after Biden met with the G-7 in Cornwall, UK. He was briefed by EU officials, and had preparation with Blinken and Sullivan  before going into the meeting with Putin.  One result is that the meeting lays the ground for further discussions on many issues. By talking openly and plainly about US expectations from Russia- laying out expectations on cybersecurity and hacking, on arms control, on EU and other issues, the US made it possible to get tangible results. Both sides have an incentive to work for the interests of their countries including preventing another cold war, ensuring cyber security through mutual respect and US response capabilities, and arms control. One of the economic issues related to Nordstream 2 which was settled before the meeting with US respecting the wishes of Germany to go ahead with the project bringing Russian oil and gas through the seas to Germany. ...

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As Kamala Harris offers $25,000 to home buyers to make it more affordable and sets up a $40 million Innovation fund to build more homes, sets a target of 3 million homes to be built, housing and cost of renting or owning is front and center of attention in 2024. Dougherty and Davis of NYT look at the US housing shortage and rising rents for apartments and homes. A look at Kalamazoo, Michigan, as a sort of microcosm of the US housing situation. Around the time of the 2009 financial crisis and aftermath when vacant homes on streets in many cities were being bulldozed and when there was more housing than people needed the seeds were being planted for today's shortage of homes. There was less interest from builders, there were restrictions on mortgages and higher down payments, capital was harder to get for builders, adding up to fewer homes being built. US demand was for 1.6 million units of housing, the supply was about 1.1 million over the next decade after 2009 leading to the buildup of a shortage of 5 million home supply. Covid changed some patters of housing behaviour. More people work from home with remote work. Then by 2022 mortgage rates were up making housing less affordable just when owners of apartments raised rents by 20-30 percent. In Kalamazoo up by 40%. ...

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The use of automation and robots is playing a large part in new capital investment for upgrading plants or setting up new plants by companies in the U.S. This is affecting the pace at which jobs are added in 2011-2013. The lower cost of capital with low interest rates and incentives for 2011 that enabled companies to write off 100% of investments in the first year have accelerated the investment in machines and software.

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Fiat-Chrysler's plan to become a Netherlands based holding company with easier board requirements, UK domicile for lower tax rates , and a New York listing for access to deep capital markets. With the change comes financial reporting to U.S. generally accepted accounting principles which does not allow capitalizing research and development. Lahart cites ISI Group analysts that show 2013 R&D capitalization boosted earnings before interest and taxes at Chrysler by 60%.

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The U.S. Federal Reserve begins to scale back its quantitiative easing stimulus for the economy in December 2013. Ben Bernanke announced the Fed will cut back on purchases of Treasury and mortgage backed securities from $85 billion to $75 billion in January 2014, and gradually taper the purchases down to zero by the end of 2014. The Fed will also strengthen its plan to hold short term interest rates near zero to provide additional support because of weakness in the economy. This sets out a plan for the next two years with the first increases for short term interest rates not till near the end of 2015. This removes uncertainty in the economy and the stock market responded with a 1.7% increase after the announcement by the Fed fllowing a 2 day meeting. The Fed's announcement coincided with the Senate passing the Ryan-Murray compromise bill that provides an agreement between Republicans and Democrats on the budget, removing risks of a debt limit standoff in 2014.

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For the first time in three decades US economic growth will be much faster than China's. Second quarter 2021 growth in the US was 12.2% compared to 7.9% in China, and will continue to be much higher for five consecutive quarters. This report in the WSJ says it is the result of the US response to the Covid pandemic. The US vaccination drive, massive fiscal stimulus and near zero interest rates have helped, including the confidence generated by the $1 trillion infrastructure investments planned for this decade. Over the longer term Capital Economic estimates China's GDP around 2030 will drop to 2% growth with demographic decline, just as the demographic factors favor Indian growth to levels that China has seen in the last two decades. This was the plan and vision set out by the Indian prime minister for 2047, on the 100th anniversary of independence. For the future government help has helped US households accumulate $2.6 trillion in excess household savings, which Moody's estimates is 7 times that in China.  In the longer term gaps will have narrowed between Asia and Europe, the US, which is a good thing. More will need to be done in Africa and Latin America. Much of the talk about who leads ignores the local needs in cities and towns across all parts of the world for a better quality of life, better education, better nutrition, better healthcare, meeting aspirations of young people, and supporting hope for a better future. ...

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Personal and institutional investing expert Jeremy Grantham has followed the market for several decades. Here he warns of an epic bubble particularly in technology related companies similar to 2000. The two stock market disasters in 2000 and 2009 hurt small investors. With the interest rates pushed down to near zero by central bankers, investors in the U.S. were faced with difficult choices of seeing no return on savings for a decade or investing more in the stock market. Collapsing stock markets lead to a loss of upward mobility in society as many families lose a portion of their savings. The significance of Mr. Grantham's call for caution is based on simple common sense when he says that electric car maker Tesla's stock price would mean over 1 million dollars for each car sold by Tesla, compared to $9000 for each car sold by General Motors. Traditional car makers and other manufacturers are being deliberately under priced on markets with the reverse for some tech companies. Major investment firms such as Morgan Stanley, large investment banks,  Grantham says are part of this system of overpricing, and are not going to say proceed with caution. ...

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The Bush tax plan simplifies the tax code and cuts the highest rate from the current 39.6% to 28%. It reduces the corporate tax rate to 20% and favors business investment. The tax on income earned by companies overseas is gradually phased out in the plan. It is designed to jumpstart growth. Jeb Bush balances his plan by creating some element of fairness by doubling the standard deduction, expanding earned income credit, limiting itemized deductions to 2%, and ending loopholes for hedge funds such as "carried interest." Jeb Bush has lamented the loss of income and economic mobility for the working class and lower middle class in the U.S., more than most of the Republican candidates, and this tax plan takes this into account, by betting that working class and lower income people benefit most from higher growth, better job mobility, and wage growth, as well as an element of fairness in taxes.

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Judge Richard Leon of the District of Columbia agrees with Senators Wyden, Udall and Heinrich that the NSA's bulk collection of phone data program in the U.S. violates the Fourth Amendment of the U.S. Constitution. This is the first successfu legal challenge to the program. It was put forward by Larry Klayman, a conservative public-interest lawyer. The American Civil Liberties Union has filed a similiar lawsuit in the Southern District of New York. In his ruling Judge Leon, appointed by president Bush in 2002, said: "I cannot imagine a more indiscriminate and arbitrary invasion than this systematic and high tech collection and retention of personal data on virtually every single citizen for purposes of querying and analyzing it without prior judicial approval. Surely such a program infringes on that degree of privacy that the founders enshrined in the Fourth Amendment." Judge Leon stayed his injunction for 6 months so that the government can appeal his ruling because of the national security interests involved. The U.S. government's case was made with the argument that there are no fourth Amendment protections for collection of metadata information such as numbers called and received, date and time and duration as reflected in the 1979 case, Smith v. Maryland. Judge Leon rejected this saying that in the 34 years since that case the whole relationship of people with the phone has changed and the record collection with today's technology reveals a constantly updating picture of a person's life....