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The New York Times editorial page on the day following the passage of the second bailout or rescue plan of $700 billion in the Senate after it was voted down in the House of Representatives. It points out that the bailout bill does little to prevent a wave of foreclosures which the NYT estimates at six million people expected to default in the rest of this year and 2009. It faults lenders unwillingness to reduce the loan balances amount. At a Congressional hearing for the Hope for Homeowners program in which the governmet wold insure upto $300 bilonin new affordable loans for troubled borrowers if the lenders voluntarily refinance delinquent mortgages by reducing loan balances to 90% of the homes' current market value, lending banks were lukewarm about taking these losses in exchange for bigger losses in foreclosures. These lenders include Wels Fargo, Chase, Bank of America and Citigroup. The FDIC's Sheila Barr has also advocated reducing loan balances in her proposal for tackling the housing crisis presented after the Bear Stearns crisis. She is taking this approach to banks that like IndyMac were taken over by FDIC. But the numbers are not large letters were sent to 28,000 delinquent borrowers of IndyMac recently to reduce loan balances. This is a serious problem and either Congress and Treasury are leaving this problem to the next administration taking office 3 months from now as there is no real consensus on this issue even today or they are missing the impact this has in dropping home price values even further in neigborhoods across the nation as foreclosures drive prices down even further compounding the problem. For the financial institutions it would appear that they are letting this drag out because their capital is at frighteningly low levels and taking losses at one time is harder than taking the foreclosure losses dragged out over 1-3 years and they are also looking for a way in which they can let the government bear the burden of losses as the crisis intensifies which can make sense from the point of view of each institution. According to a report in the Wall Street Journal on September 29, 2008, Sheila Barr told Congress this month that in recent years troubled loan portfolios have yielded about 32% of book value, compared with more than 87% for loans in which the borrower is current. These are strong statistics in favor of lenders taking an informed decision to lower loan balances voluntarily with some government help along the way but the fact that this is not happening leads one to think that something is falling between the cracks, initial lender reluctance to take losses through voluntary balance reduction at the time of Bear Stearns crisis given taxpayer reluctance and lack of government initiative to help lenders in doing this, sort of what Martin Feldstein suggested in a series of articles during the time before and after the Bear Steans crisis. And then as the credit crisis worsened with collapse of Lehman, WaMu, Freddie, Fannie and Wachovia in September 2008 fear gripping the markets and LIBOR interbank lending rate at close to 8%, banks gripped by the fear prevailing in the market, frozen practically about any steps other than preserving their hammered capital, and reluctant to take losses which would further impair their capital. Also in the WSJ Sept 8, on help for homeowners, Deutsche Bank estimates 40% of homeowners or about 20 million households will owe more than their home is worth by the time the housing market stabilizes. This will lead to some homeowners making the rational decision as Martin Feldstein argued to walk away from their homes, leading to more foreclosure losses for th banks. This article Rescue Includes Steps to Help Borrowers Keep Homes by Ruth Simon also has some information that confirms the NYT editorial. An analysis it says of 144 mortgage modifications by the Massachusetts Attorney General's office found that none reduced mortgage balances and onoly a handful reduced monthly payments. Even with interest rate reductions, the study showed borrrowers wound up paying more because of missed paymmets penalties and fees. Another study by Credit Suisse mentioned in the same article points out that the percentage of borrowers who were behind 6 months after loan modifications dropped to 17% when lenders reduced the loan balances and 13% when mortgage companies froze the interest rate of adjustable rate mortgages. A bigger problem is the effect on consumption, if 40% of homeowners end up owing more to the bank than their home is worth as Deutsche Bank estimates, combined with higher unemployment and higher parttime employment, by the time things stabilize. And this is the big looming problem for a new administration in January even if the bailout plan passes Congress this week after revisions and eases the crisis in the credit markets. ...

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Wallsten describes the tense and now frayed relationship between Obama and immigration groups and the way this has evolved from idealism to frustration to mere coexistence amid loss of faith. Obama's frustration expressed in words such as "I am not a king." And the immigration groups voicing their concerns about Obama's loss of credibility, as minorities especially Hispanics have fared poorly during his adminsitration, hit by rising deportations, foreclosures and the impact of high unemployment in construction and other sectors.

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Southwest airlines grounded part of its Boeing 737 fleet to conduct safety inspections.

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Ajami points out the risks of the deal secularists and liberals in Egypt have made in calling on the military to upset the elected government of prime minister Morsi. The liberals and the Muslim Brotherhood were both equally opposed to the military and police intervention in politics in the period following Mubarak's ouster. The six decade rule of the military in Egypt has little to show for it in the modernization of Egypt and improving economic conditions. Egypt has seen this script before, says Ajami of the Hoover Institution- in 1952 the military stepped in after corruption in the political parties and political violence. The results were dismal extending throughout the period of modernization in Asia and Latin America. It has left Egypt frightfully behind in most dimensions of education, healthcare, and technological progess. The lack of training in parliamentary and democratic governance, and in the institutions of democracy are painfully evident- the poor roadmap for democracy laid out by the military, followed by the election, the decrees and authoritarian style critics describe of prime minister Morsi in failing to incorporate liberal opinion in policy, and the flawed secularist calls for the military to overturn the elected government with only one year in office. These institutions will take a long time to build and require patience, flexibility and the gift of wisdom on all sides....

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The Labor Department reports that there is no U.S. productivity growth in the 4th quarter of 2014 over the prior year. U.S. productivity growth is about 1.3% for the period since 2009, showing a weak expansion. Job gains of 295,000 in February 2015 show an improving jobs picture, yet wage gains are tepid. This is partly due to slack in the labor market not reflected in the official unemployment rate of 5.5% for Feb. 2015, with a large number of part time workers who do not have full time work. The low productivity growth is another reason for low wage gains in this economic recovery. Economic growth is also weak with economists estimating GDP growth for the 1st quarter 2015 at 1.5% annualized. GDP growth is in the 2-2.5% growth range since 2009. Hourly wages are up less than 2% since 2009, with hourly wage growth in Feb. 2015 at 2% over the prior year. Weak business investment is part of the reason for the sluggish economic growth. Macroeconomic Advisors estimates the capital investment for equipment software and buildings is seeing growth of only 0.3% in the last decade, much lower than in the last forty years. With most of the gains from the internet technology advances already made there is less prospect of a sudden increase in productivity....

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E-book sales reached 20% of total U.S. book sales in 2011- a total of $970 million. Book sales in paper copies were a bit lower than $5 billion in 2011, close to where they were in 2011, showing that book sales have not fallen as e-book sales have increased. This is based on figures from the monthly industry reports of the Association of American Publishers. The Justice Department's antitrust lawsuit against Apple and five publishers for price collusion is having a serious impact on Barnes & Noble, as Barnes & Noble's made a profit of about 30% or $3.90 under the pricing model Apple helped establish, where the e book title sold for $12.99. In a lower pricing arrangement Amazon establishes Barnes & Noble's profits would decline substantially or even lead to a loss. Barnes & Noble's stock lost 17% in April, 2012.

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Italy's new prime minister Mario Monti, was frank in his views about depending on austerity alone to meet the debt crisis, views also shared by President Sarkozy of France. Monti told an interviewer from the German newspaper Die Welt, before meeting German chancellor Merkel in Berlin: In the absence of specific help "a protest against Europe will develop in Italy, also against Germany, which is viewed as the ringleader of E.U. intolerance, and against the European Central Bank." He went on to say-"I cannot have success with my policies if the E.U.'s policies don't change." He pointed out that economic difficulties could drive Italy to "flee into the arms of populists."

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Zalmay Khalizad, a former diplomat to Iraq, reports from Iraq after discussions with prominent Iraqis, describes the state of U.S. relations with Iraq under the Abadi government. He says the Ayatollah Sistani in Iraq prime minister Abadi, and Iraqi public opinion, now favor improved relations with the U.S. following the sectarianism promoted by prime minister Maliki and Iran's expanded role in Iraq. Other reports show Iraqi opinion in transition as the U.S. withdrawal promoted by Maliki has led to 2 million refugees, and huge dislocation of people with the expansion of Islamic State from Syria into Iraq. The change in opinion is also towards promoting better relations with Sunni countries. People in the region do not see a bright future with an increase in religious tensions that only lead to more destructive behaviours and increase in refugees. Towards the end of the Bush administration there was some hope that Iraq would see a bright future, only to see this reversed under Maliki's sectarian policies. U.S. public opinion has shifted away from any involvement following the failure of the people in the region to resolve differences and live peacefully. The cost of the wars with little gained as a result of the failure of the people in the region to work together in the common interest is a part of the public debate in the U.S. presidential election of 2016. Sectarianism in the region is the root cause of the growth of the Islamic State and the expansion of the war in Syria, and this has not only worsened the situation for the people in the region, delayed economic development given large oil resources, and left the region worse off than before. It has also led to the refugee flow into Europe worsening the situation in the European Union, adding to tensions in European societies such as France, Germany, Denmark and Sweden, following terrorist attacks and political parties promoting fear of immigrants. What started as a U.S. response to terrorism originating in this region in New York, followed by the war in Iraq, has led to more convulsions in this region, a huge number of refugees, whole country populations displaced, and requires a fresh rethinking about what people in the region can do to live and work together and promote the peaceful participation of people in their own development and growth, before Western societies consider further involvement. The statement about lost to Iran in the title also suggests framing of statements in the old way that are the root of the problem. When the dust settles years from now Iranians, Iraqis, Saudis, Yemeni, Turkish, Pakistani, Indian and other Muslim societies may want to look back at this period as reflecting the dangers of getting caught up in the geopolitics of world powers, letting religious sentiment override calmer thinking, and reflect on the brighter aspects of the common Islamic heritage in Iran, Turkey, India, expressed humanly as it is always is in different ways and forms. They can also take hope and confidence in the fact that European societies have struck the same rocks and emerged calmer, wiser, and better than before....