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Prof. Gorton and Prof. Metrick of the Yale School of Management review 16 scholarly studies and papers on the causes of the 2008-2009 global financial crisis in the current isue of the Journal of Economic Literature. Another article in the same journal reviews 21 books on the subject. Samuelson says the most cited causes- lax regulation and passive regulators, and the policy of home ownership that encourage the packaging and of securitization of mortgages to government sponsored agencies Fannie Mae and Freddie Mac- are only the surface causes. If we are to explain how a whole society seemed to believe in the idea that somehow there was a way to maintain a rising tide continuously, with only small corrections over several decades, by the clever manipulation of monetary and fiscal policies; then one has to look to the hubris of economists who acted as if this was possible and the gullibility of business and a public that desperately wanted to believe as some have put it "that this time it was different," or that shrewd management of economic policy could actually bring about such a panacea. The abiding lesson is economic policies based on a better understanding of how modern industrial economies work are merely useful tools, no more no less, and there is no substitute for a good ethic, wise management and careful thinking on the part of the public, business and government, particularly for the people in leadership positions. ...

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Jane Perlez of the NYT describes the efforts of China to draw the new South Korean president Moon Jae-in away from close defense ties with the U.S. Moon Jae-In won the South Korean election in 2017 and favors better relations with China and North Korea. China's goal is to reduce deployment of the Thaad missile defense system the U.S. has installed in South Korea, which is seen as reducing China's nuclear deterrance because the system also protects against missiles launched from China. Economic ties are also affected in the dispute as China has promoted a boycott of South Korean cars, televisions and other products, and fewer Chinese now visit South Korea. 

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Krauthammer says it has become a cliche for people to say "politics is broken" in the U.S. John Beers, head of the Standard & Poors sovereign ratings committtee, also cited a broken political system in his rationale for the U.S. credit downgrade to AA+. This happened even as S&P repeatedly emphasized the triple A rating for France during this weeks (early August 2011) tumult in the markets over French credit risks. But in reality when you look closely and have a sense about the serious changes being discussed, says Krauthammer, something exceptional has happened, and the system is working. For the U.S. Congress and the government to come to grips with an ever expanding debt -with 39 cents of every dollar spent being borrowed as Alan Simpson of the Simpson-Bowles Commission never tires of pointing out- when both branches of government have ignored or shunted off the question with a "deficits are ok" attitude for decades- is a significant achievement. When one looks closely contrary to what S&P's and other opinion says there is actually a political process that is working in the U.S. compared to the process in Europe. In difficult situations when strong opinions are bare knuckling it with each other this process can be boisterous, but it only suggests an effort to wrap ones hands around the problems in a serious way. This is actually one of the strengths of the U.S. system with its checks and balances and its spirited dialogue. In business management Intel's Andy Grove called it "constructive confrontation," and he described this as positive and essential for business institutions to survive and grow....

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Carlin and Lewis call for a reconsideration of US policy towards North Korea. They have visited North Korea several times, and say that Americans are as isolated from the North Koreans as the North Koreans are from the rest of the world. America once saw China and Vietnam as countries with which America found it impossible to engage, today it is N. Korea, say Carlin and Lewis. They also point out that with China's support on a long term basis, US hopes that North Korea will simply collapse is a weak reed to base US policy on.

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The new bipartisan sanctions on Russia agreement in the U.S. Congress has the support of key senators, McConnell and Corker on the Republican side, Schumer and Cardin on the Democratic side. The agreement would impose new sanctions on Russia and provide for a mandated congressional review. This follows Russian meddling in the U.S. 2016 election and cyberattacks. This measure is being considered as a sanctions bill on Iran is being passed.

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Typical of so much of what is written about the World Health Organization and its role in the pandemic, this podcast in the WSJ fails to quickly convey the critical function of the WHO as an early warning system the world has depended on, including China. The H1N1 epidemic originated in Mexico. Asian countries including China and India depended on very quick response from the country where the epidemic originated  in allowing entry into the affected area for experts from advanced countries such as the U.S. The global response was then coordinated across countries quickly with complete transparency. The head of China's CDC himself faced a problem with transparency with the provincial authorites in Wuhan. 1.    Fundamentally this quick entry was denied the U.S. Request by U.S. to China was made on Jan. 6 for U.S. team to go to Wuhan, quick permission was denied and given only about 6 weeks later on Feb 16. This delay is the crux of the problem for the U.S.. Taiwan confirmed human to human transmission on Jan. 1, the WHO was saying this was not clear as late as Jan. 14. These costly delays are what the U.S.  letter is about.  The head of the CDC China Gao Fu called Dr. Redfield head of CDC in the U.S. on the next day after he suspected Wuhan provincial authorites were vague about what was happening. Gao Fu was alarmed when scanning the internet on December 30, 2019, about rumors of a vaguely worded lung disease in internal memos of Wuhan. He called Wuhan authorites and was not getting clear answers on that day, then deciding on December 31 to send his own team to Wuhan, as reported in German magazine Der Spiegel- Hackenbroch, Zand, 05/20/2020.  Der Spiegel says in its special report on the early period in Wuhan that Gao Fu was so alarmed about what was happening enough to be in tears in his series of calls with Dr. Redfield in the immediate days that followed. The date was shortly after the GAO Fu sent the team to Wuhan, December 31 and New Years Day 2020, as reported in Der Spiegel. See the link to Lyrarc gist of Der Spiegel's "A Failed Deception: The Early Days of the Coronavirus in Wuhan."  2.  President Trump points out the standards of the WHO- in the concluding point of his letter to WHO- when a three time prime minister of Norway, Gro Brundtland was head of the WHO during the SARS crisis of 2003. She acted quickly and decisively and no time was lost. It is this failure of the early warning system under the new president of the WHO after 2017 Dr. Tedros that alarms the U.S.  with about 100,000 deaths.  3.  This failure it can now be said was partly a result of a election in 2017 for the position of WHO president which was flawed. This was the first time a WHO head, an important position was put up for an election. The Executive Board was responsible for this appointment since the founding of the WHO as part of the UN, based in Geneva, Switzerland, after World War II. This system worked. The election was clearly a bad process for appointing the president of the WHO which should be done entirely on the capabilities of the person holding this position not on a flawed voting process. It is flawed because India and Bangladesh hit by a cyclone during the coronavirus have suffered greatly, as have other countries, but had only 2 votes for 1.5 billion people, when Barbados (385,000 population) and Laos (7 million) which had less than one  hundredth the population had the same number of votes. The U.S. had one vote. The election resulted in lobbying and a process in which many candidates stayed away because they simply would not go through such a process. The position was too important to the world- most of the advanced countries had forgotten about the danger of epidemics to let this happen by 2017, as shown in the way the austerity years led to cancellation of the preparations for pandemic in France and Britain. The austerity years and neglect of public health during these tech boom years in the western world made it possible for this to happen. 3.   Along with the 1 month ultimatum action is already being taken to restore the effectiveness of the importance of the Executive Board. The head of the health ministry in India, Dr. Harsh Vardhan, has been appointed the new chairman of the Executive Board on May 22. This restores the voice of billions of people in Asia in the process, and brings the major countries with the greatest risk in a pandemic into the decision process for tackling the pandemic, this includes the rest of the world.     ...

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Supply chains are unraveling in many industries with the tariffs imposed by president Trump on imports from China, and renegotiated trade deals with South Korea and other countries. The growth in the value of foreign value added was possible with cuts in tariffs in the period after 1990 and the emergence of China as a low cost manufacturer with cheap labor. Foreign value added increased from 20% in 1990 to 30% in 2011. The impact on factory towns and communities in the U.S. of trade in which the U.S. manufacturing declined as it shifted to China resulted in the surge in support for president Trump. The tariffs war with China is an effort to correct this imbalance. The result is a shift in supply chains away from China in some industries and gradual shift in others. Rising wages in China had already resulted in early shifts and the the environmental costs adding to this trend. President Trump temporarily suspended a threatened imposition of duties of 25% on $325 billion of Chinese imports. A renegotiated Nafta agreement with Mexico for automobile production and determination of U.S. based content and wages was designed to reset the relationship with Mexico and the auto supply chain for production in Mexico. A threat of tariffs on European auto imports to the U.S. is set for a decision in November. The trade dispute between Japan and South Korea and threat of tariffs also shows the effect this is having in other countries. With the U.S. looking at its own interest in the global supply chain and its advantage or disadvantage, industries and companies are not free to make decisions based on which country offers the best arrangement and deal for manufacturing. Notions of competitive advantage in the tech race with China are affecting the way the U.S. and European nations are acting. ...

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Hubbard and Erdbrink report on U.S. president Trump's visit to Saudi Arabia to begin a new chapter in relations with the Gulf nations and the Saudis. Under president Obama the U.S. distanced itself from the Saudis and the Gulf nations, preferring to pursue a policy of closer relations with Iran and signing the Iran nuclear deal. This included a policy of staying out of Syria to the point of turning down a decision to deploy U.S. airpower to maintain no-fly zones to protect refugees. Syrian government forces fighting rebels were supported by Iran. The new policy is dictated by the new conditions in the Middle East. The U.S. has sought since the presidency of Reagan to balance the power relations in the region. With the nuclear deal signed and Iran respecting the deal according to independent reports, the U.S. allied with Iran in the battle against Islamic State in Iraq,  a shift was needed to balance the support provided to Iran by Russia which worsened the refugee crisis in Syria. The Republican party and Mr. Trump were critical of the Obama Iran policy during the nuclear deal negotiations. The safety of Israel is also a factor as non-state actors were supported by Iran threatening Israeli security. For these reasons the shift is an effort to rebalance the relations in the region. The arms deal in its size and president Trump's statement that Iran had "fueled the fires of sectarian conflict and terror," can be seen as this rebalancing. A business aspect of the large arms deal is that it will promote job growth in the defense industry in the U.S.. Other countries including Germany have seen growth in their defense industry. This is not the best way forward for the Middle East, yet it is a way the U.S. and nations in the region are adjusting to realities- the collapse of the Arab Spring from within and without the help from outside, the sectarian conflict arising from the Shiite pushback from Iran following the Baathist and Sunni control of Iraq which collapsed with the U.S.invasion, where the majority of people are Shiite yet with a strong Sunni presence. Elections brought Shiites in power, leading to a Sunni response in the form of Islami State caliphate move into Mosul, Iraq's second largest city after Baghdad. A decade of conflict and the efforts by the Bush administration ended in failure and sectarian conflict, resulting in the U.S. policy of rebalancing in favor of Iran to negotiate the nuclear deal. In this sense the arms deal does not solve anything. A similar rebalancing under Reagan by arming one side, followed by arming the other, led to involvement with ground forces under president Bush. It only leaves the region poor after years of sanctions against Iran to the point where a NYT reporter was not sure whether it was safe to fly from Tehran to Mashad with Iran Air because of the lack of spare parts for the airline. War torn, with millions of refugees in Syria and Iraq, the region remains broken in many ways, waiting for a sensible non sectarian view to prevail in the interest of the people in the region. The election of Rouhani in Iran by 57% of the vote is only a sign that young people in the region given a chance would opt for a different course in future. The rest of Asia has moved forward and shows a path that can be followed. ...

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This is an interview with Columbia University economic historian Adam Tooze about the international trade and economic issues brought about by globalization. The rapid emergence of China in manufacturing and overcapacity in steel has led to action on steel tariffs by president Trump. Tooze is typical of opinion that sees action by Trump not as limited action to level the playing field  as proposed by Trade Representative for the U.S., Robert Lighthizer, but as reckless move on trade.  Lyrarc.com shows articles from the WSJ and NYT showing how opinion got to this point in the U.S., on Robert Lighthizer's views that the U.S. was not facing a level playing field, and  on how trade has hurt communities across the U.S. a long distance away from Silicon Valley. President Trump's views reflect a different perspective that says the U.S. has to balance the favorable situation obtained by China and the European Union through moves of its own to protect U.S. interests. Political commentary that the U.S. was starting a trade war is not supported by the facts showing China's response as muted and a willingness by China to negotiate a balanced trading relationship as its trade surplus with the U.S. continues to grow. The trade surplus is so large that the Trump moves do not tell the real story. They are likely to be overshadowed by the increasing value of the U.S. dollar leading to a continued favorable situation for Chinese exports and a larger trade surplus in 2018, regardless of Mr. Trump's action.  Trump's moves are more significant in other areas- limiting China's access to advanced technologies, with the European Union also taking the same action. This is now the new field of competition for the major world economies. ...

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The European Union Commission says Ireland must recover 13 billion euros in back taxes for giving tax preferences to Apple that are against EU rules. The EU Commission says Ireland allowed Apple to pay a corporate tax rate of 1% on its European profits in 2003, and .005% in 2014. The EU Commissioner says the use of Ireland as the place where Apple pays taxes on operations in Europe has no base in reality, as most profits are earned in other countries outside Ireland. Taxable profits of Apple "did not correspond to economic reality," according to Ms. Vestager, the EU Commissioner.  In the current environment where political upheaval is unsettling the democratic process in the U.S., Britain, Spain, France and Italy, as well as in Brazil and other countries in the developing world- because of deep recessions, and efforts to cut the deficits with deep cuts in state spending including in education and healthcare, basic services- the moves by companies to reduce taxes to these absurdly low levels such as .005% when other companies in the EU are paying 12.5%, is becoming increasingly unpopular. As pointed out in this BBC News article this sounds like the way Carnegie, Rockefeller and Vanderbilt operated during the late 19th century, and were seen as operating in a manner that was above the law. Janet Yellen pointed out at a Boston Fed Conference on inequality in Oct 2014 that the bottom half of the distribution or 62 million households in the U.S. in 2013, had a net worth of about $10,000, One quarter of these households had a net worth of zero dollars. The working class and blue collar workers in the U.S. provide much of the support at Trump rallies. Younger college educated people support Sanders, because of the situation of the working and middle class in the U.S., and a similar situation exists in Europe. It is for the sake of the democratic process and delivering services in education, healthcare, and other basic areas to all, that companies small and large need to pay their fair share of taxes, regardless of size, influence, or technological advantages. Today this is is seen by most leaders who draw public support as the right way forward for the U.S., Latin America, Europe and Asian countries, including proper allocation of resources to best serve the needs of working people. For example the 13 billion euros is equal to all of Ireland's healthcare budget, and 66% of its social welfare budget.    ...

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Chancellor Merkel meets President Trump in a key summit in March 2017. The two leaders have different styles, one flamboyant the other reserved. Chancellor Merkel tells the German media "it is better to talk with each other than about each other." Trump called Merkel's refugee policy "catastrophic," Merkel has said that the Geneva convention requires countries to do this on humanitarian grounds. On trade German's Economy minister Brigitte Zypries says Germany would file a suit on any hike in import duties at the World Trade Organization, that WTO rules restrict import taxes to 2.5% on autos. Germany's BMW plant in the U.S. exports more autos than GM and Ford put together, and Merkel is likely to emphasize large German investment in the U.S.. The heads of BMW and Siemens and other industry executives are accompanying Merkel to the U.S. as trade will be a key topic.

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A cut in interest rates by a quarter percentage point from the U.S. central bank is a decision that comes from the U.S. not wanting to see too wide a gap in interest rates with the European Union. Losing demand to Europe and resulting lower inflation is an outcome prevented by the U.S. acting to protect its own economy with  acut in its rate. The ECB rate at 0.4% is about 3 percentage points below the Federal Reserve's rate in the U.S. After the cuts in rates to near zero by the central banks of U.S. and Europe following the financial crisis caused by poor lending practices of banks, the U.S. central bank began a process of bringing rates to about 3%. Lower rates near zero badly hurt savings accounts of ordinary Americans. By December 2018 the rates had reached 2.25%.  President Trump has called for lower rates. because of the advantages it gives Europe in trade balances with a weaker currency that follows from lower interest rates. Capital flows to the country with higher rates and increases the value of the currency creating trade disadvantages and lower trade balances. WIth European interest rates much lower than the U.S. it pushes down the value of the euro vs the dollar and the British pound lower from Brexit fears. This increases European exports putting the U.S.  at a disadvantage. As the WSJ points out the U.S. central bank says though Mr. Trump is looking at trade balances and U.S. advantage, and Mr. Powell at the U.S. central bank is looking at U.S. inflation, the result for policy is the same- the U.S. acting to cut rates and stay close to what the European Union is doing. Bond yields in Europe have dropped from a negative 0.24% to negative 0.32% with the ECB's head Mr. Draghi moving to cut rates. The announcement of Ms. Christine Lagarde as the new head of the ECB to succeed Draghi and her views to push demand up, is pushing bond yields down. The U.S. as part of the globally linked economy has to act in line with policies in Europe. ...

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Goldfarb says everyone is focussed on the "fiscal cliff," yet there are other issues which when put together could lead to a drop of 1 percentage point in growth and add a million people to the jobless. The temporary payroll tax cut for 160 million workers was setup in Dec. 2010. The payroll tax which funds Social Security is 4.2% since then, down from 6.2%, adding about $1000 for the average family to spend. The unemployment insurance benefits which expire for millions of people will also have an impact. As will the $60 billion in spending cuts on domestic and defense spending under an agreement made in the summer of 2012.