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Russian president Putin tells Russians at an annual news conference on Dec. 17, 2014, that the West wanted to deprive Russia of its natural resources. He says steps taken by the central bank and his administration were proper, including avoiding capital controls, except that the decision to raise interest rates to 17% in mid-Dec. should have been taken earlier. He deflects criticism that the sanctions and the decline in the ruble were "payment for Crimea" (Russia's takeover of the Crimea) by saying it was "payment for our independence, our sovereignty." Putin expressed unease with the expansion of NATO to Russia's borders. He told Russians to expect that the crisis will last for 2 years and during this time the Russian economy will adapt, in particular shifting its heavy dependence on oil exports. During the 10 years of the Putin administration since 2004, Russia has not made a vigorous effort to diversify away from oil dependence. Progress was made primarily in better integrating the economy with the European Union, entry into WTO, building a sovereign reserves fund, until the crisis in Ukraine. The Putin years may be seen in the future as the transition years towards a more diversified economy, and may lead to a shift away from the kind of management of economic and foreign policy by a single leader that may have led to the disruption in relations with Germany, a critical economic partner for Russia. Chancellor Merkel said Germany would continue to support sanctions as long as Russia opposed the right of self- determination of people in Europe and European values. Germany continues even now to maintain dialogue with Russia through Social Democrat Foreign Minister Steinmeier, which is why Putin continues to refer to it as "our partners" and cites the differences with our partners, very different from the Cold War period when no such close relations with Germany existed. ...

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Hispanic immigrants make up a big part of the construction industry and a big part of industries like carpet making in Georgia. This has been hit hard and jobless rate for Hispanics is 6.9% according to the Labor Department up from 5.5% in April 2007. States with expandig Hispanic populations like Florida, California, Georgia and Nevada are hit hard by Hispanic job losses. Overall the jobless rate has gone up from 4.5% last year to 5% during th same periodand when one takes out the Hispanic component the jobless rate is down much less, which also tell us something about why the pace of the economic downturn is felt less among the whites and the rest of the population, because the construction industry got hit the worst and the Hispanics especially immigrants who dominate the construction industry are taking the brunt of it. The subprime story plays up here as well. From 1994 to 2006 the rate of Hispanic homeownership climbed to 50% frm 41% according to census data, at a rate more than double for the increase amon non-Hispanics. By 2006 47% of the loans issued for home purchases by Hispanics were subprime or loans with poor credit histories, double the rate for non-Hispanic whites, according to a paper by the Joint Center for Political and Economic Studies, only exceeded by African Americans. In 2006 homeownership fell among Hispanics and one in 12 mortgages made to Latino households in 2005 and 2006 is likely to fail according to Catherine Singley, a policy fellow at the National Council of La Raza, an advocacy group in Washington. Georgia has one of the heavy concentration of new Latino immgrants, with a 70% increase in the state's Hispanic population between 2000 and 2007, according to census data. From one fifth of the construction work force in 2000 Hispanics made up one third by 2006 according to the Economic Policy Institute. Among foreign born Hispanics construction was responsible for 46% of the growth in employment from 2004 to 2006 according to Rakesh Kochhar, an econist at the Pew Hispanic Center, which tells us that the new Latino immigrants dominated the construction industry in places like Atlanta and in the rest of the country and are now getting hit the worst. Not only construction but industries that parallel the growth in construction like carpet making based in Dalton, Georgia, were dominated by Latino immigrants, so that as construction fell these towns and Latinos there are hit hardest. Investment manager El-Erian of Pimco points to employment as the key the critical thing to watch for the next 6 months and its useful to see that unemployment has increased by about half a percentage point to 5% from 4.5% April 2006 to April 2007 according to Labor Department data. As most of this unemployment has probably been taken up by the new Latino immigrants to the USA its probably not changed much excluding that component, which is possibly why the economy has not felt like it is in a recession when all around the signs of recession or what causes a recession are evident around us. Another way to say this is that there are built in hidden mechanisms of the American economy in its present form such as immigration, and possibly others that act as delay mechanisms that throw the recessionary impact back by anywhere from 6-18 months depending on how they operate and can blind one about the reality of oncoming storms. This was to be seen in 2005 for the economy with consumption spending and mortgage industry excesses, and which is why Pimco decided in 2005 at its spring meeting, that the big secular story was about the economic downturn. It actually took until 2007 for this to occur because of similiar things to what we are seeing now in terms of recessionary pain, then the new structured investment vehicles and other ingenious innovations in the mortgage industry may have extended the boom and delayed the economic downturn being felt till 2007. There is a lot of grief among Hispanic people. The numbers tell the story. For the 19 million Latino immigrants in the USA...

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The French refusal to make concessions on subsidies to farming for a new trade accord comes from cultural and emotional factors. Food is important in France, and farming and quality farm product is take quite seriously. One reason is the varied climate which is very conducive to different kinds of farming, dairy, cheese, grapes and wine, olives, wheat depending on the climate. Compared to US and Britain, France is serious farming country in an emotional and cultural sense, and different regions have their own best farming product. Historically also France has protected its farmers and farm products, both during the monarchy when farmers were seen as a conservative element and late nineteenth century with high tariff walls, and after the Second War when a common program to support farming was written into the founding treaty. Useful information: France has 26,000 local farmers markets vs 500 in the UK. The regional focus for farm products has a term: terroir. Farm unions are amazingly well organized and command widespread support, upto the point that a former trade minister says "the politicians are frightened." One could say farming is part of the French culture....

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Kenneth Rogoff of Harvard University, expert on debt crises, and author of "This Time is Different," says China is one of the best examples of the idea that this time is different, with the idea created that somehow China was impervious to the massive build up of debt. The debt is now over 250% of GDP, and this was possible for so long because of the high savings rate of 30% of disposable income and the millions of young migrants moving to cities to work in manufacturing. The growth of shadow banking, opaqueness in decisionmaking, unreliable data, use of local government financing vehicles, the bubble in housing with a large portion of loans tied to the real estate market, all combine to create serious problems that will take a long time to sort out. Rogoff says the crisis in Tianjin with the deadly explosions in the port area, and the government's inability to provide answers to questions from a alarmed public, only added to the uncertainty and loss of credibility. Rogoff says he hopes the trillions of dollars in reserves will provide China with the tools adequate to tackle the debt problems before they spread to other countries....

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The effort by a community bank, Talmer Bank, to fill in for the lack of mortgage lending for certain neighborhoods in Detroit with abandoned or ransacked homes. Talmer Bank provides $25,000 loans so that these homes can be repaired and restored. Another agency helping in this work of renewal of these neighborhoods is the Detroit Land Bank Authority which auctions abandoned homes with bids starting at $1000. That agency was started in 2007 and is now making fresh efforts under Mayor Mike Duggan. This agency had in 2015 about 22,351 residential structures and 54,660 vacant lots in its inventory, one fifth of the land in the city. Between 1900-1950 Detroit's population grew to 1.85 million. Then by 2010 as the auto industry hit a downturn and residents departed from a declining city the population declined to 700,000. Other approaches taken by DLBA are to fix up abandoned homes and sell these properties sometimes at a loss, and to demolish homes that cannot be restored to raise property values in the neighborhood. Even here with scarce resources the DLBA has to pick and choose which neighborhoods have the best chance of recovery to invest resources....

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Concerns that the austerity cuts announced by Spanish prime minister Zapatero may not address the deeper causes of the financial crisis in Europe- taking on too much debt, government spending and the imbalances in the global economy. And the concern on the other side that even these small cuts and eventual larger cuts can squeeze domestic demand in countries with severe recession, weaken the tax base, test social cohesion, and dampen the prospects for recovery. Zapatero announced a 5% pay cut for public sector employees this year and a freeze for next year, cancelling index-linked pension increases, and cancelling a baby bonus tax break of 2500 euros, cutting back regional spending budgets, and postponement of infrastructure projects, all adding up to $15 billion in savings. This is intended to reduce the budget deficit to 6% of GDP from 11.2% in 2009. With Spain's unemployment at 20%, and the construction sector stalled, pain will be felt. Spain's large informal economy tied to tourism helps in this situation. Trade union Comisiones Obreras gave a muted response about a general strike saying that "it is the last thing this country needs at a time like this," after meetings with Zapatero. ...

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Chrysler has no new models in its product lineup except for the small Fiat 500 car and some product redesigns like the new 2011 Jeep Grand Cherokee. For about 2 years Chrysler has had liitle that is new to show buyers coming into its dealership showrooms. As competitors Ford and GM recovered sales after the 2008 crisis, Chrysler's sales have been dismal. A lot is dependent on how the new Jeep Grand Cherokee is seen by car buyers. Chrysler and Mercedes had essentially redesigned the Grand Cherokee by the time of the bankruptcy filing in April 2009 and Fiat's takeover. So even though it is presented as the new Chrysler, analysts say its not something Fiat's involvement created. What Fiat added is attention to some of the technical details, and working on the marketing aspects so that its off-road and on-road capabilities are presented in the best possible way to attract buyer interest, keeping price as close to sticker as possible. The question now is whether in Chrysler's difficult situation, the American car buyer will respond to the new Cherokee with interest. Sales peaked for the Cherokee at 300,000 in 1999 and dropped to 50,000 in 2009....

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Susan Carey interviews the new CEO of United Continental Holdings Inc, Jeff Smisek. Mr Smisek is a lawyer for the law firm Vinson & Elkins LLP. He brings to this job, which involves negotiating labor contracts and bringing together reservation systems of the two merged airlines, prior experience in the 1995 turnaround of Continental. Smisek was part of the management team that helped turn the airline around. The important things for Smisek is getting the people in the merged airline embrace a positive culture, and this he says begins with honest communications. He is heavily focussed on this part, as he says this is a service business, and employees won't give the best service unless they really want to. Next he is focussed on execution of the integration aspects. And third, what he calls the day to day tackling and blocking of operating the airline. His management style is to get a lot done by walking around and using an informal style, by being direct. He would like to see the airline make money in the tough times and do even better in good times, and invest in people, product and technology....

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The efforts in Alsace on the border between Germay and France to make the European experiment work with two systems, cultural experiences and lifestyles. This happens at a time of high unemployment in French Alsace and many job openings in German Alsace for German speaking people of Alsace. The debate in France is underway on what things need to change for the French system to work taking into account cultures and different national experience. A keen awareness on both sides of the border- in German Emmendingen and French Selestat- that the European experiment works best when people on both sides of the border do well. It is also a microcosm of the debate underway in the larger European society with different cultures in Northern and Southern European countries, with a focus on improving competitiveness while respecting and not denigrating cultural differences. After reunification Germany faced high unemployment and the costs of unification, and made changes in the economy, with close cooperation between business, universities and the government. It is often forgotten that Germany's low unemployment took years to achieve. A similiar process is in its early stages in France....

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Gerhard Richter, who is now 80 years old, is softspoken and reticent, and works out of studios near his home in Cologne, Germany. He calls the prices for his paintings "absurd." The son of a schoolteacher in Dresden he crossed over to West Germany a year before the Berlin Wall went up. He has a range of styles, from portraits to abstract paintings with lots of color, experimenting in different ways to put the colors. Right upto 1962 he was largely unknown except in Germany, where local collectors put together collections of his work. At the time his paintings covered subjects that reflected Germany's recent history- "Aunt Marianne" who was mentally ill and was killed by the Nazis, and "Uncle Rudi," a Nazi soldier. It was not until the 1980's that he experimented with different styles and large brushes for colorful abstract paintings that have become popular in auctions. About 40% of the paintings are in museums. In 1995 New York's MOMA paid $3 million for 15 paintings called "Oct 18, 1977." They were done in 1988 after the arrest, trial and death of young German anarchists....

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Shellye Archambeau talks about lessons she learned. She had a unique approach to mentors- find a mentor but do not ask directly whether he will mentor you, instead simply act like he is your mentor, ask questions and cultivate the relationship. This is because most people think mentoring is a committment and will take a lot of time which they consider scarce. Suggestions include: to ask someone have you any thoughts on how...? to get people's idea on doing something. She suggests being sincere and acting on it, and thanking that person, as a great way to get them to respond in the future. Getting people to believe they want to do something is importnt and getting them to believe that it can be done, is a great way to get people inspired to achieve new things. Reducing fear, while all the time being clear about what is expected, produces the best results.Taking risks, venturing out into the unknown, is part of all this because only by getting out and doing new things when you still feel you are not 100% ready, can one learn, grow and create value....

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Instructions in a 2012 law say the money from fines paid by banks for LIBOR related offenses should go to communities throughout Britain. A program in North Yorkshire teaches military veterans how to use "therapeutic baking" as a way to ease stress through cooking and by kneading dough. The same social housing charity, Riverside ECHG, says its focus is on making sure people are not sleeping in bushes or cars. A program in Harrowgate uses these funds to resurface tennis courts at a treatment center for injured police. British prime minister Cameron promised during the recent election to use 227 million pounds from fines paid against Deutsche Bank in April 2015 for financing 50,000 apprenticeships. Critics say the money should have gone to people who were harmed by the banks actions, yet in the case of LIBOR related offenses it is not clear who was harmed and by how much. The idea for the 2012 law come from Chancellor George Osborne. Osborne said about sending money back into local communities- "It is fitting that the money paid in fines by people who demonstrated the poorest values in our society is used to support those who demonstrate the very best."...

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The lack of jobs is a major problem for Tieling New City in Liaoning province in China. Liaoning provincial leaders started the plan to build a new city in 2005 to help revive the local rust-belt economy. The new city was planned for 60,000 residents in 2010 and 180,000 by 2015. Today because of few job opportunities most of the new city is empty. The business park is also empty. The original plan was to create growth in the province by creating 7 such urban centers and building highways and high-speed rail lines to connect them to Shenyang, a 90 minute drive south of Tieling. Rural residents would take up homes in the new urban areas with affordable homes, and businesses would be attracted to these smaller cities because of lower labor and land costs, but this has not happened. Credit Suisse property analyst Du Jinsong, says there are better job opportunities in higher tier cities, so that lower tier cities are seeing a net outflow of population. He found that in two thirds of 287 mostly small urban centers there were fewer residents than people registered to live there. ...

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The losses banks incur on credit card balances has historically tracked the unemployment rate. However after the the tech bubble burst the losses on credit card balances overshot and went above the unemployment rate reaching 8%. This time its likely to go far above the unemployment rate considering the number of factors such as loss of equity value in stocks and housing and high indebtedness. The unemployment rate is 8.9% based on Labor Dept figures released for April 2009. At Citibank the loss rate is already 10.1%. As the unemployment rate exceeds 10%, the loss rate will go up even higher. Another problem lies in the shaky assumptions used in the stress tests. The stress test results showed 19 banks reviewed as expecting credit card losses of $82.4 billion by the end of 2010 in an adverse economic situation. Consulting firm Oliver Wyman estimates that losses could reach $141.5 billion by 2010 is regulators loss rate was applied to their entire credit card business, includingcredit card loans packaged into bonds and held off their balance sheets. And regulators used estimates of unemployment levels that are optimistic. If things get much worse the losses could be much higher....

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The NYT editorial questions the wisdom of letting the banks like JP Morgan Chase and Goldman Sachs repay money to the government to avoid the executive compensation and other government restrictions. THe NYT says it fears that things may unwind, and the banks face more losses on commercial real estate and the effects of rising unemployment would affect economic conditions and the banks balance sheets adversely. The government bailout money was one of several supports that were provided to the banks, and this includes favorable loans fromthe Fed, debt guarantees and incentive payments for modifying mortgages. The whole exercize appears a bit phony as without those supports these repayments would not have been possible. The pay restrictions were a result of excessive compensation that incentified risk taking. The Obama administration's credit reform, says the NYT was an apparent trade-off for the administration's hands off approach to a larger proposed reform that would have allowed bankruptcy judges to help homeowners facing foreclosure. The heavy lobbying by the banks which continues and may not be in the best interests of the country as a whole, and the administration's willingness to let it affect decisionmaking and policy, is an unhealthy sign. ...

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Henry Ford, Eleanor Roosevelt and H.G. Wells slept on Simmons mattresses. Eleanor praised the virte of the Beautyrest brand. THe company is 133 years old starting in a small city in Wisconsin. The company has since 1991 been sold and resold to leveraged buyout firms and private equity firms and debt which was $164 million is now $1.3 billion. The recession has destroyed any chances of serious recovery and the debt has made the company's prospects dim and uncertain. THe employees have been devastated and risk losing more jobs. Along the way $750 million were made by the various private equity owners. Julie Creswell says that in many ways this mimicks the subprime mortgage boom. With easy money from banks, endowments and pension funds, private equity firms were using this money with little of their own to flip companies with reliable cash flows after taking on extra debt, at higher and higher prices. Question this raises is what sort of activity is best as a society for America, innovation, new products and building companies by investing in human capital, technology and research or risky investments, and Simmons type investing? See the link to Chapman....

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Kasman of J.P. Morgan Chase only sees a small upturn in activity, that as he sees it in a world where activity is so depressed that modest changes by business and households give a lift, with unemployment coming down to 9%. Hatzius of Goldman sees unemployment rising in an economy where capacity utilization is extremely low, with unemployment rising to 10.5% even with the best efforts of the government. Hatzius sees a painful defaltion as a serious risk and he points out that the Fed can do less about deflation than it can do about inflation. The one point that both agree on is exports have to give alift to the economy, and both welcome a depreciatipon of the dollar to lift the economy through exports. Hatzius makes the point that the lift to exports is still limited- not enough in exchage rate depreciation of the dollar to help the American economy. And Kasman actually says it now Asia's turn to do their share. We lifted them out of the slump after the 1997 Asian crisis, when their currencies depreciated and exports to the US lifted their economies....

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1. GEOGRAPHICAL LOCATIONS WHERE STEAM INJECTION IS BEING TRIED TO GET HEAVY OIL OUT. Chevron has a pilot project for heavy oil reserves in Wafra, in the neutral zone between Kuwait and Saudi Arabia. Saudis are considering the Manifa field which has a large heavy oil component. Occidental Petroleum is planning to spend $2 billion on a large scale steam injection project in the Mukhaizna field in Oman. Kuwait is planning a pilot project to exploit its northern heavy oil fields. Three years ago the Geological Survey estimated that the world has more than one trillion barrels of heavy oil, mostly in Canada, Venezuela, and elsewhere in the western hemisphere. The Middle East has large heavy oil reserves which have been underestimated. 2. STEAM INJECTION TECHNIQUES TO EXTRACT HEAVY OIL. Heavy oil can be sludge like or thick as molasses is tough to bring up to the surface. It also contains more contaminants like metals and sulfur than light oil, which means in addition to extraction costs for steam injection there are costs for special refineries that can process heavy oil. Without steam the recovery rates for heavy oil reserves run as low as 5% compared to 35% for conventional pumping of light oil deposits. At the Wafra field a Chevron oil recovery project with the Saudis only 3% could have been recovered of the heavy oil, with new steam techniques this figure goes up to 40%. Costs for similiar steam injection widely used by Chevron in its Bakersfield oil fields are about $14 per barrel which leaves a hefty profit margin at today's prices. The heavy oil in the Middle East is different from Bakersfield in that its locked inside carbonate formations of softer rock with fissures. If steam leaks through fissures in the rock then its harder to heat the heavy oil and would cost more in natural gas that makes the steam. At Bakersfield some reservoirs have seen recovery rates go upto as high as 80%. The Wafra project will move into its 2nd stage with 16 injection wells and 25 producing well as well as the installation of water treatment facilities and steam generation facilities. Once the molasses like heavy oil is heated it turns into watery syrup, the oil drains down with gravity and is pumped out from outlying producing wells....

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Jumbo loan mortgages in dollars accounted for 20% of first lien mortgages in 2014, the first time since 2005, and back up from 5.5% in 2009 at the height of the subprime mortgage crisis. This part of the market for homes priced over $417,000 or $ 625,500 in pricier regions, has gained its footing faster than the rest of the market. Sales of existing single family homes between $750,000 and $1 million, were up 21% in June from the prior year, compared to an increase of 12.5% for homes between $100,000 and $250,000, with homes below $100,000 declining by 3%, according to the National Association of Realtors. The jumbo originations are closely correlated with the stock market. The loan performance criteria were tightened after the 2009 crisis leading to requirements of larger down payments and higher FICO credit scores. The strong loan performance is shown in the credit score for May 2015 of 770, and down payment of about 32% for jumbo loan originations, according to CoreLogic. Interest rates are also very close between smaller Fannie conforming mortgage loans and jumbo mortgages, 4.05% compared to 4.07% on jumbo loans. The higher demand is leading to competition between JPMorgan Chase, Wells Fargo and Bank of America in this part of the market. Chase is focussing on this part of the market with the strong loan performance- only 1.9% of jumbo mortgages being late 30 days or more compared to 6.5% for Fannie Freddie conforming loans, according to Black Knight Financial Services. As part of its strategy Chase offers minimum down payments of 15% and credit scores of 680 for single family homes as primary residence, starting August 5, 2015, down from 20% and 740 earlier, for mortgages between $1.5 million and $3 million, a change already made in 2014 for jumbo mortgages upto $1.5 million. Similiar move is made by Chase for lowering down payment on vacation homes and second homes. Wells Fargo also cut the minimum down payment- to 10.1% from 15% for jumbo mortages upto $1 million. ...

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Indian cricketer Ashish Nehra has the right attitude in sports. He is 38, has decided to play cricket only in certain formats, about 8 matches a year. He is a fast pace bowler for Himachal Pradesh cricket team. Here he shares thoughts with PTI reporter that he does not follow what people say about him, about his age, and does not follow Twitter or Facebook. He says what matters is how he practices for the sport. After 12 surgeries and a injury this year Ashish says he knows what it is to be under the knife. People will say many things if he plays well and even more things if he does badly. Ashish says what matters in the end is how he prepares for the sport, like any sport it is the preparation and long hours of practice that make a difference. What he does and how he plays the selection board and the captain of the team know very well, which is why he was invited to play again for India. Ashish can bowl fast comparable to younger bowlers, and has played for India as long as other veteran players M.S. Dhoni and Harbhajan Singh. He conserves his energy by not playing 5 day Test matches. He can then give 100 percent to the 24 or more balls he may bowl in a game. He bowls at about 140 km per hour. In many ways Ashish has the right attitude for sports. Leaving aside the praise or criticism and concentrating on what is ahead. Not even thinking too far ahead. Sometimes it is just the next game, this year, which needs all the attention and can make all the difference. Playing the right way, working diligently at it, helping coach younger players, is all that really counts, in this sport, or any sport.       ...