LyrArc Article Gist
Feldstein says that the $700 billion plan to buy impaired assets will not prevent an overshooting downward in house prices, as more people have negative equity in their homes, rising to 40% of all mortgages at some point; and leading to a cycle of foreclosure and further price declines. This will only decrease the value of the mortgage securities that Treasury seeks to take off the hands of banks. And without direct government help in form of lowcost loans, say 2%, the cost of capital for the government, for 20% of the loan upto $80,000; more and more homeowners will have negative equity in their homes. This will lead to more foreclosures as housing loans are not full recourse, so that only the house is lost and the homeowner can move to an apartment and carry on from there. Thw size of this program would be $1 trillion but it gives the government income from the loans made and these would be full recourse loans so the taxpayer is protected. In Feldstein's view the current plan does not address declining house prices which is the root of the problem. ...

LyrArc Article Gist
Galston says the Republican establishment's support for Trump before the Republican primary in Iowa is shortsighted and a mistake.

LyrArc Article Gist
Some figures on the foreclosure situation. 2.3 million Americans faced foreclosure proceedings in 2008, 81% increase over 2007. 860,000 properties were repossessed by lenders, more than double the 2007 level, according to RealtyTRac a foreclosure listing firm in Irvine,, California. Moody's Economy.com predicts the numbers to go up 18% in 2009 before slowing through 2011. That is 2.71 million foreclosures in 2009. To prevent the foreclosure levels from getting much worse as unemployment drops, the new administration plans to use upto $100 billion of the remaining $350 billion TARP funds to help homeowners. The 4 states hardest hit are Nevada, Arizona, California and Florida. More than 1.1 million properties there received foreclosure notices, almost half the total nationwide. The hardest hit areas are in California, with the metro areas worst hit in order are Stockton, California, Las Vegas, Nevada, Riverside and Bakersfield, California, and Phoenix. In December more than 303,000 properties nationwide received foreclosure notices, up 40% from year ago month, and 17% above November 2008. At 303,000 the yearly rate is 3.6 million foreclosures or higher for 2009, so the Moody's estimate for 2009 must take into account acceleration of steps to help homeowners with the new administration. Are the rather modest steps taken upto now helping? RealtyTrac analysts estimate that without a state law requiring lenders to give borrowers a 30 day warning before starting the foreclosure process, the foreclosures in California would be 10% higher. There are similiar state laws in Massachusetts and Maryland. Throughout 2008 few steps were taken by the Bush administration to slow foreclosures, even though Republican economists like Martin Feldstein repeatedly advocated this. See links to Feldstein and Sheila Bair of the FDIC who also advocated aggressive action, and providing the numbers to show that it was costlier for lenders to see borrowers go into foreclosure compared to reducing principal and interest payments significantly. ...

LyrArc Article Gist
Nouriel Roubini on what the Fed needs to do in the closing months of 2009 and in 2010, especially for the exit strategy on the massive monetary easing of 2009, supervising banks and financial institutions and requiring adequate capital at banks to cover crisis needs. See the actions by the FSA in Britian to require larger capital cushions for banks.

LyrArc Article Gist
Much of China's strong GDP growth year after year of 9-12% was generated through large fixed investments in manufacturing. More than 40% of GDP is from factory construction or fixed asset investment in housing and infrastructure. And this spawned suddenly on its own a whole generation of new small business bootstrap entrepreneurs, as if from nowhere, who were good at adapting and seeking out new opportunities as new factories and exports shot upwards. GDP multiplied 14 fold from 1980's. And created 5 million businesses of over 8 employees each, according to the State Administration for Industry and Commerce. In the processs creating 75 million jobs for university graduates, workers from state companies and fro migrants from the rural areas. These private companies and their investment spending make up half of the 2008 GDP of $4.42 trillion. But with the export model heavily dependent on overseas markets especially the USA, the collapsing export markets is shrinking production and investment. Industrial production which went up by 16% annually for 5 years, dropped to 3.8% for Jan-Feb 2009. Mr Yu and his company GenTech, profiled here, was an engineer who studied engineering in Beijing, then at Newcastle University in the UK, worked for Cargill in Iowa, and looked for opportunities away from agricultural engineering. Adapting to China's needs in first semiconductors and then solar equipment assembly lines, he provided the high tech tubing for the gases and chemicals used in manufacturing assembly lines, competing with the likes of Air Products and Chemicals of the USA....

LyrArc Article Gist
President Obama's proposed legislation for the fight against Islamic State proposes a three year effort with use of Special Commandos, but no major ground combat effort. It also rescinds a broad Bush era 2002 legislation for the Iraq war, but leaves in place 2001 legislation for the war against al-Qaeda and affiliates.

LyrArc Article Gist
Economists score Geithner's performance an average of 51 out of 100, Obama's an average of 59, and Bernanke's 71. 42% of respondents scored Obama below 60.

LyrArc Article Gist
Troops who served in Konar province near the Pakistan border saw some of the heaviest fighting in Afghanistan. Here they give their account of what they saw and why there is a big gap in what they saw and what military officers and President Obama are telling Americans. Fort Campbell is spread out over 100,000 acres on the Kentucky-Tennessee border. Tweny thousand troops from this base served in Afghanistan. Brigades of the 101st Airborne Division from Fort Campbell fought some of the toughest battles in the eastern part of Afghanistan even while the surge concentrated troops in the southern part near populated centers. What the troops remember is battles fought in remote valleys where troops came out of nowhere like "ghosts," in areas which were held only for a few months and abandoned with no idea what they had accomplished. This description also fits with the reality of the Taliban being both Pakistani and Afghan in the sense that the borders were defined by the British during colonial times, but the tribes of the Pashtun region are on both sides, in Pakistan and Afghanistan. To subdue the region would be to subdue the Pakistani side and the support they enjoy in large parts of Pakistan, with the large and mountainous terrain making movement difficult. Which is why these troops talk about "ghosts" turning up from nowhere and find the fighting to have lost meaning in terms of purposes it is supposed to accomplish and how this is to be done. The reality of the valleys and hills over a vast mountainous terrain of Afghanistan and Pakistan and the people and fighting there does not fit the speeches made by President Obama on Afghanistan, and say soldiers this gap is widening every day....

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

LyrArc Article Gist
A bipartisan compromise in the U.S. Senate provides for a 30 day review of the Iran nuclear deal by Congress. The White House accepted this after enough Democrats favored the idea for the 67 votes to override a presidential veto.

LyrArc Article Gist
Huge losses sustained by sovereign wealth funds. Estimated $350 billion for Gulf foreign reserve funds and SWF's, according to RGE Monitor's Rachel Ziemba, or 27% of assets. Sovereign Wealth funds are either using their funds for supporting their local banks as in the Gulf areas, or buying back stakes of cash strapped western banks like RBS in the case of China. Russia, China and other countries are using their SWF's for stimulus spending. And Russia, Gulf economies that are dependent on oil prices, are looking at possible sale of foreign assets at oil prices between $50 and a deterioration to $25. Only China has a surplus that is sustained through the last quarter of 2008, but this is changing quickly as imports pick up after the stimulus kicks in, and exports drop precipitiously in 2010. South Korea and Russia have also learned of the need to have liquid safe investments preferably in dollars in the current crisis, as they have learned how large capital outflows can get in a short time. And the US is not looking at these large capital inflows from overseas as a benevolent thing, because it overvalues American assets, and leads to all sorts of distortions in liquidity and pricing of risk that contributed to the current crisis. In short the whole situation with SWF's has a suprising ending, as with everything in the current crisis, nothing worked out as expected or planned....

LyrArc Article Gist
This editorial in the Wshington Post is sharply critical of the Obama administration's policies of inaction in Syria and Iraq. It says president Obama and his administration will have to answer for the policies to the American people and the people of the Middle East and Europe.