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Brazil's unemployment rate dropped slightly in 2013 to 5.4% from 5.5% in 2012, according to Brazil's Institute for Geography and Statistics. Fewer people are entering the workforce as Brazil's population ages, which has helped keep labor markets tight even with a low rate of job creation. Industrial jobs have declined as a share of overall employment after the recent consumer boom in Brazil. More service jobs are being created than industrial jobs as a result of a stronger currency. GDP growth was less than 3%, according to the statistics agency. Higher inflation constrains growth and the central bank increased the interest rate by 0.5% to 10.5%. Wages have kept up with inflation as the average monthly wage increased by 1.8% after inflation to 1,929 reais ($798) for the ninth year. President Rousseff's Worker's party has governed Brazil since Luiz Inacio Lula Da Silva became president in 2003. She is likely to be reelcted in this year's elections as polls show her support at 47%. The lower middle classes which benefitted as the middle class expanded in Brazil supports Rousseff. ...

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The US president has invoked emergency powers that relate to national security based on the fight against fentanyl -with 490,000 American lives lost over 12 years, 5 times that in the Vietnam and Korean Wars combined. And based on enormous trade imbalances that relate to national security with China having $1 trillion trade surplus 12 times the next highest trade surplus of $81 billion of Japan in 2007.

Note that appellate courts upheld the Nixon 10% trade tariffs based on invoking emergency powers also based on trade imbalances that time in the 1980's with Japan. The SCOTUS would be overreaching its judicial power to strike down the president on his main platform in the election, says one expert.

 

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The WSJ's Kimberley Strassel says a Republican winning the White House in 2016 depends on how well the party appeals to white working class voters and the struggling middle class living from paycheck to paycheck. She says Speaker Paul Ryan is taking the right step in coming up with the idea of the Kemp Forum on Expanding Opportunity event in January 2016. Presidential candidates attending the forum are Jeb Bush, Marco Rubio, Chris Christie, John Kasich. Not attending are Ted Cruz and Donald Trump who are getting support from voters who are discouraged by establishment policies. Strassel says upward mobility for the midddle and working class is emerging as the No. 1 issue in the election, especially with Hillary Clinton leading the Democrats.

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Bernanke's defense of the action of the Fed's monetary policy making committee, on November 3, 2010, (with a vote of 10-1) to buy an additional $600 billion of Treasury securities over the next 8 months. His defense focusses on the prospects of deflation- how low inflation can morph into deflation (falling prices and wages), that can create a long period of economic stagnation. In addition, with low and falling inflation, Bernanke sees spare capacity in the US that can be utilized to reduce the number of jobless people. He points to the rise in stock prices and fall in long term interest rates in anticipation of the Fed's action, as evidence that this Fed move would improve financial conditions. Lower mortgage rates would make housing more affordable, higher stock prices would increase consumer wealth, confidence and spending. Spending would lead to higher incomes and profits for economic expansion, from this viewpoint. The situation in November 2010, was a deepening housing slump anticipated for 2011, gridlock after the 2010 midterm elections and no agreement on additional stimulus for 2011, the need to rebalance the global economy lacking cooperation from China (with China increasing imports and reducing exports and the US increasing exports and reducing imports). Fed's Bernanke does not mention these factors, and only hints at the gridlock towards the end of the statement. This Fed action will push the dollar lower, just as efforts to improve exports and the trade balance are underway. The Fed's committee sees the risks of commodities inflation as an acceptable risk in the current situation, and the use of a cautious approach assessing the purchase program regularly as sufficient measure of safety. As to difficulties of the unwinding of these policies, the Fed sees present danger outweighing the risks of no action. For emerging markets such as Turkey, India, Australia and other countries seeing even more inflows of capital, the risks are left to these countries to manage. The central banks of India and Australia moved to increase interest rates at the same time that the Fed made its move....

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Since taking over Italy's right wing Northern League Party in 2013, Matteo Salvini, 44 years old, has improved the party's appeal by appealing to parts of Italy's north beyond its base in Lombardy, Piedmont and Veneto. The Milan native called for greater autonomy for the northern region, and even secession, supporting the northerners view that tax money from the prosperous north was being wasted on the poorer regions in the south. He also entered into an alliance with Silvio Belusconi's Forza Italia party. He took a hard line on immigration. Salvini has called for a train service for Milanese only, to draw attention to immigrants from non-EU countries. The head of the Five Star Movement  Party of Beppe Grillo, is Luigi Di Maio, who has called for ending the "taxi service" that brings to Italy migrants stranded on small boats in the Mediterranean. The shift in sentiment in Italy towards immigration has helped parties on the right as it has done in Italy and to a lesser extent in Germany with AfD's larger presence in the German parliament. ...

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In all elections since 2002 Mr. Erdogan has prevailed except June 2015. Much of the support for Erdogan is a result of economic gains by Turkey including 70% rise in per capita incomes since 2003.  These gains are under threat now because of heavy dependence on foreign investment and the decline of the currency Lira from 2.15 to the dollar in 2014 to 4.50 to the dollar in June 2018, losing half its value since the election of 2014. Experts say recent developments in Turkey have dented investor confidence, with investors uncertain about Mr. Erdogan's plans. The presidential candidate most likely to face Erdogan in a runoff election if Mr. Erdogan does not get 50% of the vote on June 24 is Mr. Muharrem Ince. Ince says he sees a wind of change, saying Turks are "very tired of this one-man regime" and that unlike before the economic trouble is so severe and harder to cover. This time the opposition is better coordinated and the secular CHP Party which was once dominant after Ataturk, is running in an alliance with traditional Islamist party Saadet, and with new secular nationalist Iyi party. Erdogan has called early elections a year and half ahead of time because he sees the economic troubles are at an early stage and his AKP Party would do better now than in 18 months when the economy may be in worse shape than it is now. ...

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This editorial in the WSJ tackles the issue of Russian hacking during the U.S. presidential election by saying that this should not be seen as a move by Democrats after the election defeat, and yet at the same time supports the Republican Congress's efforts to hold an inquiry into the hacking during the election. 

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Schumacher of DW.com provides insights into the referendum in Italy in which the "no" vote has a lead. Some aspects of the constitutional reforms are not positive and reduce representation, Renzi's failure to guage public frustration especially after the failure of Mayor Marino in Italy to improve services and infrastructure, the coalescing of different strands of public opinion from right to left in a referendum such as in Brexit especially with a failure to improve economic conditions for the middle class, make a "no' vote likely.

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The Brazilian economy is growing too fast, and this pace not only won't be sustained, but it has signs of serious trouble ahead. The Brazilian economy grew at an estimated annualized pace of 10% in the last 6 months and generated 962,000 jobs between Jan-April of 2010. Growth in 2010 is expected to be 7%. The jump in growth is partly the result of the stimulus measures of the Lula government. But a consensus of experts is that Brazil still saves too little, has not invested enough in infrastructure,and its economy has the potential of 5% sustainable growth each year. The central bank has increased interest rates - increase of 0.75% in April 2010, and economists in Brazil think the rate will go up to 13% in 2011. About $10 billion in cuts in spending have been announced but they are cuts to an already growing budget approved by Congress, so in reality it will only slow the increase in spending. Public debt is at 42.7% of GDP. Real interest rates have fallen from close to 20% in 2003 to between 5-10%. Costs per unit of labor are increasing at about half the rate of real wages according to a finance official. The National Development Bank or BNDES played a role in helping the economy with subsidized loans when the financial markets ran into trouble. It has expanded lending by 50%, with money from the Treasury of 180 billion reais. Some of the measures of the Lula government has reduced the skewed income distribution Brazil, and in doing so has increased consumer demand. Meeting high consumer demand, and meeting the need for commodities like soyabeans and metals from China, has boosted growth in Brazil to twice the sustainable rate and it is now at a par with China and India. But this places Brazil too dependent on the boom in Chinese demand, especially as the stimulus in China slows and the property bubble threatens China's economy. See links to China. A new President after the upcoming Presidential election will have to tackle the high interest rates in 2011, lower commodity prices, and the need for better infrastructure, and make the adjustment to a sustainable pace of growth....

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Jon Stewart's farewell on "The Daily Show," on August 6, 2015- the first show appeared in 1999- ended on the day the first Republican presidential debate was put on by Fox News. A year after Jon Stewart started his show he made his mark on television by creating a new genre- comedy that informs people. "Indecision 2000" was a new show that covered the 2000 U.S. presidential election ending with the small number of paper ballots in Florida determining the election. A whole generation of young people grew up watching his show which provided some of the bold vigilance so essential for a effective democracy, including coverage of the 2009 financial crisis. It included a show in which the host of the CNBC show "Mad Money" was told boldly that it was disingenuous that the crisis caught everybody on Wall Street by surprise, when informed people knew about the bad mortgages that were being wildly securitized. This was handled with the subtle humor that continued the conversation in an intelligent way, so typical of Jon Stewart. He is also remarkable for helping so many of his colleagues make a mark, including Stephen Colbert, which amplified his influence on discourse in American society. It included questionning those who benefitted from the intelligent debate with humor that Jon Stewart engaged in- president Obama was asked why the homeowners got so little help compared to the banks involved in the faulty mortgages, as a question of fairness. Veterans from the Iraq war were welcomed to see how the show was developed and get training. Stewart defused anger and channelled it into constructive discourse in American society, during 2 wars, a global financial crisis, and 4 presidential elections- "with malice towards none, with charity for all"- he will be sorely missed....

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The Russian economy gets an exceptional boost with the behaviour of ruble currency separating from the oil prices. Russia benefits from higher oil prices at the same time as it benefits from a weaker ruble. The ruble has declined 15% since April after more sanctions on Russia. The revenue earned in dollars converts into more rubles for imports and other financing for the Russian economy. At the end of 2017 a barrel of oil brought in 3,835 rubles for Russian sellers, when converted into rubles from U.S. dollars. In October 2018 each barrel brings in 5,262 rubles, an increase of 40%.  Russia deftly managed its emerging market crisis with lower ruble following the crisis in Ukraine by adapting its economy to a lower ruble, lowering imports and using import substitution. Initially Russia split with OPEC and Saudis to produce oil all out, but by 2018 with the Saudi economy hurting and Russia feeling the impact of lower oil prices, an OPEC agreement with Russia has pushed prices higher with production limits. Earlier adaptation by 2016 to the lower ruble, further decline of the ruble in 2018 with sanctions by U.S. for Russian interventions in other countries including the U.S. election meddling, have combined with higher oil prices to strengthen the Russian economy. Russian private and government debt held by foreign investors has fallen since 2016 to 32% in the first quarter, according to Societe Generale. This means Russia is less sensitive to foreign investor exit from the country with political and economic winds changing. Russia's current account surplus increased to $18.3 billion in the first quarter of 2018, up from $14.6 billion in the prior quarter. A weaker ruble has translated into more inflation which reached 5.5% at the end of 2017, above 4% target. Russia's central bank made quarter point increase to 7.5% for the interest rate in September 2017. Overall the management of the emerging market crisis since 2016 as Russia responded to NATO expansion and adopted its own policy is remarkable considering the damage from earlier emerging market crises. Countries such as Argentina, Brazil, and even India are feeling the impact of the current emerging market crisis, each with its own version of the crisis- Argentina with dollar denominated debt, Brazil lacking money in the budget after high pensions, and India with higher energy costs and weaker rupee.   ...

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This editorial in the WSJ says the resignation and downfall of Boris Johnson in Britain comes from the dissembling that resulted in loss of confidence in his Conservative party, but also in a larger sense from the failure of his agenda to revive Britain.  Not much has happened in the promise to invest in and revive the failing economy and social setting in the north of England. Inflation was hitting British households hard with inflation at close to 9% in 2022. Home electricity and natural gas prices spiked 54% in April and are expected to go up 40% in October. Johnson raised the payroll tax 2.5% to fund the NHS. Corporate tax rate was to go up to 26% from 19%. Green taxes helped energy prices go up, and Johnson did not cut the consumption tax or green taxes on gasoline or diesel or household energy says the WSJ, and kept the household income tax brackets the same even with inflation so households would see a large tax increase. In this sense Boris Johnson with his exuberant personal style and enthusiasm promised a lot after taking Britain out of the European Union with Brexit. Yet as the months dragged on and after the worst of the pandemic found there was little he could show that would convince Britons of a brighter future. Not for the North of England, not for Britons in other parts of England and in London, and with high inflation and lacking the investment that could change Britain, not much to show for infrastructure improvement or plans for the future. The dissembling and eroding credibility led to the situation that only half way through his term in office his absolute majority in the 2019 election could not keep Boris Johnson in office, and the Conservative party was losing the confidence of the British people.  ...

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It is hard to imagine that one is even writing about this, as shocking as it is- the 4 or 5 minutes between a decision to launch nuclear weapons and the end of life on this planet earth as we know it. Here Sam Nunn, a U.S. senator who was part of the negotiations for arms control and who is the leading American in this field talks about the unimaginable danger. He says the strategy from the Cold War where Russia and the U.S. put their nuclear forces in a position to be launched within minutes, 4 to 5 minutes, is outdated and needs to be changed. Hillary Clinton described the issue in the television debate. Yet this was not discussed because of the nature of the 2016 presidential election with lack of serious discussion.  And both Nunn and Clinton emphasize that once the missiles are in the air they cannot be ordered to go back. Accidental error, judgemental error, informational error in which one side thinks the other has launched a missile, a firing by mistake, are possible. In this situation Nunn says Trump is temperamentally unfit, and Clinton is fit to take on the responsibility. Yet the question this raises is as Nunn signals- is anyone but God fit to make this decision to launch nuclear weapons. Nunn says it is outdated and wrong to have only a few minutes, as such a decision cannot be made in a few hours or days, much less in 5 minutes. Nunn brings up a discussion he had in Moscow when he brought this up with Russians and president Putin. Russian president Putin told Nunn that he was fully aware of this. Putin's response was- "Senator Nunn, at some point it becomes automatic."  Nunn does not clarify what this means, or what Putin means to say. For people on the planet it is not enough to have Reagan, Gorbachev, Clinton, as Nunn mentions being responsible people for a nuclear decision. The current state of affairs is simply shocking and the lack of attention to this is also shocking. Equally dangerous is that 20 countries have weapons usable nuclear material, and sophisticated hacking of command and control processes is another danger.       ...

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With huge losses at RBS, Prime Minister Brown says he is angry at RBS for the excessive risks taken by the bank. A big chunk of losses of 28 billion pounds for 2008 relate to the deal to acquire ABN-Amro. ABN Amro had on its portfolio a loan to chemical maker LyondellBasell, owned by Len Blavatnik a Russian-American industrialist, which filed for bankruptcy protection in January 2009. Says RBS CEO Stephhen Hester, "we doubled up at the wrong time". Now RBS shares have fallen to 11.6 pence or less than the price of a candy bar. And Brown's administration faces growing criticism that the earlier bank rcapitalization and lending plan has not worked, even as new elections are due by May 2010. With the new deal with RBS government ownership goes up from 58% to 70%, and the next step may be nationalization of RBS. In an effort to limit banks losses and help capital needs of banks, the UK government will insure a majority of losses after the banks assume a first portion of the losses.

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Dirk Kurbjuweit of Spiegel says Merkel needs to show strong leadership to overcome the challenges with the rise of right wing populists in the U.S., Britain and France. He points to the leadership shown in the latter part of Kohl's term in office to promote German reunification after the fall of the Berlin Wall. The challenges include talking to the German people directly in a convincing way, and meeting the day to day challenges of life for the people with investments in education, health care, infrastructure so that people see real significant improvement. It is even necessary to reorder priorities such as the shift from nuclear energy so that this challenge is met. It is not enough to hope that more Christian Democrats turn out to vote than Social Democrats, that the fifth of Germans who feel the economy is not working for them and feel threatened by immigration see real changes being made to address their concerns.

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Leonhardt points out in the NYT that Hillary Clinton actually won in the popular vote by a substantial margin, by more than 2 million votes and more than 1.5 percentage points. He says that Democrats need to pay more attention to the working class in midwestern states- the job losses, crumbling infrastructure, and the plight of communities such as Detroit, Michigan which suffered through the bankruptcies of Chrysler and GM, and again with the foreclosure crisis, the financial crisis of the City of Detroit. With a similar situation in the neighboring states of Wisconsin and Ohio, in places like Toledo and other parts of communities facing industrial decline. While the Silicon Valley centred region powered the economy in California, and the financial industry and real estate powered New York, older midwestern communities never really recovered from a long decline stretching over 2 decades. The result was the loss of faith in Democrats among union workers and young people, leading to the loss of Wisconsin, Ohio and Michigan. For most of its history the Democratic Party was based on its union and working class base including a large number of white voters. Only under Obama because of his unique candidacy was the coalition so dependent on the minorities vote. Before minorities were part of the Democratic coalition, but not in the way under the Obama candidacy. A return to its historic and normal base among whites in unions and working class communities, liberals, minorities, is a way to go back to the historic and natural base of Democratic support. In a sense dependence on tech communities for election funding and the tech booms, globalization, may have distorted Democrats sense of their historic role as champions of the working class and middle class communities throughout the country. There is now an opportunity to restore this lost mission of protecting the interests of the middle and working class who have seen huge drop in net worth as reported by Janet Yellen of the Federal Reserve at the Inequality Conference on October 17, 2014-"62 million households with a net worth of $11,000 for the year 2013." Poorly covered in the media and not made the utmost priority by Democrats (or Republicans). In the words of Janet Yellen, this was in the past several decades "the most sustained rise in inequality since the 19th century after more than 40 years of narrowing inequality since the Great Depression." She added the shocking words "by some estimates, income and wealth inequality near their highest levels in the past hundred years, and probably much higher than much of American history before then." Even discussion in the media goes back to the Obama coalition and treats it as a way forward for Democrats, when history shows it was different and the situation described by Yellen calls for a serious response. ...

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Jean Claude Juncker, the newly elected president of the European Commission, was prime minister of Luxembourg for 18 years. During that period Luxembourg pursued policies that enabled large corporations to evade taxes by setting up in Luxembourg and paying taxes below 1%. A prominent British MP says it is outrageous that Juncker should be looking after tax issues in Europe with such a dismal record on taxes. He was elected with the support of Germany over Britsh objections, because he was supported by the largest elected bloc in the 2014 EU elections. But a new study by London based Open Europe shows the centre right parties supporting Juncker's candidacy won only 9.7% of the vote. The candidacy also did not receive the close scrutiny that should go with a position of such importance. The result is that the European Commission will suffer from a lack of credibility during his tenure at a time when the Commission was criticized for its bureaucratic structures, and back room deals. The criticism from Britain is especially strong. Ironically German chancellor Merkel supported Juncker to bring some element of democratic support from the EU parliament into the process of selection, which now appears to be weak....

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Sharp swings in attitudes have left America divided in terms of education. A comparable situation exists also in the UK as areas with more education access have separated from areas with less access to higher education. As the WSJ analysis points out at one time social cohesion prevailed in the postwar years till 1970 with educational attainment playing a small part leaving social cohesion intact. Even in the period 1970-1990 when there was a shift for college educated women to prefer Democratic Party and white men without a college degree to prefer Republicans this was not a significant gap. The Democratic Party appealed to less educated union voters in manufacturing industries as well as it did with college educated men and women. This gradually fractured during the Clinton and Obama administrations as the Democratic Party  moved closer to the higher educated and drawing more support from new tech industries than manufacturing. Nowhere is this more evident  than in the way college educated women have shifted to the Democratic Party and white men without a college degree have moved to the Republican Party. Swings of different types are normal in elections and politics. But swings purely based on education are rare in American politics and not healthy for the democratic system of government. As the analysis from WSJ/NBC News shows college educated women favor Democratic Party by 33 percent margin. And the swing is even deeper for white men without a college educated degree who favor Republican by a 42% margin. This is the situation before the 2018 U.S. Congressional elections. The combined group of college educated women and white men without a college degree make up 40% of the U.S. voting public. This makes each group unreachable for the other party, a situation unimaginable for many of America's leaders if they would be living today- from presidents Harry Truman and Dwight Eisenhower, John Kennedy and Lyndon Johnson. White voters make up 70% of the electorate, and a situation where they would be unreachable for Democrats would be unthinkable or unimaginable for Truman, John Kennedy. And Eisenhower would also find it unimaginable that he would have to writeoff college educated women in his campaign.  By returning the Labour Party to its roots Britain is combatting this tendency for fracturing of social cohesion. In the way the UK's Blair administration moved away from Labour party's roots in manufacturing and the trade unions, the Democratic administrations under Clinton and Obama  moved away from manufacturing industries and the trade unions.   Most of the postwar leaders of the stature of Eisenhower and Kennedy would have seen such a situation as a significant failure in political leadership. ...

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This editorial in the Economist says Spain's economy has recovered to pre crisis levels by 2018 with growth at 3 percent. It says Spain had a bigger crisis than Italy and took stronger measures under prime minister Rajoy to fix problems in its banking system, address the housing crisis, and unemployment. Italy's steps by comparison were timid and faltering. Mr. Rajoy had his problems including corruption scandals in his party and a poor handling of the Catalan drive for independence. Yet Spain owes muchas gracias to Rajoy for his leadership in bringing Spain out of the housing and economic crisis, and for running the country for two and a half years after losing his majority in parliament.  Another difference with Italy is the generally favorable attitude to immigration for all parties. Of the newer parties Ciudadanos remains at the centre and the Podemos party remains to the left in politics, as part of the populist changes in Spain during the economic crisis. The new government of Pedro Sanchez has a positive attitude to immigrants and to women, with the largest number of women in the cabinet of any European country. ...