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Greenspan's legacy is called into question with the bursting of the housing bubble which he had not expected and the growth of subprime which he did little to slowdown. His libertarian spirits took a dogmatic view of free markets that said that the best approach was an handsoff one. This conflicted with the proper monitoring and supervision of rapid growth of subprime and the abuses that went on in the market for mortages and mortgage securities. He was also slow to raise rates after the rate cuts were down to as low as 1% which fueled the housing boom. Greenspan actually felt the borrowing on home equity loans for consumption was a good thing but failed to see the excesses in consumption spending and dangers of a negative savings rate. He felt that it was necessary to keep rates low to keep deflation from happening at that point in time. He was too complacent and in the position for too long to do the job well for so long. He was appointed by Reagan in 1987 and retired in 2005 three years ago in this role for 18 years. Could the Clinton or Bush administrations have chosen a fresh face who could have performed quite well and had to prove himself and not become complacent in a wave of adulation during good times? He argues that is decision making process was sound. This showed in the LTCM crisis and during the 9/11 crisis. But what went wrong were that his assumption about the goodness of human nature inherent in an innocent view of free market innovation where only the best happens ignores the possibilities of bad things happening when this innocent innovation is converted into a negative kind of innovation by human greed as happened in the mortgage securities market. And the lack of transparency that can creep in when a watchful eye is taken off the financial machinery and it is left all to its own devices as when these mortgage securities were made complex and dispersed in protfolios all over the global financial in places like Nordic towns in Arctic Norway as well as in far off places in Asia. So the basics: careful watchdog role, continually reassessing things like the patchwork of regulation that Secretary Paulson criticized recently fit for 10-20 years ago, getting interest rates right etc requires a good mind, some grace and a fresh face and energies that a man close to 80 years in 2005 after 18 years in the position got too complacent, overstayed and in the end made crucial errors of judgement and wisdom that his libertarian logic may have made all too easy. ...

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Alan Meltzer is a respected voice on US Federal Reserve policies since the time Paul Volcker was Fed chairman He says the Bernanke Fed is making some serious policy mistakes. The first is concentrating on near term events, such as business response to Obama administration policies, over which it has little influence, while neglecting the long term consequences of its policies. The second is its effort to tackle unemployment by interpreting its mandate as a dual mandate of tackling both unemployment and inflation. By tackling one at a time, he says, the Fed is likely to fail totally. The US is unlikely to not feel the inflation that is going on around the world. By ignoring the changes in money supply growth the Fed is making another mistake. His advice is for the Fed to increase interest rates it controls to 1%, to signal that it is aware of inflation risks. Second, the Fed should annonce a specific, detailed plan explaining how it will reduce $900 billon of the $1 trillion banks continue to hold in excess of the legally required reserves. Third, the Fed should end QE II, the most recent round of treasury bond purchases. Meltzer says if the Fed waited for two more months in Nov 2010, it would have found that a double dip recession was not about to occcur and it could have held off from pursuing QE II. Meltzer emphasizes that slow growth and unemployment is not a monetary problem, because of the ample liquidity already in the financial system. Uncertainty about government policy and the future direction has been clarified by the election which will help put the economy back on track. Philadelphia Fed chairman expresses similiar views in other articles and an interview with O'Grady of WSJ....

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India's loan for the bullet train project is for 81% of the 1.1 lakh crores cost of project  from the Japan International Cooperation Agency, at 0.1% interest rate for 50 years with 15 year grace period. These are extraordinary terms provided by the Japanese government agency as part of its international aid for development. Mr. Modi said at the time in 2019 during inauguration of the bullet train project that anybody told about the terms of the loan would find it "unbelievable."  At the time prime minister Shinzo Abe of Japan was visiting Ahmedabad. The loans even of a generous nature would be of 30 years and at that period comparable to the higher yield on 30 year Japanese government bonds. Loans of 50 years are practically unheard off. It could be considered very close to direct grant aid by Abe to India. It is also how Abe had faith in Vivekananda's, Gandhi's and Modi's vision for India's development. And the future of Japan and India with Australia and the US as anchors for the free world in the Asian region. ...

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Moody's Investors Service estimates the cost of fuel subsidies to increase to 1.7 trillion rupees or $24.7 billion for the Indian government in the next fiscal year beginning April 1, 2013, up from 1.6 trillion rupees the prior year. This is the result of the rapid depreciation of the rupee in 2013. The rupee depreciated by 8% between Aug 25-Aug 28, and is now at 68 rupees to the dollar. A new Food Security bill that passed the lower house of parliament provides subsidies for grains to about 70% of the people, and will cost $20 billion, up from $16 billion for the prior year. Government borrowing costs are up. Th yield on 10 year bonds maturing in 2023 was at 9.44% on Aug. 21. The rupee depreciation is a result of the wide current account deficit of about 4.8% and India's dependence on foreign borrowing to finance the deficit. A pull back of foreign investors from emerging markets is happening after the U.S. Fed announced it was planning a winding down of its easy monetary policy and low interest rates. Because India imports 75% of its oil, the depreciation of the rupee will hurt government finances. The danger lies in what this does to the growth rate at a time when growth is alreeady slowing. In the current year ending March 31, the growth rate declined to 5% from 6.2% the prior year. A poll of 18 economists conducted by the WSJ found growh estimated to be 4.6% for the second quarter of 2013. India is the second most populous country in the world and faces huge needs for infrastructure and development, and needs to create millions of jobs for new graduates....

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To help growth in the present situation of the pandemic the U.S. central bank is adopting a new policy of letting inflation float above 2%. Interest rates will be kept low for a longer period to support jobs and growth. Jerome Powell the head of the Federal Reserve announced the new policy.  Powell is mainly concerned about jobs. He sees a lot of difficulty in the services sector as jobs are lost. It will take time for this sector to recover. This is "a strategy where undershoots are not forgotten" Powell told the Jackson Hole gathering, meaning that the Fed in contrast to current policy will adopt a strategy of staying with a goal of full employment till the people who are lagging behind in regaining employment are back on the boat with the rest. In the past these people were left to fend for themselves, even when the loss of work was due to no fault of their own- crises from banks overlending and losing money as in 2009, or today because of a virus from Wuhan.  This is the part of economic policy that resonates in the country today and it shows that the Fed is on board in the effort to revive the American economy putting the people first as in the early years after the second world war when national unity prevailed under both Truman and Eisenhower. Powell uses both economic jargon about "a long tail" and common sense language in a way few central bank presidents have in America. He says the Fed is looking at "a long tail of a couple of years at least" during which he says the Fed will "stay with these people, the millions of people still looking for work." No mathematical formulas will be used. Just plain common sense and putting the people of America first, which is just what is needed. Mathematical economics have taken America nowhere. ...

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The mismanagement of the economy under president Macri is leading to an economic crisis in the country. By embracing economic orthodoxy and slashing subsidies for fuel, electricity and transportation Mr. Macri who won the election 3 years ago has cause the prices of these basic goods to skyrocket. This has hurt the middle class and poor in Argentina. For most of this century Argentina has pursued populist policies, and in the last five decades periods of free market principle based economics were followed by severe crises, and subsequent restoration of populist policies to improve the economic conditions that had deteriorated.  The peso lost half of its value in 2018, leading to a IMF bailout of $57 billion. Inflation is at 50%, unemployment above 9%. To stem the fall in the peso the central bank increased interest rates to 60% stifling the economy and business. Under his predecessor Christine Kirchner the peso's value suffered and its currency reserves were low after fall in soyabean prices, yet the currency had not suffered the kind of decline that it has seen under Mr. Macri. The cutting of subsidies and the economic crisis has increased the number of poor to about a third of the population. Argentina now faces another of the repeated cycles of going from a populist Peronist administration to a free market orthodoxy supporting government, followed by an economic crisis and a shift back to Peronist populist administration policies. Part of the problem is that Argentina, and Brazil, and most of Latin America is still dependent on commodity exports, and the economy dependent on commodity prices. The manufacturing sector has not taken off as it has in Asian countries. This has led to repeated crises in times when the currency reserves declined and affected the currency, also leading to bouts of severe inflation.   ...

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When George Osborne took over at the British Treasury the deficit was 10.2% of GDP. Osborne's hope in 2010 was that the budget could be balanced by 2015, now it looks like this will happen in 2019 or later.The forecast for the end of the 2015 fiscal year is a deficit of 5% of GDP. Lower than expected tax receipts are a big reason for the difficulty in lowering the deficit. The Office for Budget Responsibility, the budget agency, has reduced the forecast for tax receipts for 2015-2019 by 87 billion pounds. This means further spending cuts will be needed, according to OBR. Budget surplus is not expected before 2019. This is happening even though lower inflation and lower market interest rates have helped reduce outlays to service the debt. OBR assumes productivity will increase to 2% for the budget to be balanced in 2019. At the average productivity growth rate of 0.5% seen since 2008, the budget deficit will still be 2.2% in 2019, in another scenario of numbers run by OBR.

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How the IMF conditionality has changed in the 2009 global economic crisis. The IMF head, Dominique Strauss-Kahn of France, is aware how sensitive nations around the world have become to the word IMF. So much so that it has even suggested removing the word IMF from loans to get takers. The IMF conditons worsened the S. Korean financial crisis in 1998. See link to this. This time Kahn has advocated that the developed countries of Europe and the USA increase stimulus spending to 2% of GDP.And there are fewer calls for cutting spending in developing countries offered help by the IMF. Pakistan was asked to increase interest rates by 3% but actually increased them by 2% to fight inflation. But to get some idea how the IMF is viewed with suspicion and hostility in many countries one has to listen to comments made. The move for Pakistan was so unpopular in 2008 that Mohsin Khan a top IMF official says he met with agroup of generals to get their backing. Some IMF officials insistend on a 10% rate increase. Something like that would have led to riots in Pakistani cities. IMF loaned Pakistan $7.6 billion. When S. Korea said no to the IMF credit line, Lee Hyoung-ryoul, a Korean Finance Ministry official said that S. Koreans tremble and financial markets turn sensitive whenever they hear the word "IMF." This time Brazil, S. Korea and Mexico, were offered condition free credit lines. But it has found no takers from these three conuntries, so badly is the IMF viewed in developing countries. Even though it appears that Kahn, in the small club of western nation's officials and staff that form the governing body of the IMF, is trying to give the IMF a new image, its just so bad and the views of the old timers at the IMF on spending or interest rates so contrary to the needs of people in the developed and developing countries, that a new generation of people in finance and economics will be needed before real change is established. ...

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With the U.S. Federal Reserve pulling back from its monetary easing policy and the ECB holding steady with a low interest rate policy, bond investors are finding attractive buys for government bonds of Italy and Spain. 10 year government bonds of Italy yielded 4.2%, and Spain's government bonds yielded 4.3% on Aug. 22, 2013. By comparison German government bonds yielded 1.88%, narrowing the gap between the bonds of southern European countries and German bonds as the eurozone economies recover in 2013-2014.

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Both sides harden positions before the June 30th deadline for 1.5 billion euro repayment of debt to the IMF. Greece's prime minister Tsipras accuses the IMF of "criminal responsibility" for the pain of austerity programs in Greece. Eurozone leaders says Greece's default on its debt and exit from the eurozone is a possibility. The Economist points out that a Greek default and Greece's exit from the eurozone would be a mistake. It points out that this means repudiating debts of 317 billion euros, or about 180% of GDP. Yet the repayment is at low interest rates spread out over decades. Until the early 2020's interest rates are about 3% of GDP a year. In theory a devaluation would help exports, but Greece with its small trading position, may not see much benefit. The drop in nominal wages by 16% has not led to a surge in exports. The cost in terms of broken banks, sharp decline in savings, and collapse of confidence could be disastrous. The very people Syriza is trying to protect the poor and elderly, would be hit hardest, as the collapse in the currency would lead to a shift to a barter economy as in Argentina during its default crisis. For the European Union, the problem would not go away, as it would have to deal with a bigger problem of a failed state on the Aegean on the EU's southern flank. Syriza's gamble that this can be used to extract concessions by holding off till the last minute is failing, because it is leading Greece back to contraction after the small growth in 2014 under prime minister Samaras- with capital flight from the banks and investors leaving in a general fall in confidence. The management of the economy and negotiations by Syriza is now seen as incompetent and has jeopardized any difficult progress made....

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This is an indepth article on Donald Trump's financial holdings, looking at the debt that Trump has built up in his real estate dealings, by Susanne Craig of the NYT. To get a detailed look of this the NYT inquiry into the holdings engaged RedVision Systems, a national property information firm to search publicly available data. Much of Trump's business is shrouded in mystery. But it is well known that Trump has used debt to build his business in a way that is not considered good practice in business, having led to three bankruptcies. Trump says he "is the king of debt." And "he loves debt." The recovery of real estate values during a rescue effort for the country's financial system also helped Trump tackle debt in a way that was not available to other entrepreneurs who suffered from the oil price collapse- one of them McClendon also used debt aggressively and his business collapsed leading to suicidal car crash. You can love excessive debt only if the government supports you with some sort of financial guarnatee misplaced, or you are lucky to get away with it- just ask McClendon. The irony is that the rescue of the financial system led to the low interest rates that hurt savings of the middle and working class, and the lack of help to Main Street in the home foreclosure crisis also hurt the same people disproportionately. The Obama administration policies in this regard rescued the very same business interests such as the New York real commercial estate symbolized by Trump, that are now appealing to those hurt as president Obama worked to let the financial system recover. The intention was never to support excessively overleveraged banks or overleveraged real estate built on debt, but in reality this is what happened. A nation cannot run its financial affairs in this manner of overleveraging to extract high profits that an investment bank such as Lehman or Goldman Sachs does, or a real estate company such as Trump's does- if regulators let them do this. Normally after the financial crisis of such dimensions that it shook the world economy in 2008-2009 leading to fears of a collapse as happened in the 1930's, the same faces would not still be there. But this is a strange period or a transition period where things are being sorted out, and the same faces Blankfein at Goldman Sachs and Trump in New York commercial real estate are with us.  And though the bashing of Goldman Sachs connection to Clinton is evident in the campaigns of Trump and Sanders, the bashing of Trump real estate and finance companies with its overleveraging and bankruptcies is evident in the campaign of Clinton against one posing as a representative of the working class. John Paulson who benefitted by shorting mortgage securities that caused the financial crisis of 2008 is on Trump's top economic advisory team, including the hedge funds and financial interests on Wall Street that Trump is saying support Clinton. No one, not the NYT or WSJ, can answer this, its just the paradox of today's situation. Hillary Clinton can say she has learned her lesson, with her Methodist upbringing and her own supporters such as Robert Reich and others, and break with the past especially as it in no way contributes to her success as president, not one bit. In fact rebuilding the middle class and infrastructure require entirely different connections and views on life, a different imagination.  Trump has billions of dollars and a real estate business that is so complex that even the NYT and property information firms can only say that in the end it is shrouded in mystery. Companies owned by Trump says the NYT from this inquiry have debt of $650 million. Other Trump business activities through 3 passive partnerships owe an additional $2 billion. It is a lot easier for Hillary Clinton to put the speech fees behind her as they have little to do with what she is as a Methodist and a proponent of improving women's lives, than it is for Donald Trump- for whom his business is everything that he is including his art of the deal- to reject who he is. ...

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China's premier Wen is critical of China's large state owned banks for blocking reforms. In recent months there is growing sentiment against the large state owned banks because of the large profits made and the low interest on customer deposits for savers. The guaranteed spread between deposit and lending rates is about 3 percentage points giving the banks easy profits. China's largest banks, including Industrial and Commercial Bank of China, Bank of China, Agricultural Bank of China and China Construction Bank, show combined profits of $99 billion. These four banks and the Bank of Communications, China Development Bank, Postal Savings Bank, combined control 55% of all outstanding loans in China, and lend mostly to large state owned enterprises.

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European banks borrowed 529 billion euros from the ECB in Feb. 2012 at interest rate of 1% for three years.This follows the lending by the ECB of 489 billion euros to European banks in December 2011. The total lending now exceeds $1 trillion under the European Central Bank's Long Term Financing Operation. It is designed to inject additional liquidity into the European banking system and shore up confidence in the economy. This time 800 banks applied for loans compared to the 523 banks in December. The actual amount of money going to banks is about 520 billion euros as many banks moved money from shorter term ECB loans to the three year loans under the Long Term Refinancing Operation. The operation helped bring down the borrowing rates on Italian and Spanish bonds- the rate on Italian 10 year bonds is down to 5.2% as of Feb. 28, 2012. Spanish and Italian banks were able to borrow at 1% from the ECB and buy Italian and Spanish bonds paying 5%. Intessa Sanpaolo bank in Italy doubled its borrowing to 24 billion euros. Smaller banks, including banks in Germany, participated in the February 2012 ECB lending, moving the number of banks up to 800 this time. VW's financing arm also borrowed under this operation so that it could provide credit to customers....

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France showed zero GDP growth in the second quarter of 2012 compared to the first quarter, according to the national statistics office Insee. French president Hollande will have to raise 33 billion euros in spending cuts or higher taxes to reach the target for the budget deficit of 3% of GDPin 2013, according to a July report of Cour des Comptes, a body that audits public institutions. This will be harder now that the slowdown globally is leading to expectations of slower growth than the 1% growth forecast used in the audit. French president Hollande has so far received good marks from analysts and financial markets. French borrowing costs have reached new lows especially in short term maturity bonds where bondholders are lending money at zero interest rates, partly because of the flight to safety from Italian and Spanish bonds.

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To understand the way DJT has selected key people- it follows a traditional Republican pattern getting the best qualified Republicans on board. Some of them may not be as good as the ones they replace but some may be better administrators with good judgement. Sheila Bair of Wichita, Kansas, ran the FDIC from 2006-2011 and was one of the finest at FDIC who also contributed to solve the 2009 financial crisis.  Gary Gensler was slow in acting on cryptocurrency and other regulatory matters. He is one of the first to go in the new DJT administration. At the SEC a former SEC commissioner now legal officer at Robin Hood, or law partner at Sullivan and Cromwell. At CFPB a law professor at George Mason University or a previous Comptroller of the Currency. To understand where DJT is headed there are opposing ideas cap credit card interest rates at 10% that no Democratic administration ever brought up, and discarding a rule challenged in courts that caps credit card late fees. The VP Vance's instincts also come into play as he has also fought to lighten the burden on consumers. The Comptroller of the Currency- A law partner at Jones Day, who was Deputy Comptroller of the Currency in the past. The five member FDIC can only have maximum of 3 members from one political party. For the FDIC to replace Martin Gruenberg who had to resign for not taking enough action to correct a toxic workplace that was unfriendly to women, DJT will consider the Republican Vice chairman of the FDIC, or one of the Republicans board members on the FDIC  ran an investigation into the FDIC.  ...

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Martin Fedstein has a new idea for solution to the mortgage and credit crisis. He has a Loan Substitution Program and this is how it works. The Government would loan mortgage holders 20% of their current mortgage loan, with a 15 year payback period, and an adjustable interest rate based on what the government pays on two-year Treasury debt (now just 1.6%).The loan proceeds would go to immediately reduce the borrower's primary mortgage, cutting interest and principal payments by 20%. Participation in the program would be voluntaryand participants could prepay the government loan at any time. The basic idea is to lower the Loan to Value Ratios and help prevent foreclosures and defaults so that house prices which may have another 10-15% to fall, do not fall steeply and overshoot as millions of foreclosures take place across the country in coming months. Legislation would require that the government must be repaid before all creditors except the mortgage lenders, and that the debt to the government would have to be paid, even if the homeowner defaults on a mortgage. The critical thing this would accomplish is that homeowners would pay less in total interest. In exchange for that reduction in that interest, they would decrease the amount of the debt they can escape by defaulting on their mortgage....

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The WSJ looks at Elizabeth Warren's Medicare for All plan that marks a major shift for the U.S. economy.  Households would see their costs go down by $11 trillion, boosting their ability to spend on other goods and services. Because income and wealth was highly skewed in the past three decades in one direction, the spending capacity of lower and middle income households was pushed down. This and other similar plans would help restore a higher level of spending and with it an essential element of inflation of 2-3% to the U.S. economy which was missing in the last decade. This sets the tone for the kind of broad based recovery that happened after 1950 that strengthened America's middle class and made it the core of the economy, the core of the post World War II recovery in America and Europe. The plan would be paid for by higher taxes on corporations, tax rate of 21% for corporations going back up to 35%, and reverse depreciation schedules in the 2017 Republican tax law. The argument that this would reduce business investment does not hold that much says the WSJ because amid new trade tensions business investment has declined over the last 2 quarters, and has been sluggish overall. The other source for the estimated $13 to $20 trillion cost of Medicare for All plan of Elizabeth Warren is a 6% annual wealth tax on billionaires, in an attempt to have all pay their fair share and reduce wide disparities in wealth. Mark Zandl, chief economist of Moody's Analytics, says his sense is at the end of the day from a macroeconomic view- because $11 trillion in the hands of 80% of households who could boost spending after lagging behind in the last decade- the negative effect on business investment will be cancelled out by the higher consumer spending. The overall effect and today's context is infused in this analysis. Private insurance, premiums for insurance, and out of pocket cost that the public pays would disappear in this new system where all health payments pass through the government. Health insurance premiums paid by employers would convert into a new employer Medicare contribution to the government starting at an amount employers pay now and adjusting gradually toward national averages over time. Smallest businesses are exempted. Mr. Zandl says the most important aspect of this now is that Mrs Warren has shown that her plan's revenue sources match the cost so that the plan would not lead to deficits increasing and pushing interest rates higher, leading to negative effects on the economy. Republicans under Mr. Trump have paid little attention to expanded deficits caused by their tax law, and economists across the landscape have also shown less concern. Still attacks are made if the plans don't add up. For this reason a sound assessment in today's context of depressed consumers and an overall impact becomes essential. The WSJ quotes from a pre- assessment of Warren's plan by Simon Johnson, a Massachusetts Institute of Technology economist who co-wrote it with Mr. Zandl and Betsey Stevenson of the University of Michigan. What they point out is that putting cash in the pockets of the lower and middle class for spending makes a lot of sense today, and taking money out of the pockets at the way upper wealthy end,  does not contract the economy at all. Other effects they say are constructive by letting all workers get health coverage from the government instead of employers, this makes it easier to change jobs increasing labor mobility and productivity. A worker getting a better job and better utilization of skills could then shift without looking at the employer health care plan. Warren says there would be a five year transition so that workers in health care insurance industry can work in other insurance fields and in Medicare, no one would be left behind. The important thing being to build America's middle class again. ...

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What can be guessed easily the less forunate or poorer sections of society are way more likely to be charged high interest rates or exorbitant interest rates by credit card companies is confiremed by a research report. Demos, a nonpartisan public policy research and advocacy group, says in areport, that low-uincome and lower-middle class income cardholders were about five times more likely than the wealthiest cardholders to pay more than 20% interest. It breaks down users into 4 categories, with the last two being late payers and people with revolving balances. If this graphed out the picture would show practically the entire profit of the credit card companies coming from these two. The reason being that the other two categories are those who have cards and don't use them so don't get billed, and those who pay before the due date so they pay no charges except what the credit card companies make from the business from whom the purchase is made. This means says Singletary of the WPost that the better off well to do sections of society are actually having their annual fees subsidized by the poorer sections of society, or the lower middle class. Singletary says to a online discussion person who though his cards without annual fees were free, they were never really free, and few people think of this. As a society its like hitting oneself in the foot, because by impacting students, minorities, the lower middle class and other sections of society- which form amajority of the people in the country- at a time when they are deeply in debt, is to make for another hurdle to economic recovery. Its going to impact consumption, foreclosures and worsen the cycle that creates more unemployment. ...

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Ten year euro denominated bonds of Portugal had a yield of about 3.58% in June 2014, down from about 6% at the beginning of 2014. Ireland's 10 year bonds have a yield of 2.36%, down from 3.42% at the beginning of 2014. In comparison 10 year German Bunds yield about 1.25% in June 2014. There is strong investor demand for the higher yield on these bonds in a low interest rate environment. Portugal exited a 78 billion euro three year bailout without getting a precautionary credit line which was seen favorably by credit ratings agencies.

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Student loan default reaches 22% in 2017 up from 17% in 2013. Defaulted loans are $84 billion or 13% of $631 billion required to be paid by borrowers.

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A common error in taking out student loans is assuming that federal government loans are cheaper than private loans.

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Signs that the consumer credit boom in Turkey is reaching alarming proportions are evident from the surge in credit card use. Credit card debt has increased by 20% in 2011, after an increase of 23% in 2010. There are an estimated 3.7 million delinquent cardholders and 2.5 million cardholders who only make the monthly payments. The Turkish regulators are now requiring cardholders to payoff at least half of the balances before they can use ATM's for cash. Banks charge interest rates of about 29% and cardholders who are using credit cards for the first time -as more of the Turkish people are joining the middle class during the country's decade of high growth- do not understand the risks. Turkish banks, Garanti, Yapi Kredi, and Isbank, are in the list of top ten card issuers in Europe, according to Nilson Report. Card purchases average $3,500 per year, in a country with per capita income of $12,300. Turkish banks have pushed card use, with Garanti Bank's website giving users cash for frequent use of cards, and asking users to show the card even if they are buying an apple at the grocery store. The volume of personal consumer loans has doubled since 2009, because Turks use the consumer loans to pay off the high interest rate balances on credit card debt. Analysts at ING Group in London who follow Turkish banks say the delinquency rates will be above 9% in 2012. The IMF's Global Financial Stability Report of Sept. 2011 has identified the credit growth to GDP ratio as one of the key factors leading to an economic crisis. This was true for the U.S. before 2008, for Portugal and Ireland before the eurozone crisis. China's credit growth was up 29% in 2009 and Hong Kong's up 30% according to the IMF Report. Turkey and Vietnam also have high credit growth to GDP ratios according to the IMF. Turkey's high capital inflows can quickly reverse in a crisis increasing the risks facing the country....

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Carney breaks down Fannie Mae's 2013 earnings figures of $84 billion to show that this is due to unusual factors- such as low interest rates that it gets to access capital from the government, and the reversal of a write-down of deferred-tax assets. $45.4 billon is from the reversal of a writedown of deferred tax assets, $14.6 billion to gains not easily repeated, and about $12 billion because Fannie was able to borrow at 2.06%. (Mortgage securities generated interest income of $22.12 billion. The mortgage guarantee business generated about $12.3 billion which is a result of the 2012 change to the bailout agreement terms) He sees Fannie's core earnings that it could keep generating at about $12 billion. The additional reserve capital requirement that it would face as a systemically important or "too big to fail" financial institution at about $100 billion, making it about 8 years for it reach the reserve capital requirement. The situation at Fannie Mae is not as rosy as the 2013 earnings figures suggest. ...

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Parussini describes the different style of new RBI Governor Urjit Patel, who is no rock star economist like his predecessor Raghuram Rajan. Rajan is quoted as once saying; "My name is Raghuram Rajan and I do what I do." Rajan engaged widely with the media. At his first press conference Patel made a short statement thanking RBI staff, and turned it over to staff at RBI who talked about financial supervision, banking regulation and other issues. Patel's answers were short without follow-up questions, the whole event over in 20 minutes. Patel was chosen by the new government of prime minister Modi to run RBI in 2016.

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Nouriel Roubini has proven correct on global financial issues. He said in an interview on the sidelines of a symposium in Malaysia, that China needs to revalue its currency for its own sake. China will see a growth collapse in the next 2-3 years if it fails to do so. His point is that China can still maintain growth by shifting to domestic consumption and less infrastructure spending and exports. In his view growth should not be affected if China exports less and consumes more. He points to the decrease in consumption as a share of GDP from 45% to 36% in the last ten years- this ratio is 70% in the USA. A cheap yuan keeps foreign goods unaffordable and protects state owned companies which also get cheap credit, as keeping the yuan low requires China to keep interest rates artificially low. What this does is make a massive transfer of income from the household sector to the state owned companies, just at the time when China needs to do the very opposite of this. And compounding the problem is that the 25% of China's GDP that is made up of retained earnings of mostly state owned companies, goes into real estate and production facilities. See the link to David Barboza in the New York Times who points to the wasteful spending and real estate speculation by state owned companies. Roubini cites the automobile sector where capacity has doubled in the last year to 20 million, when the domestic market increased by 50% to 10 million vehicles. The stimulus only increased the effect of surplus capacity and misallocation of investment, with highways to nowhere and brand new airports that are three quarters empty. The Chinese leadership is beginning to grasp this, but the state owned companies and other interests who benefit fromm the old model, may make it difficult to reverse the trends. A lot is at stake in this, as it affects the U.S., as well as countries dependent on China's imports such as Australia, Canada, Brazil and Germany. ...