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Target Stores are offering a 5% discount to buyers who use a Target Credit card. Target's test results show a 1-2% increase in sales with this program. Target's financial performance suffered during the recession, as buyers stayed away from clothing, and furnishings. Sales of these products are gradually improving.

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Stock markets have declined about 1% during the current banking crisis. This shows that the action taken by president Biden quickly taking over Silicon Valley Bank and closing Republic Bank is working. Treasury Secretary Janet Yellen and the central banks of US, EU, Swiss, worked together to take immediate action. Swiss central bank and the government stepped in to arrange the backing for UBS to takeover Credit Suisse bank.  The crisis affected market sectors in differing ways. Information technology stocks were up 5.7%, energy stocks went down by 7%, bank stocks declined 6%, sensitive materials sector stocks went down by 3.5%. Risks remaining are that the loss of confidence in regional banks could affect lending. The Fed's policy of containing inflation by raising interest  rates could continue say experts leading to information tech stocks losing any gains. Any drop in the price of oil could help the economies of the US and EU, India, Japan and China. By March 15 prices of US crude had dropped for West Texas Intermediate benchmark to $67. Any drop of prices to the $60 level increases growth in the EU, US, China, India and Japan, reducing chances of a recession. ...

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Michael Spence, Professor emeritus at Stanford, and Nobel prize winner in economics in 2001, says the recession is global with growth globally approaching zero, and the economy in high speed descent. So he doesn't see recovery even if all the actions are appropriate and clear till 2011. And if not it will be much worse.

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Expected legal settlements of $13.7 billion for the Gulf Oil Spill are $10 billion more than what was set aside. Oil prices are below $50 a barrel in Jan. 2015 and BP is making job cuts. BP's stake in Russian state owned oil company Rosneft is in a country facing western sanctions and a deep recession.

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This NYT editorial before the Greece parliamentary elections calls for compromise on both sides- the EU, Germany and Greece. With 61% of Greeks desiring to remain in the eurozone, and Greeks looking for an easing of the severe austerity plans leading to unemployment at 25% and deep recession, debt relief is needed as a way forward.

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Observers describe the new Pope, Jorge Bergoglio of Buenos Aires, Argentina, as a person of overwhelming authenticity and compassion for the poor. The selection comes at a time when there is increasing global inequality and a period of slow growth and recession in many countries, particularly in Europe. His message should resonate with people in many countries.

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Peter Bernstein's says it is vital to address the household sector that is the root of the problem. And the only way to do this effectively is to change the terms of the mortgages themselves and stop the flow of foreclosures, with the government taking on some of the losses from these changes in the mortgage terms. First, he says, thats where the crisis has originated. Second, in the previous recessions the household sector was not the problem, in this one it is the problem. Without returning it to better health, America cannot reverse the devastating course of this recession. Households are the primary customers of American business, and the wave of foreclosures, dropping house prices and job losses, destroy the optimism and morale of millions of Amrericans. "The risk here is not just humanitarian. Indeed the risk is also the preservation of the social structure of democracy and the future progress of America, " says Bernstein. Essentially Bernstein is saying that President Obama should put campaign promises for health care reform, and other agenda after addressing this issue. Obama has extended unemployment insurance as afirst step, he has responded to Detroit's auto industry needs, and has set up the stimulus package. But in the household sector and on mortgages the response has ben weak, thus letting this problem grow and leaving the roots of the crisis unattended. "To intervene promptly, directly and powerfully to counter the home price debacle" has not happened. Something that the New York Times has repeatedly stated in its editorials, including one last week. And without this hope and optimism is not likely to be built on firm ground. A sudden recovery in the stock markets, as in the 2nd quarter 2009, cannot substitute. ...

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Nigeria's president Buhari is reelected with a margin of 4 million votes. Delays, accusations of fraud and bits of violence marred the election but not to the extent of previous elections. Despite the accusations of manipulation independent observers say the problems were not so frequent that they would affect the outcome. The 76 year old president won with a large margin even though Nigeria faced a deep recession which increased unemployment and the northeast faced insurgency of Islamic militants. 

Buhari campaigned on spending for large infrastructure projects, social welfare programs and fight against corruption. The 2015 election provided a peaceful transition from president Goodfellow to Mr. Buhari from a different party. The competing candidate Mr. Abubakar was a wealthy businessman in the logistics sector. Voters preferred the continuity and Mr. Buhari mobilized effectively with the governing All Progressives Party.

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U.S. auto sales increase to levels seen before the recession in 2006- with 16.5 million units sold in 2014. Sales increased by 5.9% over 2013, according to Autodata. Fiat Chrysler NV sales reached 2 million units in 2014, for an astounding recovery under Marchionne, close to the 2.4 milllion units sold by Toyota and the 2.5 million units sold by Ford Motor.

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After 7 years of conflict and the recession is America ready for another deepening involvement in Afghanistan with uncertain prospects is the question asked here, even though the alternatives are not much better. What about rebuilding America and the vision for the future with investments in energy, education, infrastructure rebuilding, and does Obama want to be a war President. What are American priorities?

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China and India pass Mexico as immigration to the U.S. from Mexico declines rapidly, as a result of an improving Mexican economy, the 2008-2011 recession in the U.S. with sharp drop in jobs for construction, lower birthrates, and stricter U.S. law enforcement at the U.S. border with Mexico. Researchers using the American Community Survey of the U.S. Census Bureau found immigration from China increased to 147,000 from China, 129,000 from India, as it declined to 125,000 from Mexico, for 2013. This Survey counts a person as an immigrant for a particular year who says he was living abroad previously. Mexico shows a decline from 400,000 in 2000, with steady decline for every year after 2005. In 2000 India and China were at about 75,000, and did not cross the 100,000 mark till 2007. Other Asian countries are also at the top including S. Korea, Philippines and Japan. William Frey documents this surge in diversity in the U.S., -which is supplemented by now common intermarraige between young people from different countries of origin- in his book "Diversity Explosion."...

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The deep recession in the UK and the alienation of ordinary working class voters from the policies of Labor under Blair and Gordon Brown, has led to a surge in support for Jeremy Corbyn, as he is elected to the leadership of the Labor Party. Corbyn did not actively seek the leadership position- he was persuaded to lead Labor's left wing because of his modest demeanor and willingness to honestly debate the issues of austerity policies. The other candidates, Yvette Cooper, Andy Burnham and Liz Kendall failed to ignite support in the party. Cooper was seen as unable to take a clear position on economic issues. Faced with the prospect of having leaders reflecting Blair's centrist positions in changing times when ordinary people have suffered the effects of years of austerity policies and recession, Labor party members voted for a candidate who strongly supports a different vision. Corbyn supports increased spending on education by removing fees for college education put into effect uder Labor governments, in health services, and in infrastructure spending for transport and other fields to boost employment. ...

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Investing strategy that is in contrast to PIMCO's Gross and El-Erian view that we are entering aperiod which is the "new normal"- aperiod of diminished expectations with stocks playing a smaller role. This means that investors hold as little as 30% in stocks. Barry Ritholtz, CEO of Fusion IQ, a quantitative research firm says he sees this recession as similiar to the 1973-74 recession and sees growth picking up by 2013, or 5 years into this one. Ritholtz thinks its wise to have larger investmetns in fixed income and similar investments, but also to have exposure to stocks in growth areas of the world. Robert Arnott of Research Afiliates, aresearch and analytics firm, suggests a mix of five even baskets: Us stocks paying healthy dividends, stocks and bonds from mature foreign economies, stocks and bonds from emerging markets, stocks and bonds built around oil and commodities to hedge against inflation, and 20% in bonds. including Treasury inflation-protected securities. Such aweighting would increase stocks as apercentage of the portfolio to 50%....

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Risks in AMR's financial situation include net debt of $12 billion and a market capitalization of $1.1 billion. The stock is down 60% so far in 2011 and is now at $3.13 on Sept 30, 2011. Analysts at J.P. Morgan Chase say AMR should have $3.5 billion in liquidity by the end of 2011, or 15% of annual revenue. About $1.8 billion of debt matures in 2012. The demand for airline debt is still healthy. The airline industry is also better able to handle another recession because of cuts in capacity, and the effect of the merger between United and Delta, keeping flights full and prices up. A recession would also cut fuel costs, with fuel taking up 35% of revenue dollars, according to analysts. The problem is low margins and high labor costs, as a result of not filing for bankruptcy and cutting legacy costs. Credit Sights estimates AMR's margin as 6% before interest, tax, depreciation, amortization, and aircraft leasing costs, with the estimate for Delta at 12% and United at 18%.

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Britain's chancellor of the Exchequer, George Osborne, tells parliament it will be difficult for Britain to avoid a recession if Europe goes into a recession in 2012-2013. He also told parliament that British debt reduction will take longer than planned because of the economic slowdown. This means the British public will have to go through two more years of austerity than previously planned, now upto 2017. Britain will need to borrow an additional 111 billion British pounds through 2015. Britain's Office for Budget Responsibility forecasts economic growth at 0.9% in 2011, and 0.7% in 2012. Debt as a share of GDP will peak at 78% in 2015, instead of the 71% expected earlier. With strong opposition from the unions and a major strike planned by about 2 million workers on Nov. 30, 2011, the Cameron government plans to go ahead with its austerity measures. This includes eliminating 600,000 public sector jobs, and limiting pay increases for public sector workers to 1% for two years after the end of the current pay freeze....

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Total public and private spending on health care in the U.S. will increase by 6.1% in 2014 compared to 2014 in a revised Commerce Department forecast. The total spending will reach $4.1 trillion in 2014 from $3.9 trillion in 2013. Some of the lower rise in spending than the earlier 7.4% forecast will come from 28 states opting out of Medicaid expansion under the health care overhaul because of a June 2012 Supreme Court ruling. Employers are trying to reduce costs and the public is reducing spending because of the recession. Less generous health plans mean users are paying more out of their own pocket, paying more attention to prices and even postponing care. Growth in health care costs is a about 3.9% a year since 2009 following the recession. The costs increase in 2015 by 5.8%, in 2018 by 5.9% and 2022 by 6.5%, according to U.S. government forecasts, because of enrollment in Medicare for baby boomers. This is still higher than the inflation rate of below 2%.

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Eventually China's stimulus efforts and efforts to build up its reserves of commodities like its Strategic Petroleum Reserve, may not boost demand for oil, iron ore and other commodities enough to offset the recessionary impact on the industrialized economies. And China's demand is large but not that large that it can tilt prices one way or the other. In the first quarter China accounted for 9% of global oil demand, compared with 55% for the largely recession impacted industrialized world. Stockpiling of resources is a temporary factor. Sanford Bernstein estimates the first phase of China's Strategic Petroleum Reserve may have boosted imports by 400,000 barrels a day in March and April. Another factor is consumption. Stimulus dollars pushed fixed asset investment by one third in the first quarter, yet consumer spending went up less than 10%. Consumption will remain weak. Ultimately China's stimulus efforts may act as a brake on sudden falls in commodities prices, and not support continual upward pressure on commodities prices right smack in the face of a deep recession and large underutilization of manufacturing capacity in the industrialized world....

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The increasing popularity of store brand food is affecting Campbell Soup sales. Another factor is less trading down by higher educated workers than in the recession in 2008-2009.

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Norris provides an insightful account into the research and thinking of Janet Yellen, the new chairwoman of the U.S. Federal Reserve. In her research work Fed chairwoman Yellen has placed importance on the long term unemployment rate and the difficulties workers unemployed for long period have in finding work. This is likely to determine Fed policy on interest rates as the unemployment rate inches closer to the Fed target of 6.5% set by Bernanke in Dec. 2012. Norris points out the emphasis Yelen has placed on this in speeches since being nominated to succeed Ben Bernanke at the Fed. In a recent speech Yellen emphasized that in the recession of the early 1980's median time unemployed people said they were unemployed was 12 weeks, which jumped to 25 weeks for about 6 months in 2010 and is at 17 weeks in the most recent jobs report. Another indicator Yellen has emphasized is labor's share of income in the nonfinancial corporate sector which remained between 66% and 61% from 1950 to early 2000's. This fell below 60% in 2005 and is at 57.1% barely budging from the 2011 figure. In papers written with George Ackerloff, Yellen has advanced the "fair-wage hypothesis," that workers do not do as good a job when wages are held down. Their research also shows its normal for workers in periods of recession to hold out against the lower salaries offered during recession periods, because these workers tend to fall behind newer workers hired with better wages later when the economy recovers. At the confirmation hearing Yellen made it clear that the Fed would do all it can to help the long term unemployed by creating a stronger job market, a job market where these workers would be drawn into work and employers provide job training as well as opportunities for advancement....

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The transformation of a paper mill in Franklin, Virginia, from making copy paper to making fluff pulp for diapers. The market for copy paper dried up after the recession. A new opportunity was emerging with the soaring demand for diapers in the Asian market. This process of creative transformation takes place in industries in the free market system. Here the change took place rapidly.

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How consumer products companies like Heinz, Kimberly Clark, Pepsico and ConAgra Foods are responding to the pay check cycle, with cash strapped consumers making their largest purchases at the beginning of the month, when paychecks or social security checks come in. Its a sign of how deep this recession is becoming and how cash strapped consumers are, that the paycheck cycle is playing such a significant role.

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The lack of trust in negotiations on the terms of spending cuts between Greece and EU ministers in February 2011. In difficult exchanges between German finance minister Schauble and Greece's finance minister Venizelos, Schauble criticized the Greek government for not beginning negotiations for reduction in the minimum wage. EU ministers at a meeting with Venizelos on Feb 10, 2012, showed a distrust of Greece's figures on austerity cuts and asked for an additional $428 million in cuts to make up for the refusal of Greece to cut supplemental pensions. In Greece five ministers in the Greek cabinet resigned in protest over the conditions set by the troika of the EC, ECB and the IMF, just as unions launched a 48 hour strike in Athens. Greece is in the fifth year of a recession with unemployment at over 20%, making sharp cuts more painful. A shrinking economy makes achieving budget defict targets even more difficult and worsening the debt situation.

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Vanguard's Chief Investment Officer Greg Davis, says there is a 40% chance of a recession in the U.S. by 2020, and that the prospects for the stock market have worsened quite a bit. U.S. stocks are expected to return 3.9% down from the earlier prediction of 8% in 2013 over 10 years annualized. In Europe the stocks are expected to return 6.5% down from 8.7% earlier prediction in 2013.

Bonds and cash offer safer alternatives with attractive rates.

Vanguard's 10 year annualized returns for a diversified portfolio of U.S. bonds is up from 1.7% in 2013 to 3.3%, for Treasury bonds 3.0%, and for international bonds up from 1.8% to 2.9%. Money market funds also offer relatively attractive returns as safe haven on 10 year annualized basis of 2.9% up from 1.5%. For the lower risk money market funds are attractive to investors for making adjustments.

 

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The serious problem of the large number of long term unemployed in the U.S. in 2012, strikingly different from any previous recession the U.S. has experienced. This means that if the problem is not addressed or solved these unemployed people will simply fall by the wayside, say experts. U.S. Federal chairman Bernanke, says this is a priority to be taken into account in setting interest rate policy. His fears are that this will be a permanent loss to the productive capacity of the U.S. Evidence of the extent of this problem is that the share of the population that is working has barely budged since late 2009 when the global financial crisis hit. It dropped from above 62% to about 58% in late 2009. It was 58.6% in ealry 2012, based on Labor Department data, even though the unemployment rate edged down to 8.3% by Feb. 2012.

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Friedman cites Prof. Rogoff's work about the economc crisis being a great Credit Contraction and not a Great Recession. The process of deleveraging and transfer of assets from creditors to debtors either through financial repression, inflation or transfers, has to take place before the economy can recover. Rogoff says it takes a period of 4 years or more before the economy recovers in situations like this based on historical experience.