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Von Mark Schieritz of Germany's Zeit Online describes the changes underway following the election campaigns in the U.S., and France, and the Brexit vote in Britain, all signalling the discontent of people left behind by the tech, capitalism, trade and globalization changes of the last two decades. The appeal of one time fringe politicians using racist slogans and divisive rhetoric to appeal to those left behind, appealing to people lacking intergenerational mobility, and without much hope for a better future, is a serious concern. People who are gullible enough, lack college education, or racially isolated so that they are not likely to look carefully at what is being offered in terms of programs and change of competing parties, and likely to overlook the hard and difficult road for corrective course of action, because of anger and pentup fears. Schieritz cites as part of this change the unanimously approved conclusion in its final declaration at the G-20 meeting in Chengdu, China- "The benefits of growth need to be shared more broadly within and among countries to promote inclusiveness." Yet this can be a sort of "too little, too late."  Bankers who are cited in an email going around Wall Street lack credibility with groups on Main Street, to people adversely affected by tech, trade and globalization changes that have been persistently ignored for over a decade, close to two decades. More convincing is the tone of Theresa May, the British prime minister's first statement outside 10 Downing Street- who spoke of the "burning injustices" and her determination to make this a top priority of her government. Still more convincing are the programs to invest $275 billion over 10 years in infrastructure put forward by the leading candidate in the U.S. presidential election of 2016, to provide easier access to public universities and colleges to those left behind, as a sure way to create new jobs and address intergenerational mobility. In fact every leading candidate had made the loss of upward mobility their central plank already in 2015, long before Trump and Sanders started their campaign. The real hope lies in western leaders Merkel, May, and Clinton, all keenly aware students of changes, all women by the way who have sensed the injustice and have the ability to come up with something new and promising for the future, after learning the lessons of the past. ...

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Applebaum talks to two researchers at the University of Chicago and Princeton, Prof. Sufi and Prof. Mian, on the record of U.S. president Obama and Fed chairman Bernanke in helping homeowners facing foreclosure and underwater borrowers, comparing that record with their record in helping the banks. The issue is relevant as the policy and handling of homeowners had to be part of an overall effective plan for recovery in the U.S. economy, because ultimately without the U.S. consumer any recovery would be weak in the long run- a situation the U.S. faces in early 2014. The response to the issue of irresponsible homeowners borrowing beyond the limit without an equally robust response to irresponsible bank management that allowed wildly excessive leveraging of assets, and successful aggressive lobbying by banks in a shortsighted policy of going through with a wave of foreclosures; besides creating questions of fairness and equitable handling of the problem, also had major ramifications for the future of the U.S. and global economic growth. Here Christina Romer and other administration advisors say Bernanke was right in tackling the problem from the perspective of the banks needing to be recapitalized. Thoughtful advisors looking at the entire problem, Martin Feldstein and Sheila Bair strongly pushed for providing the same help to homeowners without getting caught up in the issue of who was responsible home buyers or the banks, and looking at the interests of the U.S. economy and the U.S. people. Proposals by Feldstein and Bair were equally robust in helping banks as they were in helping homeowners, only the banks understood their interests narrowly and had more access to policymakers in the Bush, as well as the Obama administration, Paulson as well as Geithner. This leaves us with the ultimate irony of the Obama administration pushing for the minimum wage, even to the point of electoral posture, when lasting damage had been inflicted on homeowners from the weaker portions of America's middle class by a policy that went against what two respected financial and economic experts from the Reagan period, Sheila and Bair had strongly advocated. See links and groups on Feldstein and Bair. Applebaum has followed most aspects of this problem closely and continues to provide exceptional reporting including the piece on the thinking of new Fed chairman, Janet Yellen. Private enterprise rules that require management at banks just as for other companies to take responsibility for failures, and be replaced with new management, was largely avoided leading to a fundamental failure in how a free market economy such as the U.S. and western European economies are supposed to function. Rules aggressively pushed by Geithner's mentor Treasury Secretary Rubin for a vigorous cleanup at banks in South Korea during a similiar situation in 1997, were not followed in any way here, also setting wrong precedents for the long run. ...

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The Labor Department reports that there is no U.S. productivity growth in the 4th quarter of 2014 over the prior year. U.S. productivity growth is about 1.3% for the period since 2009, showing a weak expansion. Job gains of 295,000 in February 2015 show an improving jobs picture, yet wage gains are tepid. This is partly due to slack in the labor market not reflected in the official unemployment rate of 5.5% for Feb. 2015, with a large number of part time workers who do not have full time work. The low productivity growth is another reason for low wage gains in this economic recovery. Economic growth is also weak with economists estimating GDP growth for the 1st quarter 2015 at 1.5% annualized. GDP growth is in the 2-2.5% growth range since 2009. Hourly wages are up less than 2% since 2009, with hourly wage growth in Feb. 2015 at 2% over the prior year. Weak business investment is part of the reason for the sluggish economic growth. Macroeconomic Advisors estimates the capital investment for equipment software and buildings is seeing growth of only 0.3% in the last decade, much lower than in the last forty years. With most of the gains from the internet technology advances already made there is less prospect of a sudden increase in productivity....

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Growing protests in Brazilian cities of Sao Paulo, Rio de Janeiro, Salvador, Curitiba, Belem, Brasilia, over inflation and the cost of living, government lavish spending on soccer stadiums even as public services of transportation, education and health care are being neglected. Tens of thousands of demonstrators gathered with one estimate of 100,000 for protests in Rio. The protests started with the Free Fare Movement in Porto Alegre, which calls for lower transportation fares, organizing demonstrations against an increase in fares.

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A statement by German Finance Minister Schauble that Germany would be able to accept inflation of between 2 and 3% showed the new flexibility of the German position after the election of Hollande in France. Schauble said on April 10, 2012, Germany would find inflation "in the corridor between 2 and 3%" acceptable. The ECB's target is 2%. Earlier the Bundesbank in statements to the German parliament indicated that higher inflation rate in Germany was acceptable if the overall eurozone rate remained near target. This would give other eurozone countries an opportunity to improve competitiveness. Schauble also indicated willingness to accept higher wages in Germany because of years of wage concessions by workers in Germany. France's major parties, unions and industry are in agreement on a plan for reducing wages to avoid layoffs. This gives the normal process of adjustments in free markets a chance to function to restore competitiveness and balance. It also addresses the concerns of workers in Germany who would benefit after a decade of wage concessions, and improve consumption in Germany, as demand for Germany's exports adjusts to a slowdown in the global economy....

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Some startling statistics on U.S. wages and incomes and the increase of part-time workers, by the publisher of U.S. News and World Report, Mortimer Zuckerman. He cites the Pew Research Center reports that show one third of Americans identifying themeselves as lower class or lower middle class compared to one quarter before 2008. This affects social mobility with the increasing gaps in incomes, education and social behaviour acting to reinforce each other and leading to even lower future mobility. Industries that are showing growth are in low wage occupations. The Bureau of Labor Statistics shows growth in future in industries noted for low wage part time work- health care, social assistance and retail, with some jobs lacking minimum wage and overtime protections. Revealing in this respect is that in the last 2 years fully 43% of net employment growth is in the 1.7 million jobs added in low wage work in food service, retail and employment services industries. The number of Americans working full time declined by 5.9 million since Sept 2007, part time workers increased by 2.6 million. The effects of higher part time workers and job recovery predominantly in lower wage industries is likely to affect consumer spending and slow growth....

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The Alternatives for Germany political party and the opposition to the euro inside Germany. The support for the party is not broad grass roots based and some observers see it as a movement of the elite. It was started by Hamburg economcs professor, Bernd Lucke. Many party members formerly belonged to the Christian Democratic Union led by chancellor Merkel. Over two thirds of the members listed on the home page for the party have doctorates. The new party could create uncertainty about the outcome of the German by drawing votes away from Merkel.

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Krugman points out the gains on three fronts evident from the Census Bureau report of 5.2% gain in median income of households in the U.S. He says the first is the growth in incomes of ordinary working class and middle class families, second the large decline in the poverty rate, and third the further rise in insurance coverage in 2015 for people without health insurance. He points to the steady efforts of the Obama administration to improve lives of ordinary families as working based on the Census report though results have taken time, and could have been better. The Stimulus, says Krugman could have been larger following the blow of the 2009 financial crisis and increased unemployment at the time. Janet Yellen at the inequality conference of the Boston Fed in 2014 pointed out the problems of 62 million households having net worth of about $10,000, and why this was running against the American idea of a better life for all Americans. In that sense the Census report is a movement in the right direction but a lot remains to be done.   ...

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Professors Cole and Ohanian of the University of Pennsylvania and UCLA, provide a new interpretation of FDR's economic policies during the period 1932-1934 and the period 1937-1941, based on their research. This suggests conclusions different from that of Obama advisor, Christina Romer, and Fed chairman, Bernanke about that period. Changes in economic policies under the Roosevelt administration that helped bring wages in line with productivity, reduced strikes, and gradual elimination of the undistributed profits tax, improved incentives for business investment during 1938-1939. Cole and Ohanian, say that by 1941, before the U.S. entered the war, close to half of the increase in nonmilitary hours worked in the U.S. between 1939 and the peak of the war, had already been achieved. And this was primarily the result of the changes in FDR's policies in 1938. They say a similiar opportunity is presented by the proposals of the Bowles-Simpson commission on deficit reduction, by lowering the corporate income tax through simplification of the tax code and reducing or eliminating most tax expenditures. Improving the incentives for business to hire and invest through this and other steps is likely to do more for the economy than the steps tried so far since 2009....

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Inflation in the eurozone is running at 0.7%, well below the target of 2%. In a opening speech for a 2 day conference organized by the ECB in May 2014, ECB president Draghi said the increase in the value of the euro since 2011 has made commodities like oil cost less in euros, contributing to lower inflation. A key concern referred to in Draghi's speech is the data from Spain and Portugal about the difficulty for business to get loans in Spain and Portugal. About 25% of Spanish businesses and 33% of Portgual's businesses have difficulty getting loans. Even profitable companies have difficulty getting loans. One way the ECB could tackle this is to make cheap loans available to eurozone banks conditional on the money being lent to businesses and not invested in government bonds, as has happened during prior ECB efforts to capitalize banks.

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The Social Democrats leader Sigmar Gabriel is Economics Minister in the coalition government of Angela Merkel in Germany. He is sympathetic to French premier Manuel Valls effort to reduce austerity in the 2015 French budget now being reviewed by Brussels. Here he takes the initiative to call for discussion on the issue of growth and austerity facing the European Union, by joining French Economics minister Emmanuel Macron in asking two economists Pisani-Ferry and Enderlein at the Berlin Institute of Governance for advice on generating growth. The process started in late summer with the defeat of the centre right government in Sweden which supported Merkel's strict austerity policies for balanced budgets. The elections to the European parliament showed the dire situation facing Cameron in Britain and Hollande in France with the unpopularity of austerity policies, higher taxes and cutbacks. The Socialist Hollande government has the lowest public opinion ratings of any postwar government in France, at 18%, and it is unwilling to go further down the road with austerity. At the same time Valls has found a partner in Italy with the growing popularity of Matteo Renzi in Italy who won 40% of the vote in Italy for the EU parliamentary elections of 2014. ECB president Mario Draghi, has generated the debate by saying at a October 2014 Brookings Institution conference in Washington D.C. that countries that have fiscal space (referring to Germany) should use it. He added that governments that did not take action in the economic crisis facing the eurozone of no growth will be swept away by public opinion. IMF president Lagarde, a former French Finance Minister under Sarkozy, has also questioned policy of strict austerity. For the first time since the start of the eurozone crisis in 2010 there is an opportunity for open discussion on future policies for renewal in the eurozone....

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The problems with a second phase of quantitative easing, go back to asking why the first phase hasn't worked to prevent the economy from sliding back. So far the Fed has engaged in buying $1.7 trillion in bonds in that first phase. This shows the limitations of this approach. A lot of money was injected into banks. And the banks have $1 trillion on their books that is not being used for lending. The reason being its hard to find borrowers, as borrowers are cautious and concerned about the economic future. The Quantitative Easing in this second phase is supported by the reasoning that deflation risks remain. But this raises another question, what level of quantitiative easing would work, and would such enormous levels itself cause bigger problems.

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The memo to U.S. president Reagan written by his economic advisors in November 1980 before his first inauguration. Inflation was running at 13% and the economic problems looked as intractable as they do today. Advisors included Milton Friedman and George Shultz. The memo called for setting steady policies for the long run to encourage investment and growth, and at the same time steady monetary policy. This is different from the repeated quantitative easing efforts by the Federal Reserve responding to financial markets, and the Obama administration's stimulus efforts that have not led to long term growth. On the long term perspective the memo said: "The need for a long-term point of view is essential to allow for the time, the coherence, and the predictability so necessary for success." The memo was released by George Shultz.

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Foxconn announces salaries for workers would increase by 16-25% to about $400 a month before overtime. Foxconn plans to reduce overtime. Foxconn is a major supplier in China for Apple Computer.

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Prof. Peterson of Harvard and Hanushek of the Hoover Institution, authors with Woessmann of the book "Endangering Prosperity: A Global View of the American School," offer some startling reminders about the importance of education to economic growth and incomes in countries. Simply by raising the math standards in the U.S. to the higher standards in Canada would raise GDP by three fourths of one percentage point. One advantage that the U.S. enjoys comes from its good university systems, open markets, rule of law, tax rates, and open immigration policies, which give it about two thirds of a percentage point in higher GDP growth per year. The estimates are from the authors calculations. For the period 1960-2009, a period of rapid growth in Asian countries Korea, Taiwan, Singapore and Hong Kong, higher test scores in math and reading compared to the wrold average as measured by NAEP test and PISA, have led to 2% higher GDP growth. NAEP shows only 32% of U.S. high school students proficient in math compared to 45% in Germany and 49% in Canada and 63% in Singapore. By contrast to Korea and Taiwan, Peru, Argentina, the Philippines and S. Africa have about 2% less in GDP growth because of lower scores compared to the world average....

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Feldstein, adviser to the Romney campaign, refutes the assertion based on computer models that the Romney Tax Plan of a 20% across the board cut in taxes cannot be paid for by limiting the deductions of high income tax earners. His own analysis based on IRS data, shows taxpayers with adjusted gross incomes of over $100,000 made itemized deductions of $636 billion in 2009. By taxing these deductions at a 30% marginal rate, additional revenue of $191 billion can be raised to pay for the Romney Tax Plan's static revenue loss of $181 billion. A smaller revenue loss of $148 billion is predicted based on increased incomes and taxes from the behavioural effects of lower taxes on earners. He says this was the thinking behind the Reagan tax cuts of 1986 and the Simpson-Bowles commission plan that would generate economic growth by reforming the tax system's distortions.

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U.S. gasoline prices were below $2.06, adjusted for inflation, during 1986-2003, dropping to a low of $1.51 in 1998. U.S. gasoline prices at the pump dropped below $2.00 in Jan. 2015. Buyer behaviour responded quickly to the change for automobiles, with sport utility (SUV) sales rising to 34% market share in the U.S. in mid-Nov. 2014, according to Edmunds.com.

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Krugman points to the connection between the failure to achieve debt reduction through debt forgiveness and the sluggish economic growth in the eurozone and U.S., five years after the global banking and financial crisis of 2009 and four years after the beginning of the eurozone debt crisis in 2010. In the U.S. debt reduction for homeowners was delayed with a wave of foreclosures, and in Europe austerity budgets were the norm as Germany pushed hard for austerity policies. In 2014 small relaxation of austerity to give relief to voters took place in Greece, France, Italy and Spain, with austerity budgets still in place. Growth also slowed in Germany to slight contraction in the third quarter and no growth in the fourth quarter of 2014. This is leading to the formulation of new policy to address growth challenges in the eurozone. Debt to GDP is growing in eurozone countries and Britain because of lack of growth, even though spending cuts have been made, showing the need for rethinking policy. ...

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John Taylor on the dangers of a loose U.S. monetary policy and the effects this had in fueling a housing bubble in Spain, Ireland and other EU countries. Taylor points to the bubble ocurring in emerging market economies from low interest rates. Taylor says the ECB's interest rate moves in 2003-2005 were affected by the Fed's low interest rates. He estimates the ECB set rates about two percentage points too low leading to housing bubbles in EU countries. A similiar process is taking place today with the Fed's near zero interest rate policy. Taylor points to interest rates in a group of 18 emerging market economies- including Brazil, China, India, Mexico and Turkey, which have held interest rates on average about 5 percentage points below widely used benchmarks fueling a doubling of global commodity prices between 2009-2011. The U.S. Fed's policies make it harder for central banks in emerging market economies to take aggresssive action against bubbles developing in these countries. Taylor says his does not mean that the Fed should not pay attention to the U.S. unemployment rate and long term unemployed, but should keep in mind the negative effects of slowing demand in emerging market economies and in the EU as a result of its monetary policy of keeping rates at near zero for long periods of time. This feeds back to the U.S. economy at a critical time....

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The constructive contribution made by the G-20 meetings of leaders towards building agreement on economic and other policies for peace and progress in the global economy. The meetings were especially useful for coordinating policy and addressing issues arising in the global economy after the 2008 financial crisis. Here Li Baodong, China's vice minister for international organizations and conferences, international economic affairs, describes the path ahead: IMF reforms implementation, better coordination of macroeconomic policies, pursuing the anti-protectionist and free trade policies with further support to the WTO and ministerial MC9 meeting in Bali in Dec. 2013, and infrastructure financing proposals for developing countries on the agenda at the St Petersburg, Russia, G-2- meeting in Sept. 2013. Baodong says the mechanism called the Framework for Strong, Sustainable and Balanced Growth as part of the G-20 meetings is a major achievement. Each G-20 economy submits it macroeconomic policy plan for a Mutual Assessment Process under this arrangement. The progress from the Bretton Woods financial architecture to the new arrangement- from the G-6 to the G-20 to include developing countries from India to Mexico and Brazil- is another major achievement, not fully recognized by the public, says Baodong. Interestingly Baodong makes particular mention to global rebalancing, rather than pushing what he calls the impossible task of increasing demand to get growth. This is a realization coming to China's economic policymakers under the new Jinping-Keqiang administration after the overly aggressive effort to stimulate demand in the 2009-2011 Stimulus, and the ensuing financial problems in the banking and credit system. It is indicative of the policy shift and its implementation underway in China in 2013-2015....

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Bayer AG CEO Marijn Dekkers talks to the Journal's Geoffrey Rogow about the company's pharmaceuticals business and job retention. Dekkers says profits are reduced by the tight budgets of European governments and the pressure on pricing. He cites the 16% mandatory rebate in Germany on prescriptions. For Bayer diversification through the chemicals business offers a way to handle the ups and downs in the pharmaceuical business with patent expiration. He is not interested in acquisitions because of the high premium involved and the difficulty of recovering this for investors. Bayer like other drug companies has extensive operations in China. Bayer is training salespersons in top and second tier Chinese cities. It has a program to train 10,000 physicians in rural areas of China working with the local government. Dekkers makes an interesting point about jobs and job retention in the U.S. He says a lot of jobs were outsourced in the 1990's and its difficult to bring them back. Germany has done a better job with job retention with "kurzarbeit" and other programs working in partnership with industry. In his view this could have been managed better in the U.S. with active programs such as this in the last two decades....

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The ruble goes from a low of 80 to the dollar in Dec. 2014 to 50 to the dollar by May 2015. The euro also strengthens against the dollar with weakening economic conditions in the U.S. leading to a reversal in the strength of the dollar.