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This editorial in the Wall Street Journal on U.S. Defense Secretary Chuck Hagel being asked to step down is critical about the conduct of policy. It says Hagel is taking responsibility for the failures of foreign policy in the White House. It points to the memo written by Hagel to the NSA advisor Valerie Jarrett, whom it refers to as "Vice President," which called for clarification on policy towards the Assad government, reflecting the views of the military brass. Hagel was criticized for this inside the White House for not providing options. WSJ says the president and the small innner circle of advisors McDonough, Jarrett, around the president, want nothing more than appearing to be solving the problems without having to take action for achieving solutions. WSJ's editors say everywhere they go they hear "rogues" think they have a 2 year window to push ahead for the remaining 2 years till a new president takes office.

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Paletta, Hilsenrath and Solomon give an exceptional journalism report on the silence and tension in the room at the meeting on Monday, October 13, 2008, at 3.00 pm in the Treasury building. It was an historic meeting between Treasury Secretary Paulson, Fed chairman Bernanke, and FDIC chairwoman Sheila Bair on one side, and the head of America's leading banks on the other side. The situation was explained, the bankers asked questions, bankers were not allowed to negotiate, and at one point Bernanke had to intervene saying there was no need for this meeting to have a confrontational tone. Wells Fargo's Kovacevich asked why banks had to accept a capital injection. Kenneth Lewis of Bank of America softened the tone of the meeting by saying that "any one of us who doesn't have a healthy fear of the unknown isn't paying attention." Even before the meeting an anxious John Mack of Morgan Stanley asked Paulson for the reason for the meeting and Paulson told him, "come on down, you will be pleased." John Mack who had fought so many rumors of the firm's demise, was surely pleased with the $10 billon injection of capital in Morgan Stanley by the government in return for preferred share and a dividend of 5%, which helped assure markets about Morgan Stanley's future. Goldman Sach's also received $10 billion. The meeting was ended at 4.30pm. Before this Timothy Geithner, head of the New York Fed, acting as the point man went around handing each CEO a term sheet with a place to sign. Another meeting was setup for 6.30 pm and at that time all the term sheets were returned - and all were signed. There was no meeting. Treasury officials and Fed officials and others had hoped that the intervening time would give CEO's a time to talk to their boards, to think things over, and clear their heads. In a few hours the government took preferred shares in the nation's leading banks and injected $125 billion into the largest banks. Treasury injected $25 billlion in Bank of America, Citigroup, and JP Morgan Chase, And between $20 and $25 billion in Wells Fargo, and $3 billion in Bank of New York Mellon, and $3 billion in State Street. Another $125 billon would be injected into other smaller banks in coming days. Officials at Treasury, Fed and FDIC and other government officials hoped this would give a "confidence shock" to the nation's banking system. ...

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The State Budget Crisis Task Force is co-chaired by former Fed chairman Paul Volcker and Richard Ravitch, a former lieutenant governor of New York. The Report of the Task Force says rising pension expenses and healthcare costs for public sector employees and Medicaid costs are severely reducing the ability of states in the U.S. to fund essential infrastructure improvements, education for low income students and other services. The report said there were six major threats to the fiscal situation of states- including Medicaid spending, underfunding of retirement, "budgetary gimmicks" to address the short term needs, and uncertain tax revenues. Ravitch told a news conderence: "It will be a hell of a lot more expensive to deal with theses problems in five or ten years than to deal with them now." The report focussed on California, New York, New Jersey, Illinois, Virginia and Texas. It was funded by the foundation of Blackstone Group co-founder Peter Peterson, and George Soros's Open Society Foundation....

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Toyota's Managing Officer and Chief Communications Officer, Julie Hamp, was detained by Japanese authorites after a package sent to Hamp was found by customs. It contained a powerful painkiller called Oxycodone, which is legal only with a prescription in the U.S. and Japan, and requires special permission for bringing into Japan.

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Solomon and Lee of the WSJ describe the role played by Ayatollah Ali Khamanei in the talks, down to the final days- as late as July 14, U.S. Secretary of State Kerry is described as asking his Iranian counterpart Javad Zarif, "do you have the mandate of the Supreme Leader?" Zarif replying that he was confident that he did. The media announcement of a deal came that same day July 14, 2015. The last weeks of the negotiations were conducted under the tension that if a deal was not reached quickly the Iranian military or some other factions could upset the deal. Even after the announcement of the deal in the media, Kerry was not certain, saying he never indicated he was confident, and it would all depend on its implementation. U.S. president Obama who initiated the contacts with Khamanei and his close advisors early in his presidency, said that the deal offered the U.S. and the world an opportunity to move in a new direction.

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New rules enacted after the Reserve Primary Fund broke the buck in the 2008 financial crisis would help prevent another problem for money market funds. Money market funds must keep 30 percent of their holdings in securities that can be converted into cash in 7 days. Another factor mitigating the impact of U.S. money market funds holding about 50% of their assets in European bank debt, is the action taken by the money market funds to reduce their holdings of this debt and shorten maturities. According to S&P estimates of the 500 U.S. and European money market funds rated by S&P, 80% of European bank holdings is limited to 3 months or less, and 95% to 6 months or less. Vanguard's chief investment officer says the situation would have to be one of a very rapid decline, and not just Greece but also impacting Spain and Italy for these debt holdings to result in losses for U.S. money funds.

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Delta Airlines has one of the oldest fleet of planes in the U.S. Delta is turning this into a strategic move by having to invest less in new planes and with the ability to get good flight performance from older planes with proper maintenance. Delta says it is saving about $1 billion by acquiring 49 MD-90 planes with age of about 13 years from China Southern and other global airlines, compared to the cost of buying new planes. The estimate is that it is about 10% cheaper per seat to run these planes than new 737's, when the cost of buying planes is figured in. It also took over the leases for 88 Boeing 717's with average age of 11 years from Southwest. The focus at Delta is on profitability and debt reduction by selecting routes carefully, avoiding unprofitable ones, using tight cost management. Delta is on its third year of making profits and is on plan for reducing its debt from $17 billion in 2009 to $10 billion by 2013. The older Delta fleet is also the most punctual of the large airlines in the U.S., with 86.3% of flights on time in the Jan-Sept. 2012 period. Fitch Ratings raised Delta's credit ratings to B-plus and says Delta is "the strongest player in the much improved airline industry in the U.S."...

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Jacobs takes us back to a time in history when Winston Churchill, as colonial secretary for the British Empire, created countries and geographic borders simply by drawing this on a map. The collapse of the Ottoman Empire during the first world war provided the opportunity to create the borders and states that we know today- Saudi Arabia, Jordan, Syria, Iraq, and Lebanon. This part of history is important to understand what we see today in the Middle East- as it was the first step in the evolution of British, French, and later American policy in the region. Britain's oil interests in Iran determined policies pursued first by Britain, and later by the U.S. in the region, and which reverberate to this day in how Iranians see the world.

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BMW's first mass production electric car the i3 will go on sale inthe U.S. in the second quarter of 2014, priced at $41,350. It is a city car with a range of 100 miles from one charge. BMW will launch a i8 in 2014. The i8 is a super sports car with high fuel economy. A electric motor drives the front wheels and a 3 cylinder gasoline engine drives rear wheels. BMW's CEO Reithofer has increased spending on R&D so that it can meet the 30% of automobiles that have to be hybrids or electric vehicles by 2025 for BMW to meet higher European auto emissions standards. R&D spending was up 17% in 2012 to 9.2 billion euros, and capital spending up 42%.

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GE Appliances now owned by China's Haier Smart Home to invest $3 billion to modernize US factories after DJT Tariffs. It shows that Tariffs are leading to reshoring to the US by Chinese companies along wiht Japanese and European ones.

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Efforts by China's climate envoy at Glasgow COP26 and US envoy John Kerry to build cooperation between China and the US on climate change. This happens at the end of COP26 talks and after president Jinping missed the Glasgow summit. Xie says China will work towards "concrete plans" for "finalization of the Paris Agreement rulebook." The US China agreement is not specific on details but includes arranging regular talks, and also a focus on curbing methane gas emissions which can produce immediate results in reducing global warming. The US and over 100 countries signed an agreement on methane gas emissions control. 

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Mike Bird in the WSJ points out that there is very little foundation for the idea that there is a tradeoff between the economy returning to normal and lockdown measures. Singapore and Japan without strict lockdown measures have also shown very sharp economic decline. The U.S. Federal Reserve and MIT economists published a paper at the end of March that shows during the 1918 flu epidemic cities with stricter lockdowns actually had better economic outcomes. In the 1918 pandemic Philadelphia did not impose a strict lockdown till later, St Louis acted immediately with a lockdown. St Louis emerged out of the 1918 pandemic returning to economic normalcy much earlier than Philadelphia. It is critical say the authors to understand that pandemic economics is not normal economics. There are both a supply side and demand side effects. China today is still suffering from significant loss of world demand as it struggles even though its manufacturing and its retail stores are gradually returning to normal. It will continue to struggle as long as demand remains very low in the rest of the world. And even though the services sector is larger today in U.S. and Europe than in 1918, with a smaller manufacturing sector, the pandemic effects and economics provide a useful comparison.  Japan provides an example of how the services sector less exposed to overseas demand and with Japan operating without lockdown sees its service sector absolutely hammered.  This WSJ report says it recorded a sharper slowdown than even the 2011 earthquake and tsunami. The authors of the study including from the MIT Sloan School of Management say they found no evidence that the cities that acted more aggressively in public health terms did worse in economic terms. If anything says MIT Sloan Asst, Prof. Vermer the cities that acted aggressively did better. The authors are specific, the cities that performed 50 days more of social distancing performed better in manufacturing employment by 6.5% after the pandemic ended through 1923. Earlier social distancing by 10 days translated into a 5% increase in manufacturing employment. ...

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Ford Motor Company makes a huge decision to exit the sedan business by discontinuing the Ford Focus and Fusion sedan car lines. The decision was made under CEO Hackett, and CFO Shanks, and means that Ford will have no fuel efficient car lines to offer to customers. During the recovery after 2008 and the bankruptcy of Chrysler and GM fuel efficient cars were one way the auto industry in Detroit was able to come back. Ford still depended heavily on the F series truck for profits as the market improved. With the current  popularity of SUV's the U.S. automakers are once again shifting to SUV's which does not protect the American automakers in competition with Japanese automakers if the demand partly shifts back again to sedans. Toyota has retained the Corolla and Camry and continues to upgrade its sedan models offering a broader product line better able to handle shifts in consumer demand that have in the past created problems for Ford and Chrysler. Chrysler has shifted away from sedans since 2016. Mr. Hackett is a former CEO of Michigan based office furniture maker Steelcase, and it is not clear if the lessons learned over the last decade at Ford Motor in competition with the Japanese resonate under a CEO with a different background such as that of its current CEO. ...

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UBS presents the losses at the London trading desk as a result of a rogue trading scandal. Stewart points to the culture a the UBS's investment banking operation that is partly responsible. Investment bankers he has talked to at UBS say there is a culture at UBS that encourages individuals to work separately in isolation from others, to make their own deals for advancement, a sort of every person for himself. There is no emphasis on team effort and thinking of the bank first.

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A government watchdog in Germany keeps track of what members of Germany's parliament the Bundestag earn in secondary income from speaking fees and other sources. The watchdog is called Abgeordnetenwatch or parliamentarian-watch. German parliamentarians are now required to list what bracket they are in with the highest at 250,000 euros with no ceiling set. One exception is for lawyers, consultants and farmers who can avoid transparency for upto 3.3 million euros. Unusually these professional backgrounds are left as exceptions. Still Germany is making an effort in this direction where such an effort is absent in the U.S. leading to a credibility gap for established parties and politicians, and leaving an opening for criticism from outsiders who can say they have no connection to lobbyists. German members of parliament earn an income of 9300 euros a month.

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Krugman questions the Paul Ryan U.S. budget proposal on several grounds. He says the Ryan proposal depends on projections by the Heritage Foundation for its assumption that the tax cuts would generate higher revenues by creating a booming economy. The Heritage Foundation projection is for revenue increasing by $600 billon over the next 10 years as a result of tax cuts. Krugman cites a different view from the Congressional Budget Office estimate for the Ryan proposal, which shows assumed savings from spending cuts will go not to reduce the deficit but to pay for tax cuts, with bigger deficits in the next decade. He says the spending cuts excluding Social Security, Medicare and Medicaid- but including defense- go down from 12% of GDP in 2011 to 6% of GDP in 2022- meaning that cuts in public services will need to cut to the bone. The Medicare part of Ryan's proposal does not say how spending on medical care will be reduced. The voucher or premium support Ryan envisages is estimated by the Congressional Budget Office to cover only one third of the cost of insurance premiums for Medicare equivalent care by 2030. Krugman cites the Center on Budget and Policy Priorities, which says the Ryan proposal achieves two thirds of its $4 trillion in spending cuts over the next decade by cutting programs that primarily serve low-income Americans. ...

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The new GM-UAW four year contract will provide $5000 signing bonuses to workers in place of cost of living wage increases. GM makes a committment to reopen the Spring Hill, Tennessee manufacturing plant which was idled. Entry level workers earning $14 an hour will receive increases of $2 to $3 per hour. The contract also provides for the hiring back of laid off workers as market conditions improve and for bringing back manufacturing and jobs to the U.S. In that sense it is a forward looking agreement for UAW, GM, and the U.S.

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Halting of work by New Jersey Governor Christie of the tunnel into New York City. This was a result of a lack of funding and the large price tag for the project. The lack of money for building needed infrastructure is likely to affect the U.S. in the future. See the WSJ article on estimates by Robert Gordon of Northwestern University, which show slowing U.S. growth to 1.5% in the next 2 decades, and how this would affect the ability to tackle problems from carbon and energy to infrastructure.

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U.S. housing firm Fannie Mae reported a loss of $6.5 billon for 1st quarter 2011. Home price declines pose an added risk for Fannie Mae and Freddie Mac as the firms have a large number of foreclosed homes. Fannie and Freddie had 218,000 homes at the end of March that have to be resold, a 33% increase from 2010. Fannie Mae has about $206 billion of delinquent loans on its books. Both firms are on government life support. Fannie said it would ask for $6.2 billion in new funds from the U.S. government.

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U.S. CFTC head Gensler favored a rule that would require asset managers like Vanguard and Pimco to contact at least five banks when looking for a price on a derivatives contract. The idea was to foster competition among the banks. Gensler failed to get the third vote from Democratic commissioner Wetjen on this requirement and settled for a requirement to contact at least two banks. The new rules for derivative contracts are being set to meet the rule making requirements set by the Dodd-Frank legislation in the U.S.

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The SEC requirement that companies disclose the ratio between median worker pay and the pay of senior executives. The SEC says it is putting out the rule as part of implementing Dodd-Frank legislation to control excessive executive pay. Companies will be allowed to survey a fraction of their workforce as appropriate for companies with global operations. Executive pay will include pension benefits and stock options under the new rule. A WSJ chart using information from the University of Southern California and the Bureau of Labor Statistics, shows the ratio between what CEO's on average make and rank and file workers make remained at about 30 times in the post war period till about 1970, a period of rapid growth in the U.S. economy. By 1980 this climbed to about 60 times and exceeded 100 times by 1990. The period of stratospheric growth for CEO pay and extreme widening of the gap then occurs between 1990 and 2000. By 2000 the dot com boom- telecom boom and the internet- creates a surge in executive pay reaching over 500 times. This drops to about 280 times in 2008 and picks up again to reach about 320 times in 2011. Many of the poor business practices, the excessive leveraging and risktaking in the financial industry, take place against this background of excessive pay for senior executives. Some of that risk was passed on to others through such methods as securitization in the period leading to the 2008 financial crisis, so that executives were compensated with higher pay for taking excessive risk that they personally or their companies did not assume. Dodd-Frank legislation following the 2008 financial crisis sought to correct this imbalance by having pay information disclosed. The excessive pay has also coincided with an increase in the frequency of boom-bust cycles in the economy. The busts prompted the needs for intervention by the U.S. central bank, the Federal Reserve, to drop interest rates more than would otherwise have happened during this decade, culminating in the huge bond purchases and monetary easing by the Bernanke Fed. The SEC under Mary Jo White is mindful of these distortions in the economy as a result of misallocation of resources based on excessive executive pay, and the need to take action before the next crisis. ...

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Jeanne Whalen on the Two Speed Economy in the US September 2025- diverging paths of low and high income Americans. With the new administration in 2025 priorities shift to immigration and what to do about 14 million illegal migrants from Latin America and other places, war on fentanyl and drug trafficking gangs with hundreds of thousands of lives lost to fentanyl and drugs in the US, crime and safety which includes the unprecedented illegal movement of drug trafficking in the Nation, and to a bold posture on using US advantages of its huge market to get European Union, Japan, South Korea, and China to level the playing field on trade bring jobs home.The Biden administration had already conceded to DJT's approach in its one term presidency by shifting on uncontrolled illegal migration but not fast enough, by not removing DJT's tariffs, and failing to take an aggressive posture on fentanyl and drug trafficking. Of the DJT plan US has tariff based revenues of 10--15% for all countries imports into US can that it redirect to groups to soften any effects of tariffs. DJT administration oil transition policy of stretching out the transition to give middle class and lower classes cost of living relief was also accepted by the Biden administration and is now the policy of Democrat run California state government.  The US economy was slowing in 2024 under the Biden administration. What has changed in 2025 is that the US stock markets are responding to steps taken by the DJT Republican administration to lower the cost of doing business by softening regulations, and giving US business the upper hand in different industries, and rebuilding the manufacturing sector with calls for EU and Japan/South Korea to invest more in the US as a quid pro quo for market access. This has led to increase in the value of market portfolios of the income earners above 250,000, or 10% of American households. As this happens the process of trade renegotiation has introduced some uncertainty in 2025 and businesses are looking for more clarity before increasing investment and slowing job hiring which hurts younger people entering the job market and lower income Americans. Were things better under Biden? Government Covid assistance and payouts in the early years 2020-2021 helped lower income workers, as this faded and the cost of living autos, housing increased sharply under Biden in 2022-2024 the situation deteriorated. The situation today is similar to the situation in 2024 with the difference in 2025 that inflation is coming down just as government help is receding. And added factor is the DJT administration plan to tackle head on the increasing cost of Medicaid to about $1 trillion by adding new requirements and reducing subsidies. The federal workforce had a disproportionate share of black workers and the policy changes to reduce the federal workforce have increased black unemployment from 6.1% under Biden in August 2024 to 7.5 % a year later. Hispanics have seen slight improvement in unemployment to 5.3% in 2025, and the middle class incomes also have held up and are holding steady. Meantime Bloomberg points out that one third of people in the top 10% are living paycheck by paycheck because of high cost of housing, university education for children, and inflation.     ...

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With Bud Lights sales declining for the last 3 years, Anheuser Busch is responding with new "craft" beers and new malt beverages which have the taste of iced tea and tequila. Anheuser has 46.9% of the U.S. market, down from 48.9% in 2008, according to Beer Marketer's Insights. Shipments declined by 3.2% in 2011. The emergence of many small independent "craft" beers as consumers look for variety and new alternatives, has cut into sales for Anheuser and MillerCoors. MillerCoors, a joint venture between London based SABMiller and Denver based Molson Coors Brewing, is increasing its advertising budget by 50% to boost Miller Light. In the U.S. "craft" breweries increased production by 13% in 2011, reaching 10 million barrels according to the Brewers Association. This is 5% of the total market in the U.S. of 200 million barrels. Anheuser's new product introductions include Bud Light Platinum, with higher alcohol content, and new packaging, which has taken a 1% share in the market. Anheuser has a research brewery which is trying out new beers- one is a wheat India Pale Ale with its strong taste, introduced under its Shock Top Label. In the malt beverage category Anheuser has Bud Light Lime-a- Rita, with 8% alcohol coming to stores in April, that has the flavor of margarita. Anheuser is also heavily promoting its Belgian beer Stella Artois, which increased sales by 24% in 2011, to reach 1 million barrels. Another strategy is buying craft breweries, such as Chicago based Goose Island, which Anheuser acquired for $39 million in 2011....

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The WSJ looks at $110 billion in projects which get financial support from the US government under the climate law of the Inflation Reduction Act. Many of the projects are being done by foreign companies. Panasonic is planning a third battery plant in the US and will get $2 billion in tax credits from the US government. Other companies are from South Korea such as LG, and from China. The intent is to build a US supply chain that depends on factories in the US and creates jobs in the US, yet because the US supply chain is so undeveloped with so little attention paid to it in the past, foreign companies will be needed.

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U.S. GDP increased by 1.5% in the second quarter of 2012. This is down from 2% in the first quarter of 2012.