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China's central banks cuts the reserve requirement ratio, the amount of money banks need to keep at the central bank, by half a percentage point. Banks are required to use the money that is freed up of $100 billion to help heavily indebted companies and small business lacking collateral to get new loans.

This is a response to the Trump tariffs on $100 billion of Chinese goods with a equal response from China and the trade war between China and the U.S., so that the Chinese economy can be bolstered before the impact of the tariffs hurts the economy. In the past China was reluctant to reduce the reserve requirement. Chinese debt soared with local government debt and debt accumulated from the 2008 large stimulus in the financial crisis.

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Efforts by president Macron to setup a meeting between Rouhani of Iran and president Trump in New York to reduce tensions of miscalculation and disproportionate response after the attacks on Saudi oil facilities by drones and missiles. Macron says the "maximum pressure" sanctions placed by the U.S. are resulting in Iran placing "maximum pressure" on its neighbors. The Yemen civil war is fought by proxy.  One outcome appears to be the Houthi rebels backed by Iran in Yemen announcing a unilateral ceasefire. And the Saudis announcing a ceasefire of their own. This gives the European Union, the U.S., Saudis, Iran, China and Japan, time to consider the implications of the counterproductive approaches of the different sides to give enough room for new talks. Iran nuclear deal, U.S. relations with Iran, and any new talks on these issues are now seen in a different way. The nuclear deal is now linked with other issues in the region, including building peace in the region. Countries that depend on oil flowing through the Straits of Hormuz such as Japan, China, South Korea, and India are now also involved as silent partners pushing for peace in the region.  ...

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This article in the NYT provides a look at the features of the Republican House Health Care Plan- Both the Affordable Health Care Act and the House Plan provide incentives for buying insurance- the ACA bases these incentives on income levels whereas the House Plan does not provide additional help for low incomes or elderly. Incomes at $20,000 would see a loss greater than  $2000 under the House Plan and as many of the elderly poor living in high cost areas may not have the resources to make up for this loss of subisidies they may forgo buying insurance or have insurance coverage that protects only in a limited way. President Trump has given assurances that all will be covered. For people with incomes of $50,000 or $75000 the loss of $2000 subisidies would also have some impact. At larger incomes or the well to do the subsidies are not handed out under either plan. Under the ACA the emphasis was on income levels and high cost insurance areas the subsidies were greater, under the House Plan the subisidies would be higher for the elderly compared to the young but very low income levels are not given additional help.     ...

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There is a two week period before the 25% tariff on steel coming into the U.S. goes into effect. This gives time for Canada, Mexico, the EU, Japan and other countries to come up with offers to negotiate or as with the EU come up with its own plan to put tariffs on some American goods. An exemption for Canada is supported by the United Steel Workers Union, as many American companies make steel across the borders. Canada sends the most steel and aluminium to the U.S. With the departure of Gary Cohn as economic advisor, Mr. Lighthizer, the U.S. Trade Representative who pushed for the tariff plan becomes a trusted advisor to the President. Lighthizer is to be seen in Lyrarc pages as having consistently supported fair trade and protecting U.S. workers in these situations since his work in the Reagan administration. The other advisors who are ascendent are Peter Navarro, a trade expert, and Wilbur Ross, the Commerce Secretary. Ross is an experienced business veteran in consolidation of steel and auto parts companies, who pushed for a moderate position to renegotiate NAFTA and convinced president Trump to pursue renegotiation instead of rejecting NAFTA following calls from president Nieto of Mexico and Trudeau of Canada. ...

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Chancellor Merkel has shown exceptional leadership during the coronavirus health crisis in Germany, leading to increasing popularity for her government. Her approval ratings are the highest of any coalition government in the last 23 years. The government says this report in DW.com has appeared level headed in its actions, and Merkel has paid careful attention to advice from Germany's Robert Koch Institute, the German public health agency. Merkel also shared important facts for tackling coronavirus in an effective television address. By listening to the expertise of RKI public health agency the government has maintained calm and better handled the crisis. In the U.S. a similar process is taking place with the heads of the public health agencies, Dr. Fauci and Dr Birx playing a similar role, and president Trump paying careful attention to health experts. DW.com says doctors, nurses, police officers, and people working at supermarkets and pharmacies, are being applauded by the public, with people taking to the balconies to applaud. This is also happening in Spain. The hope expressed by DW.com is that going forward these professions will be better paid and public health become a top priority. ...

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In a speech to 3000 party officials Xi Jinping says it is the "central and united leadership of the party that made possible this historic transition." He was speaking at the 40th anniversary of the Deng reforms to open up China's economy. He said China was right to have "lofty aspirations." Yet he said China "would not sacrifice the interests of other countries," while preserving its own interests. The speech comes as China is trying to find a way out of the trade tensions with the U.S. through negotiations. The U.S. sees China in the same way that it saw Japan's rise as an industrial power in the 1980's. and seeks to preserve U.S. economic strength and balanced trade relations that give no unfair advantages to Asian competitors. The U.S. negotiating team is led by the same negotiator who led the team that negotiated for the Reagan administration with Japan-Robert Lighthizer.

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For the first time the U.S. focuses on the huge trade deficit with China in a serious way. The trade negotiating team led by Robert Lighthizer has set forth its negotiating terms.  1. China must reduce its trade deficit with the U.S. by $100 billion in the first 12 months. In the next 12 months it must reduce its deficit by another $100 billion. In 2 years the trade deficit the U.S. has with China must come down by $200 billion. The issue is no longer just the tariffs on steel, it is about the core issue of balance in  trade. 2. The U.S. says subsidies to state industries in the "Made in China 2025" program must stop. Here the focus is on gaining an unfair technological advantage with a combination of U.S. technology imports and subsidies to state advanced manufacturing industries to erode over time the U.S. technological lead.  3.  China is expected to cut its tariffs by about two thirds on imported products so that the tariffs match that of the U.S. This is the first serious negotiation the U.S. has conducted with China on the core issue of the trade surplus which is growing with a stronger dollar not declining. The surplus approaches $1 billion each day for about $365 billion a year, unsustainable from any perspective. The vital issue of the erosion of the U.S. technological advantage under the Made in China 2025 has turned this issue into one in which the U.S. is unlikely to back down. Especially now that Mr. Lighthizer is leading the  negotiations and has the confidence of the president of the U.S. Lighthizer is a veteran of negotiations from an earlier period -under the Reagan administration in a similar situation with another national competitor- then it was the Japanese. A relentless negotiator as the U.S. seeks to reverse a trade imbalance of stupendous proportions neglected by previous administrations.           ...

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French 2025 Bayrou budget compromise deficit of 5.4% target is a fragile one. Le Monde says PM Bayrou is dependent on the goodwill of his opponents the RN National Rally and the Partie Socialiste PS. Cutting the budget slightly is not popular with RN or PS and it remains a compromise to avoid the worst of not passing the budget for 2025, a responsibility the public places on all politicians and parties. As in Germany France with fragile coalitions and lack of clear voter support for one program, is not able to invest in its economy as Biden and Trump have done in the US, slowing growth in the European Union.

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In the context of president Trump's statement that the Paris accords if fully implemented would have "a tiny, tiny impact," BBC News points out that it refers to a Massachusetts Insititute of Technology study by scientists in 2014. That study did not include all the commitments made in the Paris talks, and does not carry the improvements forward beyond 2030 assuming that things level out with no improvements. It then came up with the figure of two tenths of one degree Celsius as the improvement by the year 2100. When the MIT scientists corrected these assumptions after the Paris accords in 2015, they stated that 1 degree of Celsius improvement would be achieved with the Paris accords and all countries working together on the planet. Scientists contacted by BBC News, including Prof. Hohne who works with Climate Tracker that tracks greenhouse gas emissions, say this 1 degree Celsius reduction is the difference between dangerous levels of global warming and tolerable levels. ...

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Landler and Barry say in this report in the NYT that the situation of government paralysis in the U.S. parallels the one in the UK with no-deal Brexit around the corner. President Trump wants a border wall (steel or other kind) on the border with Mexico as a campaign pledge. In the UK Conservative party faction supporting Leave from the European Union, including supporters of Boris Johnson, seek Leave at all cost. Johnson called the shortage of Mars bars a small inconvenience, as the Theresa May government prepares to push its own Brexit deal through Britain's parliament. In a separate report the NYT tries to show that over 80% of the drugs come in through entry ports and the border crossings are largely families or unaccompanied children. For the first time -since the 1950's and the segregation struggles in the U.S. -populists battle the elites in the large cities, say Barry and Landler. The rural urban divide, is seen in both sides of the Atlantic, in Europe and the U.S. ...

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After a period when Democrats let the narrative be shaped by "the entitlements crisis" and questioning the legacy of president Roosevelt- who many including Mr. Trump believe setup the groundwork for the prosperity of the early postwar years in America- the vision of the New Deal and FDR is back, says Glickman in the Washington Post. He says the New Deal order lasted from 1932 to 1980 when president Reagan was elected. Conservatives were skeptical about the New Deal, and Democrats such as Al Gore joined the Conservatives with their faith in limited government and unregulated or less regulated markets. To this was added the faith Democrats such as Mr. Clinton put in a new policy of openness in trade with China that ultimately led to todays $ 1 billion a day deficit with China. There is a new sense says Glickman that the tide is reversing and that FDR is now seen as the new ideal for a fairer and better America, and better investment in the people of America. ...

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This Wall Street Journal editorial says the Trump-Lighthizer strategy is to blow up global supply chains and a political strategy to win Democratic votes. It is critical of the reduced protections for American business from expropriation, which it says is intended to keep American jobs at home. It is also critical of the attempt to leave NAFTA by setting up separate trade deals with Mexico, and later with Canada. Business has favored keeping the North American supply chains intact. The editorial praises the 16 year duration of the agreement with Mexico offering more certainty for investors.

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Crime by violent street gangs with whole sections of cities controlled by different groups, some a remnant of the guerilla wars, has fueled the migration crisis. Many people have left central American countries of San Salvador, Costa RIca, Guatemala, because of the crime and extortion experienced and the lack of law and order in these countries. Criminal violence by these gangs hurts business which leads to even fewer economic opportunities for young people. This leads to a steady flow of migrants to the borders of Mexico trying to enter the U.S. Experts say 95% of homicides in these central American countries are not tackled, with severe distrust of police.  There are fewer emigrants from Mexico as the economy has improved and population growth has slowed. Most of the faces of migrants are now from the Central American countries. A program is underway to create jobs skills in Honduras. But this a small effort in tackling a much bigger problem of violence, lack of economic opportunity, and the legacy of the civil wars in central America in an earlier period that have left whole sections of urban areas under control of former guerillas and militia turned into gangs.  ...

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As a Sunday school teacher Jimmy Carter brought evangelical Christians in the South into the political process. And it encouraged the emergence of other southerners such as Bill Clinton of Arkansas from small towns into Democratic politics. In doing so it distanced the Democratic party from it's roots as a party of the working man, of the working class and labor, of farmers and small business owners, that it had been from 1902 with TR taking up this stance and followed by FDR, Truman, Kennedy-Johnson. Leading to the situation today after Clinton brought China into the WTO and changed world trade, exchanging places with China as a leader in manufacturing, integrating Silicon Valley into the Democratic party under Obama and distancing from working class concerns. Gerald Seib in his tribute to Cater says in WSJ that he was a good man who was president at a bad time. The problems of inflation and cost of living at 10.4% and mortgage rates at 13%, oil prices with the Iran crisis under Carter were problems that were a result of actions taken by the US in the period going back to the 1950's for Iran and embargoes on oil from lack of conservation in oil use in the US. What Carter accomplished is to open the door to new faces out of nowhere- a small town in Georgia was not a place where a presidential hopeful cold be found in previous eras. Washington, Adams, Jefferson, Adams, TR, Wilson, Harding, Hoover, FDR were all from well known families in the East Coast and Northeast. Only Abraham Lincoln emerged from a small town in Illinois. It opened the door for other southerners Clinton from Arkansas and new faces Reagan and Trump.   ...

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President Trump wants to see China lower fentanyl exports to the U.S. because of a worsening opioid epidemic. The trade disputes extend into areas that have no direct connection but affect the U.S. and Mr. Trump's commitment to tackle this issue.  This report says president Trump expressed dismay on this issue.

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The NYT covers the GAESA tourism enterprise of Cuba (that operates independent of the government of Cuba) that overinvested in Tourism at the expense of agriculture industry and infrastructure during the Obama administration, leading to collapse with Trump's 2014 embargo on Cuba. GAESA controls about 50% of Cuba's economy, run by military and people from Castro's family.  That left 121 hotels built in the boom years of tourism at 30 percent occupancy. The Iberostar high rise hotel is one of these hotels that rises over dilapidated housing in Havana, the Cuban capital. The investment in tourism by the GAESA enterprise that runs about 50% of the Cuban economy is 13 times what is spent on healthcare and education, says the NYT. The Castro family, Raul Castro family, runs this business venture that was started when the Soviet Union as sponsor of Cuba had collapsed by 1991. The NYT says this 'devolved' the ideas and promise of the revolution. "Devolved?" What kind of word to describe a complete loss of faith, and enormous failure with severe hardship for the Cuban people? It means the whole idea of communism or Marxist revolution has been proven false, even as it survives in Mexico and parts of Latin America. One can be against the Batista regime- similarly against corrupt regimes in Latin America or Asia- that ruled Cuba before the Castro Cuban revolution and still look for better choices and alternatives than what Castro came up with as an answer to Cuba's needs. Much of Latin America is suffering from the same problems of dictatorships and turning to Marxist alternatives - particularly the alternative put forward by Castro in Cuba- that has also destroyed the Venezuelan economy with Chavez's turn to Castro's Cuban revolutionary slogans and ideology. That came up with temporary solutions for the poorer sections of society, yet failed badly for all sections of society in the long term. How else can one explain one fourth of Venezuela's population and about the same of Cuba's leaving the country, some of those who left the critical human capital that would form the core of the human input to combine with capital and technology for advancing the economy. If Cuba were like the Dominican Republic or other parts of the Caribbean to depend on tourism for its national income then would it not be better to have friendly relations with the US, the main source of tourism revenue. The Obama administration was only holding up a failed idea by holding out a helping hand to tourism in Cuba knowing full well that a change to a Republican administration would simply lead to heavy investments in tourism at the neglect of infrastructure, public services and the economy, of health and education, to become large economic losses. This is what has happened.  As China and India have proven and are proving there are no magical ways to economic development- the same route that was traveled by the nations of Northern and Western Europe with scientific advances, technological advances, have to be taken, the same route that was traveled by the US in its industrial revolution and building of infrastructure, that same route has to be taken by all nations. It does not have to take a time period of centuries as in Europe. The US accomplished it faster with new technologies and vast human and natural resources over 100 years, Japan in 50 years, China in 30 years. India in 25 years ongoing.There is room for intelligent solutions to problems, for speed and tapping into new technologies, yet the same inputs of land, labour, capital and technology have to be put together for development. For states or regions, cities, within China and India, the same inputs, the same access to foreign investment and new technologies is the only route to rapid development. Long range plans are set in motion, decades of stable efficient, clean governance is put in place, and alliances are built with the nations of Europe and with the US. This road is traversed though hard work as Japan and China have done, and India today is thoroughly engaged in. ...

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Peter Navarro's thinking is genuinely felt and genuinely thought out after 20 years  at Harvard, UC Irvine and other universities, as an economist who abhors sitting in the office with textbook theory that has no relevance to life of working families in the heartland of America. He says of these textbook theory economists and the American companies that have recklessly shifted America's industrial base to China year after year and decade after decade- “The same damn fools who supported NAFTA, China’s entry into the W.T.O., and every other trade deal that was supposed to benefit America but only benefited Wall Street and the foreign nations screwing us. Those mainstream economists need to get out more often — maybe to Ohio or North Carolina or Pennsylvania or Wisconsin or Michigan.”  He says the 70 nations including the big ones Japan, South Korea, Taiwan, India, Britain and the European Union are already neogtiating with the Trump administration. What more proof does one want. The Nation will get a better deal as it is about fairness in world trade, and an even playing field. Navarro calls it "a beautiful thing." The three dimensional unique approach taken by Navarro, Bessent and Lutnick and by Trump is working, says Navarro. Fifteen decades ago A. Lincoln stated- "The dogmas of the quiet past are inadequate to the stormy present. The occasion is piled high with difficulty, and we must rise to the occasion.As our case is new we must think anew, and act anew. We must disenthrall ourselves, and we shall save our country."   ...

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Barbara Wesel of DW.com says 2017 will be a difficult year for the European Union. Elections will be held in the Netherlands, France, Germany, and possibly in Italy. The Netherlands election is coming up this month and the far right party led by Wilders is likely to gain as much as 25% of the vote but have to negotiate with other parties in a fractured parliament to form a government. Elections in France show Marie Le Pen winning the first round, with an uncertain result in the second round between Le Pen and Macron. A win by Le Pen could lead to the unwinding of the EU. In Germany another coalition government is expected with the SPD playing a larger role as it regains favor with the voters under the EU's Martin Schulz. Wesel says Germany and Merkel are looking like a beacon of stability and hope as the world looks for leadership with America looking inward to fix problems at home.