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Thomas Hoenig was Governor of the Kansas City Federal Reserve Bank for 20 years. Here he talks about the dangers of "too big to fail" with Gretchen Morgenson of the New York Times. He is due to retire at the age of 65 in 2011. Hoeinig has stood for conservative safe financial practices for U.S. financial institutions throughout his 20 year old career, and cautioned against extending the government safety net for banks that engage in risky financial activities including derivatives trading. And essential element of safe financial practice and part of necessary market discipline, he has pointed consistently, is the fear that taking on risky activities or acting recklessly has a price- creditors can take out their funds if they see a banks as unsafe, and the financial institution may have to be broken up or closed. He joins Alan Meltzer in his criticism of Federal Reserve policies under first Greenspan and then Bernanke that take on the job of stimulating the economy and creating jobs through a very loose monetary policy after the collapse of a bubble. Hoenig sees the role of the Fed in such situations as a neutral player. The reason say Meltzer and Hoenig is that the Fed has not given enough thought and attention to the long term consequences of its policies. What were the consequences of the low rate policies in 2003 asks Hoenig? It promoted another bubble and the mortgage meltdown of 2008. What were the consequences of QE II asks Meltzer in an op-ed piece in the Wall Street Journal on August 11, 2011, "The Folly of Economic Short-Termism?" It has failed to revive the economy or reduce unemployment. Hoenig also points to questions of fairness and equity that arise when banks are treated differently and farmers, seniors and other groups are asked to make sacrifices....

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Philip Alston, UN expert on extreme poverty and professor at New York University School of Law, says most of the progress on poverty that the UN agencies  and elites talk about is based on one country China. In the rest of the world, in Latin America, in Africa, and in other countries in Asia the situation is not any better than it was in 1990. About half of the world's population 3.4 billion people live on less than $5.50 a day, and this is not much changed since 1990. The improvements in China could also mean that the situation has worsened in other parts of the world. The pandemic has taken the lid off the situation in Latin America with Mexico, Brazil, Colombia and other places there showing extreme weakness.  Alston studied this as UN's representative for looking at extreme poverty 2014-2020. He is clear in describing what happened. The World Bank he says set $1.90 a day for poverty line, artificially low and what will not pay for housing or food even. He calls it "scandalously unambitious as a benchmark" what would pay for "a mere miserable subsistence." By using this he says a devastating effect is being allowed to happen as more of the investment is drawn into a pro-growth narrative which pushes allocation of capital in the direction where it profits short term speculative capital and profits rather than the long term investments in health, education and public services that are vital for any country. The improvements in China have also come at the expense of communities in Europe and the U.S. as industries were being shifted with their jobs overseas since 1990, first imperceptibly and then in waves after 2000, which leaves millions exposed to poverty and social decay for the first time in history in the advanced countries. It is an unhealthy and destabilizing situation. Alston's other points are that the so called progress narrative has been used to drown out the appalling effects of policies that misallocate capital away from the vast numbers of people. And in doing this he says it has entirely upended or turned upside down the social contract with the people. From Carl Sandburg's "The People Yes" in the 1950's after the tragedies of war we have come to "The People No." Nothing could be more reprehensible than capital being allocated for dog walking apps and other speculative investments by investment funds pooling hundreds of billions of dollars when basic sanitation services, health care investments are neglected in countries like Brazil, and smaller towns and communities are being systematically uprooted for jobs and social services over three decades in advanced countries in parts of Europe and the U.S.   ...

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This report in The Times shows that from April to October the Tory red wall seats in the north of England have been hit hard by the coronavirus, much harder than the south of England. The infection rates in October are about three or four times in the north of England. The second lockdown came earlier in the north, in Liverpool Greater Manchester and Yorkshire. The result is that instead of levelling up the great disparities in wealth and income that are seen between the south, London and the north of England the gap is widening under the impact of coronavirus. Deindustrialization in the north after their prominent role in Britain's industrial revolution was followed by the same type of decline seen in parts of the American midwestern states. Imports from China and globalization, hit these areas in a sort of second wave, just as America was hit first by the wave of Japanese imports, followed by an even bigger wave of imports from China and complete loss of manufacturing. With it the loss of well paying jobs for workers in manufacturing and the decline of industrial cities. Influx of cheap labor from other parts of the European Union also affected the north. The result is that the popularity of Boris Johnson and the Conservatives with 58% approval rating in April in the north of England is replaced by a rating of about 31% in October 2020. The 40 Tory MP's in the Northern Research Group expressed their serious concern to the prime minister. ...

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China decides to go ahead with a reception honoring the 40th anniversary of the setting up of diplomatic ties with Japan in 1972. Hu Shuli, editor in chief of Caixin Media, economic journalist, says job losses for Chinese working in Japaneses owned companies will hurt China. China received $12.6 billion of Japanese investment in 2011, in comparison the U.S. received $14.7 billion, according to Japan's External Trade Organization.

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China's agriculture based on small farms is undergoing a change as the government pushes automated farming and large farms in the face of limited imports from the U.S. China put tariffs on agricultural imports from the U.S. in retaliation for U.S. tariffs on Chinese imports. China's Agriculture Ministry says it will build 254 "strong agricultural industrial towns" as models for the country. President Xi stated on a visit to northeastern province Heilongjiang, that "unilateralism and trade protectionism are rising, forcing us to take the road of self reliance." The yield per hectare in the U.S. for soybeans is about twice that in China. Mechanized farming is limited in China because it would eliminate many jobs in rural areas. As the state has ownership of land and farmers merely use land, farmers are less likely to take risks with large long term investments. It can be risky for farmers to rent their land use rights to others, which would lead to consolidation.  Now a separate "Made in 2025" plan makes upgrading farm machinery and equipment one of the 10 goals. China may lift ban on genetically modified seeds now that ChemChina has acquired Swiss seed company Syngenta. China plans to partner with Asian Development Bank to provide $6 billion of loans, grants and investment to fund a list of development projects in rural areas, to modernize agriculture. WSJ cites a project of consolidation into an 8200 acre farm in Shandong province that  has increased yields 43% by investing in new farm equipment and planting machines, pesticide spraying drones. Scaling up has made this possible.    ...

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Zero covid lockdowns have added to the sentiment seeing China as a less attractive location for foreign investment. American companies are seeing staff resign due the lockdowns and zero covid policy. About a fourth of companies in a US Chamber of Commerce survey see a 20% drop in sales in 2022. A similar situation is being seen for European companies in China. The other area of growth from property sector is not working anymore as there is a 59% drop in demand for new property units. Investors in the property sector fear  another situation like that of property developer Evergrande's collapse.  Similar to Japan by 2000 a lot of the government infrastructure for roads and rail and automobiles has already been built leaving less room for this sector to kick in. Investments are possible in AI, renewables, electric cars, and advanced technologies, with limited potential to tackle loss of jobs in other sectors such as construction and government financed infrastructure spending and in retail stores. Retail sales are hit by inflation and high gas prices. The result is that China's GDP may fall by 1% according to one estimate for this quarter from the previous year. For growth and foreign investment look to India where a surge in government financed infrastructure in construction of roads and rapid transit, fast rail, construction of housing, and rapid increase in use of mobile phones, automobiles, and appliances is taking place. A new logistics system is being built with a Master plan for the whole economy under Gati Shakti creating a whole new place for foreign investment in a country of 1.3 billion. With Indonesia and Bangladesh closely related to India this is a market of 1.8 billion people far surpassing China and built on values of democracy ingrained over 100 years since the experiments under the British of elected state assemblies. This happened under limited Hind Swaraj since 1930's when India was led by Mohandas Gandhi in these early experiments with democracy. Germany, France and the US have a lot in common with India and the ground is being prepared with improvements for extensive German, US foreign investment by the Modi administration.  ...

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 President Trump says China is backing off in negotiations to address U.S. demands for a fair relationship on trade. He says the U.S. will increase tariffs from 10% imposed in September 2018 to 25% on $200 billion of Chinese goods starting May 10, 2019. China has put tariffs of 10% on $60 billion of American goods exported to China responding to the American tariffs in last September.  The U.S. says since China joined the World Trade Organization in 2001 with the approval of president Clinton it has unfairly benefited in trade with the U.S., leading to closure of factories and loss of jobs in the U.S. with state subsidized Chinese exports to the U.S. contrary to the spirit of the WTO and its rules. China has made promises to correct this and not kept them says the U.S. side in negotiations led by Robert Lighthizer. The tariffs moves are a tactic of president Trump to get China to relent and make fundamental changes in the way it exports to the U.S.  So far the Chinese response has been tit for tat. But this can change. As this report points out what is already known that China benefits far more and exports far more to the U.S. than the U.S. does to China. The $60 billion of American goods exports on which China placed tariffs represent two fifths of China's imports from U.S. With smaller exports from the U.S. to China, China has not much leverage in trade negotiations in this kind of tit for tat retaliation. It hurts China's exporters and economy much more than it does U.S. consumers. The increase in prices for U.S. consumers are also not expected to be significant, according to this report in the NYT, if China increase tariffs further. Aware of this and China's belief that past administrations have not responded is a guide to what the Trump administration can or will do, has convinced president Trump that there is no other way to get a fair trading relationship that respects U.S. interests, its jobs and workers. As Robert Lighthizer who leads the U.S. negotiating team faced this type of response from the Japanese when he negotiated with them (shoving off U.S. demands to reduce Japan's trade surplus in the eighties before accepting them), the U.S. thinks this strategy will work again. In any case it sees no alternatives to achieve its goal of a fair and balanced trading relationship. The U.S. international trade deficit in goods was up to $891 billion in February 2019 even after the tariffs on Chinese goods in September, showing that it will take a lot more to turn this as well as other trading relationships around.   ...

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FR24 gives this video of the televised national debate in France between Macron and Le Pen. Macron took up the challenge of not enough attention being given to Le Pen's ties with Russia and her position of skepticism when it comes to the European Union and climate change. "You are dependent on the Russian government and you are dependent on Mr. Putin. When you speak to Russia, you are speaking to your banker." Le Pen says she had taken that loan from a Czech-Russian bank only because French banks refused to lend to her. "I'm absolutely and totally free woman." The candidates also clashed over Le Pen's proposal for banning Muslim women from wearing headscarves. Le Pen described the veil as "a uniform imposed by Islamists." Macron sad that such a plan would violate France's secular rules and would trigger "civil war" in a country that has the largest Muslim population in western Europe. The Fench colonoized parts of North Africa during the period after 1830, with French colonies in Algeria, Morocco and other parts of the region, leading to immigration from this part of the Arab world. After a series of terrorist incidents the French public lost patience with Islamist tendencies leading to a general swing to the right in French politics including Macron. Yet mainstream parties such as Macron's continue to support France's secular values. The traditional parties from the period before Macron such as the Le Republicains of the De Gaulle period in the sixties and the Socialists from the Mitterand period (1981-1995) both failed to win more than 5% of the vote in 2022 showing the many changes happening in France.  During the Macron period as president Yellow Vest protests brought up the issues of working families having a hard time making ends meet. Macron has responded to such protests with some aloofness but also with a tendency to organize town hall meetings to listen to people express their frustrations.  France has established a stronger welfare state than the US and Britain, and for this reason issues related to the dislocation of smaller towns because of the shift of manufacturing to China are part of the general trend that had affected both the US and western Europe, requiring a more unified response. This now takes shape with the renewal of manufacturing in the US and all the western European countries. Candidates with platforms such as Le Pen's to provide relief for the current surge in the cost of living could offer temporary band aid solutions but not address the root causes that require a renewal of French manufacturing and bringing good jobs home or closer to home. The will and aspiration to bring a next generation industrial revolution to France and Europe is the kind of solution that is needed, one that would revive towns and communities across France and across Europe. Much of the technological capabilities are there in Europe, needed is the will and aspiration.  ...

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US president Biden campaigns in Nevada. His focus is on the cost of living actions and has proposed 15,000 affordable housing rental units on underused federal land repurposed for housing, action which can be taken on presidential orders. Other cost of living action is being prepared by Biden and he closely follows the mortgage rate increases from 3% to 8% that are leaving families stuck without owning an home. Biden is also focussing on the threats to democracy coming from the former president's rhetoric and actions, something that he devoted time to in his address in Philadelphia's Independence Hall, where the founders of this Union gathered together to draft the Constitution. This happened early in his first presidential term and in the 2020 campaign Biden focused on this threat to democracy. Peter Baker points out that Biden is best qualified to convey a sense of hope to America, yet what the NYT, W. Post and WSJ, and the television news channels -that are not watched as much by the core 25-54 years with a shift to digital- fail to do is to do their own introspection on how Biden has forged the consensus in Congress from his vast experience and wisdom to make the multi trillion dollar investments in America's future through infrastructure, job creation, manufacturing, chips and science. Not since FDR has America seen this happen and it shapes 2030. ...

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Gerald Seib of the WSJ says president Biden is coming back with new actions to revive the Democratic agenda after a challenging period in the first year. Yesterday's first formal press conference of 2022 gave Biden an opportunity to respond. Why the WSJ, NYT, did not cover on their online edition front pages president Biden's first formal press conference on Jan. 19, after 1 year of the Biden administration, will remain a mystery. With the American press acting this way it did not take much for Germany's DW.com to run the story with the title "Biden's first year weighed down by disappointment," with a thoughtful Biden at the press conference replaced by a picture of Biden staring downwards.  This is only the first year of the Biden administration. Actions are planned to ease the supply chain situation and bottlenecks at ports. Much is made of inflation, Afghanistan, Ukraine, by Republicans assailing the Biden record. President Biden responded to this by asking at the press conference what Republicans are for. On Afghanistan Biden held firm on not investing billions of dollars every week when there is so much need in America and the rest of the world at this time of the pandemic after a failed adventure for 20 years in "a graveyard for empires."  Biden pointed to the bright spots in 2022- vaccination and testing achievements in the face of anti-vax sentiment with 200 million vaccinated, the job creation in the economy with unemployment way down and wage increases by employers, and the $1 trillion in infrastructure spending tackling much needed projects state by state with immediate impact. Rarely has a president faced so many challenges in the first year as Biden pointed out- vaccination drive in the face of the Delta variant and anti-vax sentiment, the Ukraine crisis with a president Truman period like event of the Berlin Wall coming up just potentially around the corner, and efforts to tackle problems left untackled for a generation in infrastructure, for working families and climate change. Scoring on infrastructure spending, one of the three, with the other two for working families and climate change to be tackled in the remaining three years and beyond.  Biden also told the American audience at the press conference that he was reminded of what his father used to tell him- that if all goals are equally important, nothing is important. In saying this he said help for working families through child tax credit, child care assistance, community college education funding, health care costs, climate change investment were priorities for his administration that would be tackled step by step. And he pointed out from the outset of the conference that only one or two senators were blocking the party's plan for children and working families. All 48 other senators were united in the Democratic party behind his plans for workers and families. As were 5 Republican senators who he said he would not disclose because of confidentiality. In that sense president Biden already has the majority he needs in Congress. This is not happening because of the peculiar situation of the 2016 and 2020 elections in the US and also in Europe- the historical problem of administrations of Democrats in US, Social Democrats in Germany, and Labor in Britain having give up on their working class families and middle class roots. Tech revolution and internet has further complicated the situation with economic changes, tech companies not paying taxes normally due, and tech workers shifting to Democrats yet living in a world distant from working class families fracturing social cohesion. This is changing in Germany with Scholz in Germany with the help of the Greens determined to restore the dignity of working class families, for Biden with a similar coalition, and a process underway in Britain as Labor returns to its roots. In essence Biden was saying- the process of unwinding decades of unwise policy that hurt America as a nation and leader of the free world would take time, requiring a patient step by step approach. To bring America closer to its own roots and Jefferson's immortal words of "all men are created equal and endowed by their Creator with certain unalienable Rights, and among these are Life, Liberty, and the pursuit of Happiness." Jefferson went on to say in the Declaration that when government becomes destructive of these ends it is the Right of the People to alter it.   ...

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The hardest hit group in this downturn are workers who have not completed high school, with the unemployment rate for this group going up to 15.5% compared to 8.4% last year. Workers with 4 year college degrees have unemployment at 4.8%, comparedto 2.3% a year ago. The unemployment rate for women in May is at 7.5% and for men at 9.8%. Women who have finished high school have an easier time finding jobs in health care and education. The male dominated manufacturing and construction industries are among the worst hit. Harvard University labor economist Katz says the recessions of 1990 and 2001 were more "egalitarian" than the present one, which is more like the recessions of the early 1980's and the 1970's when the less educated group was the hardest hit.

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Canada is the largest supplier of oil to the U.S., supplying more than 2 million barrels of oil imports a day. Here the heads of the U.S. and Canadian Chambers of Commerce argue that a new pipeline from Alberta, Canada to Texas would supply an additional 1.1 million barrels of oil a day. The pipeline project- called the Keystone XL pipeline- has been under review by the U.S. government since 2008. An Energy Dept study in February 2011 found that the project should go ahead, but it is being held up for further environmental studies by the Obama administration. The delays may be the result of opposition to Canadian oil sands development. At the same time significant progress has been made in reducing the environmental impact of oil sands development. About 80% of the water used in the process is now being recycled. Tailing ponds containing waste product from the oil shale process are also being reclaimed for green land and replanted with trees and shrubs. TransCanada says the Keystone XL pipeline could create 20,000 new American jobs for construction, and 250,000 jobs in the long run. Strict environmental standards can be followed say Donahue and Beatty, because the U.S. is partnering with Canada....

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The reference Bazooka man comes from Scholz's hard work putting together the 750 billion euro funding package to help German businesses and workers survive the coronavirus pandemic. At the time Scholz said-"This is the bazooka that's needed to get the job done. We are putting all our weapons on the table to show that we are strong enough to overcome any economic challenge that this problem might pose." Scholz gets high marks for his hard work during the Covid crisis as finance minister putting together the funding packages. This BBC report says Scholz chaired cabinet meetings when Merkl went into self-isolation as a precaution. BBC says it gave Scholz the platform he needed to go back to his roots as Mayor of Hamburg when he stood up for social cohesion and help for workers and families. Before he announced his SPD candidacy when asked if he would run he would say - "we need to work, not indulge in vanities." Scholz also played an important role in European solidarity. He was the lead architect with France of the European Union 750 billion euro recovery fund. This brings him strong praise from France, and also support from Italy, Spain, Portugal and other countries in the EU. French foreign minister Bruno Lemaire has praise not only for Olaf Scholz but also for his brother Jens Scholz, who airlifted 6 critically ill French patients to an hospital in Kiel. Says Lemaire "It really is a great German family." Scholz grew up in Hamburg, becoming a Socialist youth leader and studying labor law. He was Mayor of Hamburg from 2011 to 2018. In 1998 he entered the German parliament, the Bundestag.   ...

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Which European port is at the center of Europe's wind energy project. Answer: Esbjerg, Denmark. On May 18, 2022 the heads of state of Denmark, Germany, Netherlands, and Belgium came together to sign the Declaration of Esbjerg. Together the countries want to increase wind energy production in the North Sea to 65 gigawatts (GW) by 2030 and rising to 150 GW by 2050. Esbjerg is one of the few ports in Europe and the key port serving the offshore wind industry. Industry leaders Vestas and Siemens Gamesa ship wind turbines from here, and Orsted provides spare parts that weigh several tons.  German ports such as Bremerhaven lack the infrastructure and it is tied up in disputes ending up in court. Dutch port of Eemshaven is much smaller. The harbor was recently expanded in Esbjerg by 0.5 million square metres to 4.5 million square metres or 45 million square feet. Environment groups are also part of this and there is no dissent in the planning. Here are some useful facts on wind power- Environment cost is 70 times less than that of coal fired power according to Germany's Federal Environment Agency. Within 3  to 11 months wind turbines generate the energy required to build them. No CO2 is produced in the electricity generation process but they do alter the landscape. The future of wind power giants is in the sea where the wind is reliable and strong. One such modern turbine can have an output of 10 to 15 thousand kilowatts to provide electricity for 40,000 people. Pioneers in wind energy are Denmark and Germany. Denmark gets 50% of its energy from wind power, for Germany this is 25%. Jobs are generated installing and operating these wind energy turbines. 1.3 million people are employed in it today. With additional wind propulsion energy consumption of freighters carrying most of the world's freight would be reduced by 30%. Wind and photovoltaic solar can combine for providing most of India's energy because of its sea coastline and having a lot of sun. To get an idea of what is doable in India - in Germany 41% of electricity demand is met from renewables mostly solar and wind. German farmers get 25% of their income from solar energy. Where Germany lags is in use of renewables for transport which falls to about 9% and for heating and cooling where it is about 18%, and it is making great strides to correct this. A big change is technology and how people use transport (more train than airline or automobiles), which will change the entire picture of how energy is created and used in the future. Energiewende the  term for this change is only beginning to take place with urgency in Germany in 2022. India needs to work closely with Denmark and Germany to stay in front of these developments.   ...

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The major part of 4.5 million deaths have been saved in the US just by the decline in smoking. About 4.5 times the losses during Covid pandemic 4.5 million American saved lives just from the efforts to cut smoking of the last 2 decades, and better cancer screening and treatments. Stopping cigarette advertising saved millions of lives. It means letting processed food companies advertise freely, the FDA not doing its job by letting  companies use Red Dyes in food, and lobbyists for plastics companies not stopping PFAS contamination are all costing American lives in the hundreds of thousands. Cancer rate for women keeps increasing as men cancer rate drops. Men took up smoking in large numbers and the decline in smoking had a bigger impact for men's cancer rate. The overall cancer rate has dropped by 34% since 1991 largely because of the decline in smoking. Men's cancer is now almost even with women in 2021 compared to men having 1.6 times the rate of women in 1992. For women increase in breast feeding and having children at a younger age reduced some kinds of breast cancers, as women had children later, and higher use of alcohol, physical inactivity, obesity added to increase in cancer rates. ...

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New Sony CEO, Kazuo Hirai, plans to cut 10,000 jobs, about 6% of its total employees, over the next 2 fiscal years ending March 2014. Sony's television business has faced 8 years of losses, and the entire electronics business has faced 4 consecutive years of losses. The price competition and the high price of the yen has hurt Sony's sales and margins. This has affected the entire Japanese electronics industry, which has suffered consecutive years of losses, including Toshiba and Panasonic. Hirai is changing Sony's strategy in the television business. Instead of targeting a goal of 40 million in sales for television sets, he is cutting this in half to 20 million and reducing the size of its television sales operations. Sony's plan appears to be to focus on its strengths in new technologies and maufacturing, including the new 4 K technology, which would have to be adapted to mass market from its current specialized application. By doing this Sony would not have to compete on price in the manner it does today with Samsung and other Asian brands which have closed the gap in conventional technologies. Hirai's employee cuts follow the 16,000 job cuts made by Howard Stringer in 2008, during the global financial crisis. During March 2011 Sony had 168,200 employees....

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The cost of social stability in OPEC countries is changing the attitude of countries that advised moderation in pricing in the past. Saudi Arabia has committed itself to $129 billon in new spending for public sector jobs, pay increases for state employees, and allowances for the unemployed, to preserve social stability after the democracy protests in the Middle East. This is happening throughout the Arab world and in most OPEC countries. Algeria and Iran have also increased social spending. The oil price that Saudi Arabia needs to balance its budget and pay for this is going up from $68 a barrel in 2010, to $88 in 2011, and $110 in 2015, according to the Institute of International Finance. Merrill Lynch says it is $95 a barrel for this in 2011. This is bringing the moderates like the Saudis and the hawks like Iran and Venezeula together on price issues. In the second week of April 2011, Saudi Oil Minister Ali Al-Naimi, said the Saudis had cut production by 800,000 barrels a day in March because of oversupply in the market. A consultant for Arab Petroleum Investments Corporation which reflects Saudi and OPEC views, says: "OPEC members spending pattern is expected to bear on their oil price preferences and production policy behaviour." The only restraint on price will be that price at some point will affect the global economic recovery and lead to lower consumption and growth, something the Saudis have paid attention to in the past....

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This editorial in the Economist says Britain's economic recovery will not be complete until interest rates are well above zero and productivity growth is established. Without productivity growth and growth in wages, both lacking in the economic recovery since 2009, tax revenues will not be enough to reduce the deficit, requiring more spending cuts. That means the Bank of England will not raise interest rates, keeping a situation of no rate changes prevailing since March 2009 when the central bank cut rates by 0.5%. In the current situation the Bank of England is not expected to raise rates till 2016, only after the U.S. Federal Reserve increases rates to avoid appreciation in the pound and further deflationary pressure, according to Goldman Sachs. With inflation currently at zero, following the drop in oil prices, and 10% appreciation in the pound since mid 2013 making imports cheaper, there is little pressure to increase interest rates. In 2011 inflation with rising food and energy prices reached 5.2% , but the Bank of England did not raise rates because of the eurozone economic crisis affecting growth. Only since 2013 has economic growth picked up with 1.2 million jobs created since the beginning of 2013, bringing unemployment down from a high of 8.5% in 2011 to 5.6% in May 2015. Throughout the recovery productivity growth is falling behind- 2014 productivity measured by output per hour worked was 1.3% lower than in 2011, and 14% below the pre-crisis trend, according to the Economist....

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Tom Keene of Blomberg BusinessWeek talks to a panel of experts about the future prospects for the US and the global economy. The discussion was spurred by Carmen Reinhart's paper at the central banker's Jackson Hole, Wyoming, conference. This paper forecasts high unemployment, low housing prices and very low growth in the US upto 2017. Shiller, Calomiris, Orszag, Kaufman and Bill Gross are part of this panel. Shiller's to do list main item is to get help to local and state governments by restoring general revenue sharing arrangements. Gross would focus on jobs that can hold up in a competitive economy, and put back some of the production that is taking place in the developing countries back into the developed countries, as part of a rebalancing; through a currency realignment. Kaufman would like to see a capital expenditure program by the US government, including infrastructure and education. Calomiris would like to see a setup of a new Republican Congresss to set the stage for post 2012 efforts. Calomiris favors cutting entitlements, cutting payroll taxes, but is not clear how this would help lower the deficit. Orszag points to feedback from business leaders suggesting a lowering of payroll taxes will not spur hiring, as the real reason for not hiring was low 1-2 % expected growth. Shiller, Kaufman and Gross see government efforts as realistically needed in the current situation....

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This WSJ report looks at how China is run today with attention to details by president Xi Jinping. Mr. Jinping takes interest in all matters that relate to wellbeing, reducing gaps in wealth and privilege, coronavirus pandemic, corrupt businessmen or officials, climate change, and the economy. Some decisions have to be reversed after they appear not to be working. In some situations goals conflict such as climate change action on coal requiring shutting down intensive coal dependent factories, and economy jobs goals requiring use of coal intensive factories. Leading to a complete reversal of the original decision to cut back on use of coal as happened in 2021 when factory shutdowns affected the economy.  Jinping does not see it as micromanagement. Previous leaders such as Hu Jintao had little interest and did not put in the effort to seek out areas where policies were not working for families and workers, delegating this to lower level officials. Jinping's style is hands-on and energetic to act on issues that affect how China should be run so that the quality of life of ordinary Chinese is improved. Jinping says that if he did not take action there just is'nt the level of initiative on the part of local officials. Many officials are not competent to tackle complicated issues. Jinping says that "some officials only act when the central party leadership has instructed them to do so." And that he acts as a last resort- "I issue instructions as a last line of defense." His willingness to reverse decisions or let them be implemented with local officials using their discretion if he thinks that would be wise also shows a level of flexibility and humility. Basic to his decisions is a general idea that the original vision of China of the founding leaders in 1948 was forgotten in the headlong rush to modernization of the last 20 years. This means a balance was needed to restore some measure of equality and empowering of the disadvantaged. Xi Jinping's father was one of these founding leaders under Mao and under premier Deng during the market economy founding in the 1990's. Xi Zhongxun, Jinping's father was an energetic leader who also took a keen interest on a whole range of issues for China's modernization drive, a trait now found in Mr. Jinping. The first market economy experiment was done under Xi Zhongxun with premier Deng's encouragement. Xi Zhongxun set up the Guangdong and Shenzen special economic zone in 1979, as governor of the province in an effort to liberalize the economy and slow the exodus to Hong Kong. At the time wages in Shenzen were 1/100 of wages in Hong Kong. Some of this style can be seen in India with Mr. Narendra Modi delving into details of policy and taking intitatives that local officials had neglected to do on a whole range of issues related to modernization, development and technological progress. One of the decisions made by Jinping was to tackle Covid aggressively with a zero Covid policy, which means frequent lockdowns and restrictions even with a few cases. Mr. Modi has also acted vigorously on Covid after warning in March 2020 that this could set India 20 years back, with a policy to get over a billion people fully vaccinated. In both situations the only two countries with over 1 billion population needed this kind of strong leadership with an interest in a whole range of issues that relate to lives of ordinary people during the pandemic to inspire some essential level of public confidence and build public wellbeing.     ...

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The Economist's view is that trade and currency tensions are too high to result in an accord along the lines of the 1985 Plaza Accord. There may be a general underestimation of how strongly the American public feels about trade and jobs issues, and the currency issues that are intertwined with trade issues. This includes the Economist. See the 2010 survey of American public opinion (Murray, Belkin, WSJ, Oct 2, 2010, Americans Sour on Trade), which shows that better educated and higher income professionals are also shifting to firm opinions on trade that impacts jobs in the U.S. Also see Roubini's recent analysis (interview with Peter Stein, WSJ, 10/2/2010, Yen Revaluation for China's Own Sake), on why it is imperative in China's own interest to move forward with a currency revaluation. Economist Robert Gordon of Northwestern University (Peter Coy, Business Week, 9/30/2010, Why One Economist Predicts Slow US Economic Growth), recently pointed out that his models show a significant slowing down of the U.S. economy over the next two decades, the slowest growth since the Presidency of George Washington. This means growth slowing down to 1.5% in the period 2007-2027, from 1.93% in the prior three decades, which he says leaves less money for everything from tackling carbon emissions to infrastructure needs. ...

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This report says fewer jobs alone is not going to reduce inflation, US inflation is propelled by factors beyond economic theory. The Phillip's Curve is a inverse relationship between unemployment and inflation that was a convenient tool for the 1960's to get the economy to do well with low unemployment at 4% with moderate inflation. It was torn apart by high inflationary expectations in the 70's. In today's world Robert Gordon of Northwestern University suggests central banks consider inflationary embedded expectations, supply shocks and cost push as in the pandemic 2021-2022, and demand changes. The job that Mr. Powell at the Fed has is lowering inflationary expectations by reducing private sector investment and job creation by raising the cost of capital through interest rate increases. Yet today the government is a huge partner in capital investment for America in clean energy and infrastructure building which means job creation remains strong as it has in America. President Biden's effort to reduce pharmaceutical costs and for inflation reduction by fighting price increases through stealth fees, has at the same time cut into inflation. So as lower demand and increased supply in 2022 as the government better manages the supplies of energy, including release of oil stocks from the national reserves. Explained- The Phillips curve is an inverse relationship between unemployment and inflation observed by a New Zealand economist William Phillips in a paper in 1958 based on British unemployment and inflation data1861-1957. Economist Robert Samuelson turned it into a textbook concept as a simple tradeoff in 1960 more inflation gets you less unemployment- which fit the period of the 60's- but warned that it could change over time. Milton Friedman and others during the 1970's period of high inflationary expectations setting rejected it. In reality Mr. Phillips never meant for economists like Samuelson to generalize from his statistical observation of data on the British economy before 1958 and apply it to the US for the closing decades of the 20th much less the 21st century. ...

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Half of the 109 economists and housing analysts polled in October 2010 by MacroMarkets LLC, expect home prices to bottom in 2011, and half don't expect home prices to bottom till 2012. Backing this up is growing inventory in many markets. The Wall Street Journal's latest quarterly survey of housing market conditions in 28 major metropolitan areas showed inventories of unsold homes were up in 19 markets at the end of 3rd quarter 2010, compared to the prior year. The largest increases were in California- in Los Angeles, Sacramento and San Diego. Only parts of Texas, and Washington D.C, and some other areas which have shown decent job growth are an exception. In the Realtor's Report, median home price fell 2.4% to $171,700 in September 2010 from a year earlier. This data does not include the suspension of foreclosures due to title defects, which will further dampen prospects of a recovery in housing. This will affect New Jersey, Florida and other "judicial" states, where the banks must complete foreclosures through court. At the current sales pace it would take 10.7 months to sell the 4.04 million home inventory of unsold homes, according to the recent NAR report. Six to eight months is considered normal. This does not reflect the "shadow" inventory of homes in some stage of foreclosure, which is estimated at around 4 million, creating a problem that even current low rates for a fixed rate mortgage of 4.21% cannot solve....

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China after American and European offshoring of supply chain and manufacturing over three decades is going through a rapid reversal. People to people contacts are also falling off a precipice as it were, showing how badly structured efforts by business focused on profit and not people to people fail miserably, hurting the long term prospect of peaceful cooperation. Foreign Investment that was $100 billion in the first quarter of 2022 is now $20 billion. Tourism down by about 80%. At Zhangjiajie National Park goes from half a million foreign tourists to 50,000 last year. It is typical of this staggering change.  People are not going from America and Europe to China unless they have to. It shows the complete failure of a purely business relationship such as offshoring manufacturing when it hurts workers and families in America and Europe, who turn against it leading to a free fall in relations. American and European business and the governments allied with it failed in this sense to build a world of better interpersonal relations between Asia and the western world. China's experience with industrialization and modernization begun in 1990 is now a cautionary tale for other regions such as India and the Middle East that are planning their own modernization. Much of it happened less from a people to people relationship than from an effort by US business to seize the opening of China after Mao's revolution to offshore American manufacturing as if realizing a new opportunity without understanding its long term consequences for the American people. European business followed American business in this offshoring. It damaged the basic structure of the American and EU peoples based on locally based supply chains and manufacturing at home needed for strong healthy communities, leading to this situation today. The rancor and deeply seated discontent all across America and Europe from communities losing factories and the jobs and wealth coming from it from offshoring by business interests has created this situation.  ...

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Lucie Castets, candidate for prime minister of the largest parliamentary group in the National Assembly of France, the NFP,  is interviewed in The Guardian. Kim Willsher interviews Lucie Castets at a cafe in the Marais district of Paris.  Castets says- “France is a rich country but people are getting increasingly poor, they don’t know if there’s going to be a teacher in front of their kids, they don’t know how long they’re going to wait in casualty if they break a leg, they don’t know how much their salary will be in a year. Who can accept that? Well apparently, Emmanuel Macron accepts that, but I think it’s unacceptable.” A government is needed in France for a budget to be passed by January 2025. A caretaker government of Macron's party cannot do this following its poor showing in the recent election. Macron refuses to let NFP form a government with outside support saying he was doing this for "institutional stability." Macron wants to see cuts of $25 billion. The NFP wants to spend $150 billion for the government to meet the needs of the people. It would like the US, recover most or all of this $150 billion from higher taxes for the ultra rich, and billionaires which would not affect 95% of the French people.  Castets says- Castets rejects the ideas this would be “impossible to apply or finance” and cost jobs. “We will finance each measure with new revenue, unlike the government. The accusation of economic irresponsibility irritates me because that’s not what we’re proposing at all. The NFP’s programme was heavily attacked on this aspect, so it’s important to say that these measures will only affect the ultra-rich. We want to correct flagrant tax injustices, with billionaires paying a lower percentage of tax than the middle classes.”   ...