LyrArc Article Gist
Krugman has some legitimate concerns. Noting that 600,000 jobs were lost in February, 2007, which would mean several million jobs lost, anywhere from 5 to 7 million jobs lost in 2009. In the face of this generating 3.5 million jobs by the end of 2010 as Obama plans to do, looks like not having done enough, and letting the worst effects of the downturn go on. And the lack of a plan to resolve the situation of failing banks, which are only drawing more of the government's capital, leaves continued weakness in credit markets and the economy that will hurt the unemployment picture through 2009. So in spite of all the rhetoric and good intentions, the lack of experience in dealing with a crisis of this magnitude, political deadlock, and an element of trial and error, learning and observing, as the President and his advisors deal with the evolving crisis, leaves the American economy exposed to many risks.

LyrArc Article Gist
Carney calls Canadian elections on April 28 2025. He was head of the Bank of England and comes from the financial sector. The opposition leader from the Conservatives cannot be ruled out as he enjoyed increase in popularity after Trudeau's popularity declined after being in power since 2015. Carney has never contested an election and the example of Sunak is recent. Sunak called an early election only to lose badly to Labour in 2024 after serious missteps by the Liberals and a split in the party. That split has not been fixed by Carney in any way. 

LyrArc Article Gist
Peter Eavis, in the Heard on the Street column, says something similiar to what Krugman said when the Geithner plan (for troubled assets to be bought by private investors with cheap money from the government,) was announced March 23, 2009. His point is similiar to Krugman's in that if the market is experiencing just ashortfall in confidence and liquidity Geithner's plan might work, but if the underlying properties are not worth that much, the government engaging in agame of price support can't really win. The securitizztion of mortgages ocurred in a period of easy money. Now that that period is gone the basic underlying structure that supported it is gone. With more job losses at the rate of half amillion a month does anyone think the government can make the underlying mortgages for these securities profitable even with the government putting in its money to leverage the returns? He is right in pointing out that investors would need to build abig margin or error and will likely bid well below what banks are willing to sell at. CreditSights projects collective losses of the 4 biggest US banks through the end of 2010 of $250 to $450 billion....

LyrArc Article Gist
In his essay on the oped page of the WSJ Bernanke says: "history teaches us that government engagement in times of severe financial crisis often arrives very late, usually at a point at which most financial institutions are insolvent or nearly so, and in these conditions the consequences and costs of inertia and inaction can be staggering." Bernanke clearly is a student of the Great Depression and has learned the lessons from that catastrophic crisis. He pushed early for Paulson to take the case to the American Congress, and he had early on called for an injection of capital into the banks for ownership stakes, something the Bush administration ideologically resisted. Now that $250 billion is being injected into banks as part of the $700 billion rescue effort, and a global plan is being shaped after the Gordon Brown plan in the UK, it is possible for Bernanke to say that serious efforts are being taken that meet the severe challenges posed by a freezing up of credit markets wordwide. After some missteps and the help of Gordon Brown's initiative in the UK, there is reason for confidence even in the face of what Bernanke calls more " inevitable setbacks."...

LyrArc Article Gist
Allan Meltzer says a Fed QE III woud be bad monetary policy. He puts several questions to Bernanke- how the Fed and Ben Bernanke can know now what is the right interest rate policy in mid 2013, and what reason can the Fed give for adding excess reserves when U.S. banks have $1.6 trillion in idle reserves at the Fed. Meltzer cautions the Fed and other policymakers not to pay attention only to short term forecasts, which can be susceptible to large errors. And calls for attention to the long term consequences of their actions. One point he emphasizes is that the unemployment problem cannot be resolved with short term policy actions nor can it be resolved in a short time. It will take population growth, falling housing prices and rising rents to create opportunities for new construction. Another change is the transition to a less consumption driven and more export oriented economy. This transition which has started will also take time. He urges the Congress and the administration to focus on: reducing corporate tax rates by closing loopholes, long-term reductions in entitlement spending, a 5 year moratatorium on new regulations, and the Fed adopting an explicit inflation target between 0% and 2%....

LyrArc Article Gist
Hilsenrath points out that Japan's central bank, the Bank of Japan's holdings of securities and loans has increased by 35% in 2008-2013 compared to an increase of 2, 3 and 5 times respectively in the assets of the ECB, the U.S. Federal Reserve and the Bank of England. Experts in Japan say what was considered commonsense by Bank of Japan chief Shirakawa and others, that aggressive monetary policy doesnt work, is considered nonsense in other parts of the world. They say aggressive monetary policy was never tried and Shirakawa diluted its impact by saying he did not think it would make much of a difference. Communicating the right message to financial markets was part of the approach taken by Draghi at the ECB, Bernanke at the U.S. Fed and King at the Bank of England. Anil Kashyap of the University of Chicago agrees. He says the Bank of Japan missed its inflation target for 15 years. BOJ also bought shorter term bonds in its bond buying efforts, with maturities of three years compared to the average maturity of nine years for bonds being purchased by the U.S. Fed. This reduces the effect. The Abe administration is careful to present the approach as similiar to that in other countries, and intended to spur growth in Japan, which in turn should spur global growth. U.S. Fed chairman Bernanke has supported this effort. Prime minister Abe was on a visit to the U.S. communicating Japan's approach and winning support, something never done before....

LyrArc Article Gist
Referring to the nine mile wide area from Israel's Mediterranean coast north of Tel Aviv to the West Bank at the shortest point, Israeli prime minister Netanyahu says of pre-1967 borders- "these were not the boundaries of peace, these were the boundaries of repeated wars." Netanyahu is reported to have made an angry phone call on May 19, 2011, to Secretary of State Hillary Clinton after hearing of President Obama's call for a peace with a return to the pre-1967 borders. Netanyahu told Obama Israel considered such borders indefensible and not the basis of a lasting peace.

LyrArc Article Gist
Will the long awaited Obama plan do enough to reduce foreclosures and help the economy? $75 billion will go to help homeowners facing foreclosure. But it continues the earlier course of letting it be voluntary for banks and lending institutions to decide if they in fact want to reduce the mortgage payment to 38% of the borrower's income. If they do the government provides an incentive of $1000 for every loan modified, and more payments if the borrower stays current. If the lender decides that its not in its interest to make concesssions to reduce the payments to 38% of the borrower's income, in exchange for the $1000 incentive, it could well decide to do nothing, and even continue the current practice of adding on interest and penalties that actually increase the mortgage payment in many cases. Is it enough? Clearly no, if Mark Zandl, chief economist at Moody's Economy.com is right, and helps only 1 million of the estimated 14 million people who are under water, and the homes are worth much less than the outstanding mortgage. As Martin Feldstein has pointed out for the last year since early 2008, its these people who are under water that need to be helped, and not in a piecemeal or voluntary way as Obama is suggesting. It only goes to show that after all the rhetoric, Government both Republican and Democratic, differ only in degrees in the way they are responding to the foreclosure crisis, that is at the root of the financial crisis. The tidal wave of foreclosures, the other 13 million borrowers that are not helped by this plan but are under water, with growing numbers because of growing layoffs, suggest a serious failure to tackle the problem, with serious consequences for 2009 and beyond....

LyrArc Article Gist
Economy Minister Habeck says- "Our energy system will be structured differently: we will have 80% renewable energies by 2030."  Germany will close its last 3 nuclear plants this week. Germany is shutting down all nuclear energy when other countries are increasing reliance on nuclear energy. Westinghouse is building Poland's first nuclear plant. Britain, France and Finland are increasing nuclear energy with its very low carbon emissions. Biden administration in the US is backing the building of a new generation of smaller nuclear reactors. Mr. Habeck the Economy minister says for the short term Germany has its natural gas storage tanks half full with the winter heating season over. New LNG terminals and imports help replace Russian supplies. In the long term Germany is way ahead in renewable energy than other countries and will craft its own solution in its own way.

LyrArc Article Gist
Stephen Lezak of Oxford looks at the costs of mining for lithium, cobalt and other minerals needed for EV's. There is the danger of the EV transition happening at the increbible cost to producing countries in Africa and Asia. In the Congo the problem of child labor and in Indonesia the problem of destroying huge parts of tropical forest. Can the EV transition happen on the backs of environmental destruction of forest or child labor?  Lezak suggests bringing mining for lithium, cobalt, back to the US with strict controls and for Apple, and EV makers to have a passport that shows where their EV battery materials come from, the responsible sourcing of materials and the controls in place. This is a problem that won't go away and will require serious solutions for green to mean something entirely positive.

LyrArc Article Gist
Low morale of 14,000 Yahoo employees with attrition in management ranks and no clear idea about Yahoo's future.

LyrArc Article Gist
Blanks describes the situation for 65 million Americans with criminal records who find it difficult to find jobs.

LyrArc Article Gist
British Prime minister Gordon Brown meets bankers from Merrill, Lehman and Chase JP Morgan, Thain, Fuld and Dimon to discuss issues relating to credit recovery, disclosure, valuation, and injecting funds into the market and passing on benefits to mortgage holders and urge banks to bring transparency and disclosure so that writeoffs from offbalance sheet activity can be taken quickly and openly. He is for coordinated international action and the British government is talking with the Bank of England on steps to calm the credit markets.

LyrArc Article Gist
Jay Powell, a former US Treasury official, now a scholar at the Bipartisan Policy Center, says the fears of budget problems in US states are survivable, even though they will be difficult and painful. He does not see widespread defaults, the way Meredith Whitney has predicted. Kenneth Rogoff of Harvard University, says a major default would cause serious macro-economic dislocations. It would have impact beyond the US, in the European economies with serious budget problems such as Greece, Portugal and Spain. Analysts cite the following reasons why a widespread debt default by states and local governments is unlikely. Municipal bonds are held mostly by individuals, who own about two thirds of US municipal bonds, directly or through mutual funds. Most state and local government debt is long term, and does not rely on short term borrowing the way a Lehman Brothers did in the recent financial crisis. The states can raise revenues, as Illinois did recently. With the economy improving state tax revenues were up 6.9% in the fourth quarter of 2010, compared to a year earlier, according to preliminary data from the Nelson Rockefeller Institute of Government, Albany, New York. That said, the following reasons show that life will be difficult and painful for states and local governments. State budget gaps total at least $125 billion, as they look to the coming fiscal year, according to the Center on Budget and Policy Priorities. And no federal help is in the works, as it was in 2009. Far less of newly issued muni-bonds are insured today - 6% compared to 57% in 2005- according to the Bank of America Merrill Lynch. Insurers are still recovering from losses in the recent financial crisis. A massive supply of new bonds has depressed the market just as Dec 31 expiration of a federal program, Build America Bonds, which provided help to states that were borrowing. Investors withdrew $23.6 billion from muni-bonds mutual funds since November, 2010. Moody's Investor's service has listed the states that will need to issue bonds to fund current operations. California will borrow billions to cover cash flow needs, and Illinois is considering an $8.75 billion 'debt restructuring bond' to pay past due bills, and a $3.75 billon bond for contributions to its pension system. Because banks have only 1.3% of assets in muni-bonds any defaults will not affect their ability to lend. But the impact will be felt in the US economy and overseas. In the event there was a default, some analysts believe the federal government would find it hard to say no when the federal government said yes to AIG....

LyrArc Article Gist
Conditions that a Netanyahu government would accept for the creation of a new Palestinian state are a military presence on the Jordan river, and sovereignty over Jerusalem and the settlement blocs. He would be willing to negotiate the giving up of the rest of the West Bank. Another condition is that the Palestinian government cannot include Hamas. This was outlined in a speech he made to Parliament on May 16, 2011. In a speech outlining his government's policy in the Middle East President Obama called for a return to pre-1967 borders for Israel.

LyrArc Article Gist
Meltzer says the northern European countries France, Germany, Netherlands, and others should form a new currency union, and leave the euro currency to Portugal, Ireland, Italy, Spain, and Greece (the PIIGS countries). This way Greece can devalue its currency to bridge the gap of 20% between wages in Greece and the productivity of workers in Greece. The new currency union would follow fiscally binding rules. After the adjustments in currency were made by Greece, Portugal, Italy and Spain, these countries could be admitted to the new currency union of the northern countries. This would be conditional on acceptance of financial discipline and enforceable sanctions by these countries. Meltzer says clever agreements designed to protect the bankers are not the solution, as they only shift the responsibility and the burden for wasteful and reckless behaviour to taxpayers. Bondholders would take losses in a devaluation, and banks that are at risk should be either allowed to fail or given loans on strict repayment conditions. ...

LyrArc Article Gist
Former World Bank chief Zoellick points to the need for investments in human capital and productivity improvements in emerging markets such as India, China and Brazil to overcome the problem of slow growth in 2013.

LyrArc Article Gist
The risks facing China of slow growth and a bubble economy as the new leadership of Xi Jinping takes over in 2012. The export model for the economy is coming to the end of its run and the new leaders have to come up with a new plan for the future. At the same time they face the interests of state owned companies, banks and local governments interested in maintaining the status quo.

LyrArc Article Gist
The remarkable recovery in Iceland after devaluation of the currency and a whole range of steps taken by the government to support those affected hardest by the recession. A recovery in exports and letting banks fail- not letting the burden fall on the government and taxpayers as in Ireland- also helped ease the path to recovery. Iceland is making repayments to the IMF ahead of schedule and is able to borrow on international markets.

LyrArc Article Gist
Newspapers and media from Argentina to Germany and France praise the effort of the new U.S. Attorney General in prosecuting the case against FIFA, and taking on the challenge of acting in a case that crosses international boundaries. The use by people investigated in the case of the American banking system and the new willingness of banks to cooperate with federal investigations provides Lynch with the basis of building a strong case.

LyrArc Article Gist
Questions raised about Price Waterhouse's audit procedures, whether it contacted the banks directly to verify the cash balances on hand and whether it looked for signs of trouble like the huge discrepancies between net income and operating cash flow in recent years. The Institute of Chartered Accountants of India, India's professional accounting body is conducting its own investigation and may revoke licenses and remove members for violations of its code of conduct and ethics.

LyrArc Article Gist
Local reports indicate that in Brazil alone the damage could be $30 billion from betting the local currency against the US dollar in complex derivative contracts issued by banks. With the Mexican peso and Brazilian real rising against the USdollar many latin american companies bet against the dollar. Mexico's No 3 retailer La Comer decalared bankruptcy with losses of $1.4 billion. Cemex lost $711 million and Gruma which makes corn tortillas $684 million.

LyrArc Article Gist
Feldstein points out that other recent recessions were of short duration because the the Fed tightenend monetary policy to get back to price stability so that the Fed had some control over duration. This time the six years of steady house price increases has created a bubble which is the cause of this recession, and to make things worse it has affected the creditworthiness of institutions, as a cloud hangs over the assets carried by financial institutions because complex securities were created with risky mortgages and dispersed throughout assets of these financial institutions. So there is only so much the Fed can do. Feldstein is pessimistic about how long this recession could last. Feldstein faults the poor supervision and bank examinations of the Fed over banks and institutions they lend to such as nonbank financial institutions.