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Japanese prime minister Naoto Kan says he has requested the suspension of operations of all reactors a the Hamaoka nuclear plant in Shizuoka prefecture. This plant is operated by Chubu Electric. Another plant on the Japan sea coast has been shut temporarily to investigate above normal radiation levels. With the government moving away from its policy of cooperating with the industry, there are questions whether other nuclear plants that are on earthquake fault locations may face similiar restrictions. This move will further restrict electricity supplies to companies in the local areas supplied by the plant. The Hamaoka plant has been described as "the world's most dangerous" by Japanese media because it lies near an active fault zone. Government estimates are for an 87% likelihood of a magnitude 8 earthquake in the next 30 years. Pressure is growing on premier Kan to take action to show he is listening to public opinion and not following old practices of collusion between bureaucrats, politicians and the nuclear power companies....

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BP makes a final settlement with the states and the U.S. government for the Gulf oil spill. Of the $18.7 billion settlement in July 2015, the Clean Air Water Act penalty is $5.5 billion, the Natural Resource Damages are $7.3 billion, the 400 local government claims are $1 billion, the economic claims to 5 states are $4.9 billion, according to BP. Most of the money goes to the states of Louisiana, Mississippi, Alabama, Texas, Florida, for environmental improvement and economic development. Louisiana gets $6.8 billion. The settlement comes after court rulings went against BP. BP chairman Carl-Henric Svanberg, says it provides -" A path to closure for BP and the Gulf. It resolves the last remaining legal exposures, provides clarity on costs." BP shares were up 5.1%, and Fitch Ratings say this strengthens its ratings. For BP this adds $10 billion in cost to $44 billion already incurred for legal and cleanup costs.

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FDIC program for loan modification at IndyMac Bank. About 3500 loans were modified, and 15,000 borrowers contacted in recent weeks with offers for lower affordable monthly payments. FDIC's innovation is to create a comprehensive program with clear guidelines so that a lot of loans can be modified without doing it on a case by case basis which would take too long. Loans are modified by reducing interest rates and the principal amount so that the payments are affordable each month, and the FDIC has come up with 38 to 40% of the previous monthly payment as about the right amount. It also looks at tax information to verify earnings. There have been complaints about the responsiveness of FDIC Indymac call centers which may have inadvertently turned down some homeowners looking for help. A big problem is that the FDIC can do little for loans sold to other investors so that out of 653,000 loans serviced by Indymac Bank only about 47,000 are eligible for FDIC modification program. ...

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"China's Superbank," by Henry Sanderson and Michael Forsythe looks at the rise of China Development Bank to provide insights into the two decade real estate boom in China, and the trillions of dollars in loans made by state owned banks to finance China's state owned industries and infrastructure development. The authors say these loans based on land owned by the state, improved with roads and other infrastructure and then sold to industry, have helped finance China's urbanization and industrial development. But it has also created problems including eviction of farmers from the land by local government authorites increasing inequality, led to misallocation of capital on bad projects, and an unsustainable model of development focussed on state owned companies. A major side effect of this is not covered in the book. This is the impact of crowding out of credit for private industry in China, with privately owned business having to pay higher rates in the underground loan market or lacking financing. A major focus of the report "China: 2030" by the World Bank and China's official think tank Development Research Center is on reversing this development to come up with a sustainable development model. The report was supported by World Bank chief Zoellick and China's new prime minister Li Keqiang. "The Great Rebalancing," by Pettis, a finance professor at Beijing University, looks at the other side of the financing of China's boom- the low interest rates on savings for China's consumer. This reduces household incomes and reduces purchasing power as the interest rates are lower than the rate of inflation. Lower value of China's currency also reduces the purchasing power for China's consumers. Estimates show the low interest rates cost China's workers and consumers somewhere in the range of 3 to 8% of GDP annually in bank deposit income. This money is funnelled through the banking system to make more loans for infrastructure and growth at the state owned companies, concentrating exraordinary level of financing in one direction. As a result the consumption share of GDP in China has actually fallen in the two decades of hyper development. This is about 34% compared to 50-55% for other Asian economies....

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This election is seen as a turning point for Britain. The Liberal-Conservative coalition has come up with a radical plan to cut spending and decentralize services in the areas of education, policing and health care. The plan is to cut the deficit quickly from 11% of GDP in 2009-10, to 2.1% in 2014-15. By comparison the outgoing Labor government's plan was to balance the budget by 2016-17. And the fiscal impact of Labor's budgets would have been 4% by 2014-15, compared to the Cameron government's looking at 6.3%, with larger and accelerated cuts in spending. It is something of a gamble by the Tory-Liberal government. If the severity of the cuts in spending stifle growth, then Plan B will be needed. The size of the cuts are not seen as feasible. With growing interest payments with the large borrowing by the government, and no real cuts in healthcare spending, departments delivering public services in Britain face cuts of 25% by 2014-15. With defense and schools limited to cuts of 10%- other departments would face cuts of 33%. According to the Institute of Fiscal Studies one way to reduce the severity of these cuts in department budgets, would be to find additional savings in the welfare budget. In June, Mr Osborne, the Chancellor of the Exchequer, announced 11 billion pounds in savings in this area (with half coming from using a different measure for inflation in calculating benefits). Additional savings of 14 billion pounds in welfare budgets, can reduce the size of the cuts needed in departmental budgets to 20%. One example cited is means-testing payments that go to the affluent as well as to poor people, such as child benefits, and cutting winter-fuel payments. Tories and Liberals agree on the need to decentralize government and services in the areas of schools, policing and the NHS. In schooling the idea is to give more choices to parents and children. Current schools can apply for academy status and new "free schools" will be run be non-profits, charities, churches, and parents. These schools will have freedom to set pay, select curriculum, and still receive state funding. In policing, the idea is to have directly elected police and crime commissioners for every constabulary in England and Wales. The elected commissioners would appoint constables and determine budgets and priorities. For the National Health Service the move is to give groups of general practitioners a significant role in the delivery of health care. ...

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The water situation on the Euphrates river. Three reporters for the NYT, Amir, Mohammed, and Abeer, join NYT's Campbell Robertson in talking to farmers along different stretches of theEuphrates river in Iraq, near Jubaish, Karbala and where it meets the Tigris. The causes of the problem are the water policies of TUrkey and Syria which are the upstrema countries and have built dams along the river which control its flow, a two year drought, and water mismanagement and neglect in Iraq. The river is significantly smaller now, and at this rate could be half of what it once was. It affects rice and wheat fields along the river which are turning into scorched dirt, canals becoming small streams, and water treatment plants sitting idle. The area for wheat and barley in the rainfed north is down 95%, and the date and citrus orchards in the east are dry. There are no treaties for water use with Turkey and Syria, so the situation is unpredictable. Recently Turkey doubled the waer flow into the Euphrates, a mover that increased water flow to ablut 60% to cover half the irrigation requirements for the rice growing season....

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The Wall Street Journal's editorial columns have followed closely the working of Fannie Mae and Freddie Mac over the years. Especially during the last decade, when most of the excesses, missteps and failures in the operations of the two companies occurred at huge cost to the US economy and to taxpayers. The Journal quotes from the recent Treasury report on the planned winding down of the two agencies. And focusses attention on the question of what will replace Fannie and Freddie. Only the first of three options looks viable considering the goals of reducing misallocation of national resources, and winding down the federal government's role in housing, says the Journal. With this Option the federal government guarantees are limited to Federal Housing Administration (FHA) loans to low income buyers and VA assistance for veterans and farm programs- narrow segments that limits the guarantee strictly to 10-15% of the mortgage market. The Journal says that the conclusions of the Treasury report are what WSJ has been saying for 20 years: " The strength of this option is that it would minimize distortions in capital allocation across sectors, reduce moral hazard in mortgage lending and drastically reduce direct taxpayer exposure to private lender's losses." And the points about the benefits: " With less incentive to invest in housing, more capital will flow into other areas of the economy, potentially leading to more long-run economic growth and reducing the inflationary pressure on housing assets. Risk throughout the system may also be reduced, as private actors will not be as inclined to take on excessive risk without the assurance of a government guarantee behind them. And finally, direct taxpayer risk exposure to private losses in the mortgage market would be limited to the loans guaranteed by FHA and other narrowly targeted government loan programs: no longer would taxpayers be at direct risk for guarantees covering most of the nation's mortgages." This bit of wisdom is especially significant, as misallocation of capital that went on in housing for the better part of the last decade has hurt America and the American people. It makes sense to have explicit money allocated by Congress for housing help to the poor and have no housing guarantees that have hurt the economy....

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The revised AIG rescue plan helps banks recover some of their losses on collateralized debt obligations and helps AIG by cancelling the credit default swaps it wrote on these CDO's, and thus helps shore up the financial system. This is what happened. During the boom period banks bought protection from the insurer AIG on securities backed by now-troubled mortgage assets. These securities are called CDO's or collateralized debt obligations backed by subprime mortgage bonds, commercial mortgage loans and other assets. Banks in the US, and Europe bought credit default swaps on these securities from AIG, and AIG promises to compensate them if the securites default. Now with the housing and the credit crisis the values of these CDO's plummet, banks go to AIG and AIG has to provide them collateral to help cover these losses of the banks. AIG ends up giving $35 billion in collateral to the banks including Goldman, Merrill, UBS, Deutsche Bank and others. The continuing fall in value of the CDO's meant AIG had to give more and more collateral to the banks leaving AIG severly exposed, which is along with other problems on its accounting books when the government stepped in in early October to bailout AIG with loans, with interest rates that became punitive for AIG leaving it in a struggling condition. What does the new revised plan do. It eases conditions on the interest rates and the New York Fed puts $30 billion of its money to buy the multisector CDO's at market prices averaging 50 cents to the dollar and AIG provides an additional $5 billion. With than one action banks get to recover their $35 billion and AIG gets to cancell its credit default swaps on these CDO's, in effect freeing AIG from thses swaps that were creating a hemorrhaging effect as it had to keep posting more and more collateral to banks, and banks got to recover the money on CDO's. In effect helping shore up the financial system. There are other problems at AIG but this was the biggest and most draining, and it helps AIG protect its other businesses, and banks get to put this dismal chapter behind them. ...

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Heidelberg, in southern Germany, and smaller cities like Freiburg and Tubingen are seen as "green cities" in the sense that the people there have an open international outlook, are well educated, look at new ideas, and are idealistic. The Green party is in power in the southwestern state of Baden-Wurttemberg since 2011, where these three cities are located. Greens have about 20% support in elections here compared to 8% nationwide. Here Dr. Franziska Brantner, the representative in the Bundestag describes the orientation of people in the state. Heidelberg was able to handle the 600 refugees coming at the peak of the crisis very easily. Heidelberg's university, the oldest in Germany was founded in 1386. Students make up a quarter of the population of 156,000, and most of the Green party voters have university degrees, more than any other party according to Die Welt.

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Fitch Ratings reports that 10 of the largest U.S. money market funds have combined assets of $755 billion, and as of May 2011, half of these assets are in instruments issued by European banks. These assets have been held for 5 years. In the event of a crisis it is feared that the funds will withdraw from the European market. Money market fund holdings for the ten largest funds show that no European bank has more than 7% of its short term funding from these money market funds, according to Fitch. A combined withdrawal would affect global credit markets.

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A day in 1936, 75 years ago, when New York Mayor Fiorello La Guardia opened the city pool in Red Hook, Brooklyn. The pool was the seventh pool built by the parks department with money from the federal Public Works Administration. Admission was ten cents when the pool opened, with children allowed for free in the morning. Robert Moses was the parks commissioner in those years. The pool meant a lot to New Yorkers then, 40,000 people attended its opening. The good thing says the current commissioner Mr Benepe, is that the city continues to invest in its parks and infrastructure.

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RIM's Blackberry phones struggle to compete with Apple's iPhone and phones using Google's Android software. RIM's second quarter net income fell by 59% to $329 million, from $797 million in the same quarter prior year. Gross margins declined to 39%, from 46% the prior year. Revenue declined 10% to $4.2 billion. The Playbook tablet computer is also struggling. RIM shares lost 19% of their value in after hours trading following the announcement on Sept 15, 2011. RIM introduced 7 new phones that are updates of existing phones. It is not known when the new phones using the QNX operating system will be available.

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The longer the recession, the lower the wages on the next job and the quality of work in the next job, says Columbia University labor economist, Till von Wachter. It may take years for the wages of these workers to catch up to what they were before the recession. From 2007 to 2009, more than half the full time workers who lost jobs they had held for more than 3 years, and then found full time work by early 2010 reported wage declines, according to the Labor Department. About 36% reported the new job paid at least 20% less than the earlier job.

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The difficulties of acquiring land for industrial development or infrastructure building in India. India's Congress party increasingly supporting farmers who are protesting the acquisition of their land. India's highway commisssioner committed in 2009 to building 12 miles of highways each day, but highway officials say only 5 miles of highways have been built. The Congress party plans to propose legislation that requires farmers to be properly compensated- one proposal is to pay farmers the average recorded price plus 50%, as the recorded price used to compensate farmers does not correctly reflect the entire market price including cash paid unofficially.

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The future of high speed rail in the U.S. is uncertain. Only $10 billion was approved for high speed rail upto now, and this money was spread over projects throughout the country. $8 billion was in the original stimuls program and $2.5 billion was aprroved for 2010. Additional money will be needed to complete projects that are planned. The new 2011 budget deal agreed to between Republicans and the President shows no money in 2011 allocated for high speed rail. One section of the bill calls for taking $400 million out of the $2.5 billion approved in 2010.

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United with subsidiaries United Airlines and Continental Airlines had $6.8 billion in liquidity as of June 30, 2014. American Airlines after the merger with US Airways has $9.4 billion unrestricted cash by July 2014. Mr. Parker, the CEO of American, plans to prepay $2.8 billion in debt and aircraft lease payments, place $600 million more than required into pension contributions, and start a dividend and share buyback. Airline consolidation into 4 major carriers, cutting unpofitable hubs and routes, filling planes to capacity, and charging for better seating, snacks and other amenities, are leading to record profits for the U.S. airline industry.

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South Africa suffers from power shortages reducing output at metals and engineering firms. The electricity supplier Eskom has a large $20 billion funding gap and has cash shortages. About $230 million is owed by South African cities which collect payments. IMF estimates are for slower growth with a ceiling of 2.5% with the dire power situation. Growth in 2014 is estimated at a mere 1.4%. The government of president Zuma is not seen by experts as effective in tackling the economy and problems at Eskom. Moody's has cut Eskom's debt to junk status making it difficult to attract financing. Foreign investment is declining.

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The U.S. "quit rate" reflecting job churn in the economy with workers leaving for better job opportunities increased to 1.8% in Nov. 2013, increasing from 1.2% low in Sept. 2009, according to the Labor Department. 2.4 million workers resigned in Nov. 2013. This includes workers retiring and choosing not to work. The quit rate was about 2.1% betwen 2000 and 2006. About 20% of the churn is from the lower paying hotel and restaurant sector. As the U.S. population ages and workers look for more stable jobs the number of workers leaving jobs is declining since the 1990's.

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Jack Ma tells employees in an email: "At 48, I am no longer 'young' for the internet business. The next generation of Alibaba people are beter equipped to manage an internet ecosystem like ours. I believe they understand the future better than I do." Ma plans to give up the CEO role May 10, 2013, and let other managers inside the company run Alibaba. Alibaba runs the Taobao and Tmall shopping sites. Recent investments by Alibaba have focussed on improving its logistics system. Management changes include improving efficiency and giving more independence to managers to run their units.

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As potential bank takeover on a short term basis to fix things looms over some banks, that are already heavily dependent on government money, their share prices dropped significantly. Bank of America dropped to $3.79 a share and Citigroup dropped to $1.95 on February 20, 2008. The more bank shares fall the more likely it becomes that the government will end up owning even larger stakes in the banks. Larger infusions of government capital mean diluting existing shareholders. In this atmosphere investors fearing that the value of their shares will be wiped out keep selling bank shares.

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Saudis make only a modest increase in production of 200,000 barrels a day taking production to 9.7 million barrels a day for 2008. The global market is for 86 million barrels a day with 40% of production coming from OPEC. Saudis make plans to increase capacity from 11.4 million barrels a dya to 15 million barrels a day with increased investments but this is thought to be ambitious. One former president of Aramco the Saudi oil company Edward Price thinks there are resource limits even in Saudi Arabia, as he sees the big fields topping off at 12 million barrels a day.

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The Paris based think tank International Council for Security and Development says in a report that the Taliban now have apermanent presence in 72% of the contry and are now encircling the capital Kabul, and attacking 4 roads leading to the capital. This will certainly make things difficult for Obama as he takes office in January as the economic crisis will take a lot of attention while at the same time additional troops and military support will come into an Afghanistan that is mostly in the hands of the Taliban and with Kabul region in danger.

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An export rebound is not matching the growth in imports. Imports went up 31% since May 2009, while exports went up 27%. The result is that the trade deficit is growing, primarily because of imports from China and imports of costlier oil. The trade deficit is expected to reach $40 billion in December 2010, compared to $25 billion in May 2009.