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Sanger and Gordon point to critical elements of the nuclear deal that were needed but will now be missing. Iranian negotiators now say they will not ship atomic fuel out of the country. For the agreement to be serious and credible about Iran's peaceful intentions for the use of nuclear energy, it was important that the atomic fuel be shipped to Russia, where it would be converted into specialized fuel rods for the Bushehr nuclear power plant. If Iran at some point decided to opt out of the agreement the use of this atomic fuel for peaceful purposes cannot be assured.

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JP Morgan Chase disclosed that traders in the Chief Investment Office may have tried to avoid showing the full extent of losses by placing inaccurate prices on their positions. A trader named the "London whale," may have been asked by his boss to mark positions more aggressively. CEO Dimon said this has "shaken our company to the core."

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This WSJ editorial says the EU bailout deal for Cyprus of March 25, 2013, which shut down Cyprus Popular Bank, and aggressively downsizes Bank of Cyprus, is the right move. Under this bailout deal no money from the EU's $10 billion to the Cyprus government goes to bailout banks. Cyprus Popular Bank is allowed to go bust, with only insured deposits below $100,000 protected. Larger depositors are compensated with equity shares in a "bad bank," holding this bank's questionable assets. The good assets of this bank are transferred to the Bank of Cyprus. Bank of Cyprus, the largest bank, will have depositors and creditors take haircuts so that it can maintain a 9% capital ratio- estimated losses of depositors being 35%. All this leaves Cyprus with lower debt of 140% of GDP than under other plans. A large part of these losses will be borne by Russian depositors taking advantage of Cyprus as an offshore tax haven. Germay's Angela Merkel and finance minister Schauble face German voters in 2013 elections. Merkel and Schauble did not want to be seen burdening German taxpayers for bailouts in Cyprus to help affluent Russian depositors....

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WSJ reports that the former president's supporters will rally to his side but swing voters might be repelled by this latest legal controversy including the context in which it happened that of a sordid affair. Mr. Trump built his support base out of two mistakes of president Obama, his neglect of rural America, and neglect of American manufacturing. And of the mistake of president Bush in pushing America into two wars in Afghanistan and Iraq that put money into wars with no productive purpose that needed to be put in rebuilding America's infrastructure. Others could have done this, Mr. Trump aggressively pushed ahead and found himself first. President Biden has closed the chapter on the wars by ending them, he has also closed the chapters of neglect of American manufacturing and put working families and America at the top of his agenda at every point. And as he did at the State of the Union address in 2023, made it personal by reciting what his father has told young Joe about standing up for working families. Biden's abilities rival that of president Lyndon Baines Johnson, who had as much experience in the US Congress as Biden, and delivered the passage of Medicare and Social Security for all Americans. Biden has done something that ranks similar with trillions of dollars for the Inflation Reduction Act, CHIPS and Science Act and pandemic assistance, and has the conviction that there is much more to be done. ...

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Underreporting of coronavirus cases in China poses risks for other nations in not giving them a sense of the magnitude and severity of coronavirus. This leads to a false sense of security- in Japan, Sweden and other countries, much delayed action and a sense of exceptionalism that we can ride this thing through like an ordinary virus, In the U.S. and Italy, Spain, UK and Germany, loss of crucial weeks before taking action. Looking to the future this poses new risks as it still leaves people without a sense of how long to continue lockdowns.  The pandemic poses huge risks for Asia and Latin America because of poverty, crowded conditions and sanitation levels. The early action by prime minister Modi was a huge step in the right direction before coronavirus spread could damage the economy and people- as Mr. Modi said if not done right such as with a 21 day lockdown this could set India back by 21 years. It had value in that it alerted other countries such as Philippines, Indonesia, Malaysia, Bangladesh, Pakistan to take strong action early. As the WSJ says here in this essay by what is important for China and all other countries reporting on coronavirus is that this reporting is vital only because it can save many other countries from making costly mistakes. Which is why the direct doctor to doctor contact between Chinese doctors and American doctors is an encouraging right step, says WSJ.  ...

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The first significant action to help homeowners threatened with foreclosure comes from Sheila Bair, Chairman of the Federal Deposit insurance Corporation, one of the few people after Bernanke and Paulson who have shown initiative and foresight in the current crisis. Bernanke and Paulson had the foresight to open the Fed lending window to investment firms like Lehman Brothers and others but little has been done for homeowners to have significant impact. When interviewed on television in the days surrounding the Bear Stearns crisis Sheila has shown a good grasp of the issues and courage to take the initiative. This action is similiar in line to what Martin Feldstein has suggested on the pages of the WSJ for some time now. Martin wanted the Federal government to step in to loan homeowners the 20% of their outstanding loan and work towards bringing the homeowners payment to an affordable sum. According to Feldstein's calculation this would be about the right amount as a percentage of their loan so that homeowners rationally would not be better off walking away from the loan as the best possible decision under the circumstances. If the rational option was taken under a scenario that homeowners would get no direct help here is what would happen even though it may be intuitively read in one's mind. Homeowners would walk away in increasing numbers, it would become the popular option, one that has happened in prior housing crises in Colorado for example but this time it would be spread out across America, making it dangerous. This would launch a downward spiral or cycle in which the more homeowners walk way, or default the more house prices drop, and the more house prices drop a new group of homeowners who previously had enough equity in the house now because of the last price drop enter the category of homeowners who would be better off just walking away as a rational option. During the next wave this gorup would default and set the spiral or cycle moving again to lead to further price declines and another group of homeowners finding not enough equity in their homes to justify making payments and this group would walk away. At each turn of this spiral another cycle would be set in motion which is why it is so dangerous once it gets started, and the need for timely but also well thought out plan and good execution. This cycle is that of the economic system as a whole. As house prices drop at each turn of this cycle, it would have a serious impact on consumption for an already indebted American consumer. A drop in consumption means fewer product purchases by consumers, and the falling demand means factories would close as companies consolidate operations around the remaining factories to keep capacity utilization at reasonable levels, and this would mean layoffs and cuts in investment and other spending. The layoffs in turn would add another layer of homeowners leaving their homes through foreclosures adding to the pool of homeowners who have left their homes, and adding to the downward pressure on house prices. The pickup in inflation would bite at exactly the worst time as this would mean consumers would have to spend even more carefully. The price of oil which normally would respond to changes such as a fleet of cars with higher mileage on American roads would take a longer time to respond as this fleet change would take a few years to occur. It would respond to lower demand for oil in American factories but the considerable demand in Asia and other countries where the economies are likely to slow down but still be growing at rates to accomodate the large number of people who have not benefited from the market economy, would make the price decline in oil a gradual affair. The weaker dollar would add to the price of imports adding to the inflation. This bite from inflation would lower consumption even further in the economic cycle. And this would mean lower production in factories and even more layoffs at the next turn of the economic cycle. The Federal Reserve would find itself having difficult choices between maintaining confidence in the dollar, for which Capman and McKinnon argue on the pages of the WSJ recently and lowering rates but not achieving much in terms of stimulating either consumption or investment as this would take time to work itself out and all the Fed could achieve by its interest rate making tool is to buy time to weather these adjustments in an orderly manner. There is almost a consensus among experts that interest rate reductions in the current climate of inflationary movements in prices and the current currency exchange rates moving towards a loss of confidence in the dollar is something to be done very carefully and each action taken only with careful understanding of the possible consequences. A look at the proposal itsel shows that it gets around the whole issue of moral hazard by having the cost paid for in this manner. The mortgage investors will pay for the 5 years of interest on the 20% of the loan the government provides. The homeowner takes over after that. The mortgage investors cannot add deferred interest, prepayment penalties or other ways to make the homeowner pay some of the interest charges. And the homeowners payment has to be afforadable so mortgage investors have to show that the payment is not more than 35% of income of the homeownercalled the debt to income ratio (DTI). And only homeowners with mortgage payments above 40% DTI are eligible. And the government would raise the money needed through a $50 billion offering. To show there is no moral hazard that is the government bailing out any of the parties involved, the government will get back all of its money or intends to do so, the government will have the first rights to the money should a home foreclose and before anybody else is paid. ...

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William Booth provides a must read insight into why poorly educated young people attempt to cross the border into the U.S. looking for work and opportunity, and why Mexico fails to provide the elementary and high school educational system it needs to increase growth to create opportunity. Mexico's education system is failing when compared with other countries in the Group of 20. Sixth graders get 562 hours of instructional learning compared to 1,195 in S. Korea, according to Mexicans First, a group working to change the way the educational system works. In recent international exams half of Mexican 15 year old students scores ranked them at lower levels in math and only a little better in reading and reasoning. "De Panzazo" is a popular documentary prepared by Mexicanos Primero on the dire situation in the school system. One of the most striking measures of this failure is that only a quarter of the children graduate from high school. This only pushes more poorly educated people to attempt to cross the border into the U.S. looking for work. It means the Mexican economy is deprived of a highly educated workforce to increase productivity and growth. The middle class tries to get their children educated in private academies. And the nation's employers use special training to improve skills for workers to be able to compete in a global economy. Part of the reason rests, say experts, on the ability of the powerful teachers union with 1.4 million members to block change for teacher selection based on merits and competency, and exams for teachers. Instead teacher positions are sold, with an elementary school position tenured for life selling for $20,000 in Cancun, and a rural village position for $2000, according to Mexicanos Primeros. Even president Calderon owed his election to the support of the teachers union. And the current PAN presidential candidate Vazquez Mota, who was Education Secretary for two and half years could only go part of the way. She got the union to agree to have new teachers selected by having them take exams, made public standardized test scores, and pushed state governors to show employment rolls and whether teachers actually taught in classrooms or worked at union offices. Calderon failed to make changes because he agreed with the union that the union would take the lead on changes not the education ministry, and had the union president's son-in-law, Fernando Gonzalez, as deputy secretary of education. Jorge Castenada, a former foreign minister, says Mota was fired because of union demands. In July 250,000 teachers are required to take competency exams, but the union has asked its members to ignore the exams, and the education ministry will not do much beyond using the exam for diagnostic purposes for teachers who take the exam. The problems at the elementary and high school levels are evident also in other countries such as India and Brazil leaving the real potential of the labor force untapped....

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Jurgen Kroger, is the chief negotiator for the European Commission, and Poul Thomsen, heads the IMF negotiating team, for the 78 billion euros in loans extended to Portugal under a bailout agreement. Kroger offered his views on the agreement in Lisbon. Kroger said he was convinced that the program gives Portugal the means to boost growth and jobs, as it builds a sustainable and competitive economy. Two thirds of the loans come from the EU at an interest rate that is yet to be set. The yield on Portugal's 10 year bonds keeps rising and is now at 10.20%. The IMF will provide one third of the funds. The IMF's Thomsen said the issue of interest rates was addressed by arranging for two thirds of the loan package money coming in the first of the three years of the program. What this does is to take Portugal out of the markets for medium and long term debt for a "little over two years" he said and gives Portugal the "breathing space" it needs to restore credibility before going to the financial markets. The fear expressed by analysts is that the tough austerity measures in the programs of the EU and IMF can cause the economies of these countries to worsen, making it even harder to repay the much larger debts when the loan package money is added to the original debt. The IMF and the EU negotiators had to create a credible program for recovery in the light of these facts. Already Portugal's finance minister is predicting a contraction in the Portuguese economy of 2% in 2011, and 2% in 2012. The negotiators appear to have taken this into account in setting interest rates. Portugal will pay the IMF an interest rate of 3.25% for the first 3 years, with the rate going to 4.25 in the fourth year. By comparison Greece's loans are for seven years with an average interest rate of 4.2%. Ireland's seven year loans carry an interest rate of 5.8%, which it is working to renegotiate. To give Portugal more breathing space the terms of the loans set a slower reduction in the budget deficit than originally planned. Portugal gets to cut its budget deficit to 5.9% of GDP in 2011, and 4.5% of GDP in 2012. The 3% target is set for 2013, one year later. Economists such as Carl Weinberg of High Frequency Economics, say the loan package will only increase Portugal's debt and lead to a larger default later on when the debt amount owed is larger. The debt restructuring solution is being actively debated in the EU, including the risks that European banks would take large hits. Negotiators are also mindful of keeping any negative impact on Spain as low as possible. As Portugal's financing costs have risen, Spain's have risen also. Spain offered higher rates to sell 3.4 billion euros of five year bonds on May 5, with the average yield on Spain's bond sale rising to 4.55%, up from 4.39% on March 3. ...

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Bayer CEO, Marijn Dekkers, plans to divest its plastics business, called Material Science. The plastics division requires large investments with lower returns than can be made in health care or the agricultural crop science business. Crop Science generated earnings before interest and taxes of 1.81 billion euros in 2014, and Health Care helped by 5 new prescription drugs reported EBIT of 3.58 billion euros, compared to poor returns of 555 million euros on the polyurethane and polymers used for laptops to soccer balls in the Materials Science division. CEO Dekkers is a Dutch born executive who worked for 25 years in the U.S. Since taking over in 2010 he has brought a significant culture change to Bayer, by insisting on speed and agility from executives. Division heads with marketing backgrounds are preferred to science degrees, and the planning orientation of the company is being changed to one where the company executives are not afraid to take risks based on incomplete information. Dekkers prefers an IPO for the $10 billion plastics business to generate more cash and reduce the debt of 20 billion euros. He acquired the over the counter drug business of Merck for $14.2 billion, and has boosted drug sales with the introduction of Xarelto in partnership with J&J, eye treatment Eylea, cancer drugs Stivarga and Xofigo, pulmonary hypertension drug Adempas. Sales of these 5 drugs are expected to go up from 2.9 billion euros in 2014 to 4 billion euros in 2015, contributing significantly to Bayer's profits. Dekker's venture capitalist type focus on profit margins is showing results in share price performance- Bayer's share price has advanced 60% in 2015 mid-March price of 145.85 euros compared to the prior year month. In the small town of Leverkusen, Germany, where Bayer is located, there were initially fears that Dekkers was "too American" and too focussed on shareholder value to understand the need to respect tradition. Since then Germans have realized that Dekkers understands tradition and is only bringing necessary change- the transition to being a life sciences company makes sense to shareholders in Germany, for employee representatives on the supervisory board the guarantee of current level of 17,000 jobs in the plastics division for a few years shows his concern for job protection during the transition period. For Dekkers who left Holland in 1985, and has a U.S. passport with an American wife and kids who speak no Dutch or German, the important thing is to get the right balance- he says the system of 99-1 where 99% of the information had to be in before a decision could be made is making the change to 90-10 where only 90% of the information is now necessary to go ahead, even if he would like to see it at 80-20. Bayer still sponsors the local soccer team known as Bayer Leverkausen, and 26 other clubs. Dekkers steps down at the end of 2016....

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A critical part of the Affordable Care Act is the setup of marketplaces or exchanges to let people without insurance buy individual health plans. Some states setup their own exchanges, and some states let the federal government step in and run them. To help the lower middle class and poor the Act provides health subsidies to buy insurance in the exchanges, and 85% of customers in the exchanges qualify for this benefit. The U.S. Supreme Court voted 6-3 in 2015, compared to a tight vote in 2012 on the Affordable Care Act, to maintain the health subsidies. Justice Roberts wrote the majority opinion, saying "Congress passed the Affordable Care Act to improve health insurance markets, not destroy them." Justice Scalia dissented calling it "interpretive jiggery-pokery." Justices Clarence Thomas and Samuel Alito Jr. dissented. Voting in favor were Justices Anthony Kennedy, Ruth Bader Ginsburg, Stephen Breyer, Sonia Sotomayor, Elena Kagan, Justice Kennedy dissented in the 2000 case. The challengers petition to the courts was based on a reading of phrases in the Affordable Act which had not occurred to the writers of the law. The reading suggests only people enrolled in state setup exchanges are eligible for subsidies. If the Supreme Court ruled in favor of the plaintiffs the 6.4 million Americans who are enrolled in the federal exchanges would lose the subsidies provided under the law and lose health insurance. And the economic foundations of the Affordable Act would be undermined with insurance companies required to provide insurance to all regardless of pre-existing conditions and subsidies removed, leaving the companies with sicker pool of customers resulting in destabilizing the exchanges and higher premiums. The court ruled in favor of an interpretation that is compatible with the whole law and the intentions of the statute to help the middle class and the poor buy health insurance. The chaos in the insurance markets that would result in going with the plaintiffs because of a careless writing of a phrase, was uppermost in the majority's mind. Chief Justice Roberts emphasized this, saying- "The statutory scheme compels us to reject petitioners' interpretation, because it would destabilize the individual insurance market in any state with a federal exchange and likely create the very 'death spirals' that Congress designed the act to avoid." This case originated with 4 plaintiffs from Virginia who challenged the IRS regulation that said subsidies were allowed regardless of whether the exchanges were run by the state or the federal government, arguing that this was at odds with the particular phrase in the law that was ambiguous about federal exchanges eligibility for health subsidies. Judge Roger Gregory of the Fourth Circuit Court of Appeals in Richmond, Virgina, ruled that the phrase was indeed ambiguous, but the IRS was owed deference in its opinion. Chief Justice Roberts made it clear that this was not a case for the IRS, saying "it is instead our task to determine the correct reading." ...

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A new report, "China: 2030," by the World Bank and the Development Research Center (DRC), has major implications for the course of action taken by new Chinese leaders. The limits to China's economic model with the dominant role of state owned companies has been pointed out in the past. It has now reached a point where China must choose to move to a modified model or face the "middle income trap" of countries like Brazil and Mexico, where income levels and growth reaches a certain level and then decelerates suddenly with little warning. The report makes some major recommendations that would modify the current system. It says the state owned companies should be supervised by asset management firms focussed on commercializing these companies, and not supervised by the State-owned Assets Supervision and Administration Commission (SASAC). The asset management firms would restrict the state owned companies on what areas they participate and sell off businesses to make it possible for private companies to compete. Zoellick says- "China needs to restrict the role of the state-owned companies, break up monopolies, diversify ownership and lower entry barriers to private firms." The state owned companies would be required to pay sharply higher dividends to the government which could then be used for social programs. Currently state owned companies invest in land which is sold by local governments for revenue helping fuel the real estate bubble. Significantly, the report had its origins when it was proposed by Mr. Zoellick, head of the World Bank, during a visit to Beijing in Sept 2010. It was supported by Li Keqiang, then vice premier, and now expected to be the new prime minister of China. The World Bank is widely respected by Chinese leaders because of its assistance during the early stages of reform in the 1980's. The DRC reports to China's State Council, a top governmental institution, and the No. 2 person at DRC, Liu He, is a senior advisor to the Politburo Standing Committee. He helped draft the current five year plan and is close to Li and Xi Jinping, the next president of China. The SASAC has opposed these ideas, especially any shift in its personnel selection of management at the state owned companies, which it shares with the Communist party's personnel department. Respected China economists say China faces large risks of a sudden sharp slowdown because the the state owned companies have largely copied foreign technology and have not generated enough technological advances, which will be needed for the next stage of growth. Lower growth rates could worsen problems in China's banking system leading to a crisis. The Conference Board, estimates China's growth at 8% for 2012, slowing to an average annual growth rate of 6.6% from 2013 to 2016. Barry Eichengreen of UC Berkeley, Donghyun Park of the Asian Development Bank, and Kwanho Shin of Korea University, say the annual growth rate will drop by at least 2 percentage points by 2015....

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One big concern says Nancy Keates of the WSJ about the National Association of Realtors, is that the organization collects and puts out objective data about home sales, and at the same time provides a commentary on the statistics. It also has a mission to advance the interests of its members. There are 2.6 million licensed real estate agents, and NAR represents about 1.3 million of these real estate agents. Would the real estate agents and the NAR tolerate an economist who raised concerns about the boom in lending? David Lereah, is former chief economist for the NAR ,and worked there from 2000 to April 2007. He remained upbeat throughout these years, even when the market was headed downwards. And the way he sees it he was doing for 7 years everything the NAR wanted him to do, and he was pressured to issue these upbeat reports. Critics called him "Baghdad Dave", after a Iraqi information minister for his false upbeat reports even when the war on the Iraqi side was lost. And a Credit Suisse analyst called him Liar-eah for some of these upbeat assesments, when things were clearly going wrong. The way Nancy Keates sees it this economist was eager to profit himself in the boom years. He was an economics Professor at Rutgers, at the University of Virginia, and later an economist and regulator at the Federal Deposit and Insurance Corporation. He himself bought condos 2 in Washington in 2003 and 2004, and one each in Tampa, Richmond, Va. and Alexandria, Va. and Naples, Florida. Owning by 2006 six condos worth between $150,000 and $400,000 a condo. He had an expensive lifestyle says his wife, with a big house worth $780,000, a country club, sports fishing boat. So in some ways suggests this reporter, he was caught up in the boom himself with his investments and the demands of a expensive lifestyle, with little room left for independent opinion and analysis. This is a striking example of things gone wrong, with all the meticulousness and comprehensiveness with which data is collected having its value destroyed by the lack of strict objectivity in the analysis. And the intrusion of strong personal interest bias in one direction making the destruction of objectivity complete. Looking at the economists at companies and associations, there is a subtle bias in operation that needs to be discounted by CEO's and association heads, a bias for giving the CEO's better and optimistic assessments on a consistent basis. An example is the way a large number of economists see the recovery taking place in 2009. Another related example is the sales forecasts for the Detroit auto companies that continued to assume sales in the 16-17 million a year rate into the latter half of 2008, even after the Bear Stearns collapse in March and the increasing foreclosures suggested something was amiss. All with horrendous consequences for the companies or industries involved, and the US and global economies....

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Intervew by Deborah Solomon with former Clinton era SEC Commissioner, Arthur Levitt, captures the mood of the public in the USA. Super skepticism and disbelief about public servants, including those of some stature in the past like Levitt. The questions are suggestive of the angst and loss of innocence, and willingness to ask the straight question right out. Solomon tries to get Levitt to take responsibility for what has happened under his and others watch. What do you feel Mr Levitt about the American economic landscape and see 401 K's going up in smoke? Have you changed your spending habits? Are you kicking yourself for not having caught Madoff at his game? After you left your SEC post what led you Mr Levitt to become an adviser to the Carlyle Group, which had ties to the Bush family and defense contracting? This question grates on Levitt. He responds that it is such a Michael Moore like exaggeration, that he was an adviser to the Carlyle Group before he went to Washington. And then Ms Solomon asks the question straight out, saying that frankly she can't understand why the SEC culls its leaders from the world of high stakes investment, when there is this "capture theory" that states that regulators get co-opted by the industries they regulate if one isn't very careful. And the response from Levitt is evasive as he talks about the patriotism of the 4,100 people who served with him at the SEC. Ms Solomon isn't accepting this and calls it boosterism, telling Levitt he hasn't answered her question. Levitt tries another escape route and talks about the European system of gray bureaucrats running government agencies forever, and how refreshing the American system of repotting private sector talent to bring fresh ideas is. Solomon's steers the dialogue in another direction. She reminds him about his father Arthur Levitt Sr. , who was the New York State Comptroller for more than 20 years. Yes, says Levitt Sr.'s son, his father was passionate about defending the interests of pensioners, and his mother was a schoolteacher for 38 years. That gets Levitt reminiscing about his growing up years with his grandparents in Brooklyn, when his grandfather would check 75 used bulbs to see if one worked before using a new one. What has thrift got to do with this Solomon starts to think, after all Levitt is an adviser to the Carlyle Group. Put that in your report, yes, says Solomon, I will. Ms Solomon is getting right down to the point by now. Levitt can reminisce about the thrift about the old days, but the public wants answers. Do you feel you should apologize, does this keep you up at night? Levitt's response: not really, I'll try not to think about it. See the link to Rubin's letter of resignation from his position at Citigroup to CEO Vikram Pandit. Rubin another Clinton era adviser and Treasury Secretary, is being asked similar questions....

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The Treasury and Fed's handling of the financial markets crisis on Tuesday, Wednesday, Thursday and Friday as it unfolded Sept 17, 18, 19 and 20, the worst since the 1930's. With the credit markets battered, the collapse of Lehman Brothers investment bank and the rescue of AIG right on the heels of the rescue of Fannie and Freddie the previous week, and all these moves barely improving the general loss of confidence and increasing fragility of the financial markets worldwide. Steps like the ban on short selling by the SEC to stem two 400 point declines in the last few days, and the Fed setting aside $50 billion to shore up money market funds by making them whole where needed, and providing about $200 billion through the European Central Bank and the central banks of Japan, Britain, Canada and Switzerland, were tactical moves so Paulson and Bernanke had to address the real problem of removing the highly illiquid assets of risky mortgages from the financial markets. This would require working with Congress to put together the necessary legislation which is what Congress, Treasury, the Fed, and others will work on this weekend of September 21, 22, so that the legislation could be drawn up the following week and passes into law creaing some Federal agency that will buy up the illliquid mortgage assets owned by banks, investment banks, and other financial institutions before there is another series of collapses in the financial markets necessitating rescues by the Fed. Meantime Treasury has raised another $200 billion last week through sale of Treasurys and provided this money to the Fed to use as needed. The result of the most recent chaos in the financial markets has resulted finally in agreement among all parties about the need for committing taxpayer money in hundreds of billions of dollars to be used to buy up the risky illiquid mortgage assets at steep discounts to be resold later to bargain seeking companies so that the banking sector can repair their balance sheets and recover, as being much safer and less costly route than the cost of rescuing financial firms with systemic risk on an individual basis after a run on these firms or their imminent collapse. Which is why people like Laurence Meyer of Macroeconomic Advisors himself a former senior Fed official believe that this is the first serious effort to tackle the crisis by getting to the root cause of the problem and removing the illiquid mortgage assets and the Government an taxpayers spending the hundreds of billions of dollars but at the same time finally seriously tackling the crisis in a manner that will restore confidence to the markets and to the industrial economy of the USA. His comment, "the markets voted and they liked the proposal", as the Dow Jones went up 610 points at one point and ended up the day Thursday September 19 at 410 points gain for the day....

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Paul Volcker was Fed Chairman from 1979-1987 and is now 81 years old. He is best known for taming the runaway inflation of that period. He is now the senior economic advisor closest to Obama and they have a developed a sense of rapport and trust through frequent discussions and meetings in which Obama has sought Volcker's advice, especially at critical junctures of the present crisis. So close is the association that Volcker now keeps a cellphone with him at all times and he has gotten used to Obama's messages at all times. And this week he is due to appear on the campaign trail with Obama for the first time. At a round table discussion with voters in Lake Worth, Florida, he will give his view on the state of the economy and the credit markets. This puts the 81 year old Volcker on the campaign stump for the first time. In his debate with McCain at Hofstra University Obama said "let me tell you who I associate with. On economic policy I associate with Warren Buffett and former Fed chairman Paul Volcker, who have shaped my ideas and who will be surrounding me in the White House." Obama is increasingly relying on Volcker. His staff now routinely reviews policy proposals and speeches wit Mr. Volcker. And conference calls and face to face meetings of economic adviers are increasingly organized to accomodate Mr Volcker's schedule. When there is a discussion of the financial crisis Jason Furman the campaign's economic policy director says the most important question for Obama is "what does Paul Volcker think?" It all started when Obama sought advice from Volcker through his economic adviser Austan Goolsbee, a 39 year old University of Chicago Professor. The bond between the two started with a dinner invitation in June 2007, when Obama was still a long shot candidate, setup by Mark Gallogly, cofounder of Centerbridge partners, a New York private investment firm. He invited a number of financial executives like Gary Cohn of Goldman and Fleming of Merrill and Mr. Volcker. At a private dining room in a Capitol Hill restaurant Volcker was seated directly opposite Obama. That night on a return flight to New York Volcker told the group that he "was genuinely impressed" by the Senator from Illinois. When this was passed on to Goolsbee his reaction was- "Volcker is a legend.. we want to pick his brain." Since late summer 2007 Goolsbee had regular discussions with Mr. Volcker. Some of them were about including Volcker's ideas that the housing downturn would snowball into a larger financial crisis into Senator Obama's policy positions. A September 2007 speech by Obama to Nasdaq stated that the oversight lapses and abusive practices would cause the markets to "be ravaged by a crisis in confidence." Since then at almost every turn of the crisis after Bear Stearns collapse, Obama and Volcker have consulted together....

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Public opposition in the summer of 2012 to the restarting of nuclear plants by prime minister Noda. A huge rally was held in central Tokyo with about 100,000 protesters.