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Details of the $825 billion stimulus plan. Renewable energy does well under the plan including production tax credit for renewables, with $32 billion for a "smart" electrical grid for which GE makes components and lobbied for. Renewable energy producers win an extension of production tax credits now convertible into cash for companies whose losses leave them unable to use the credits. Transportation infrastructure green projects did not do so well, with $32 billion for transportation projects and only $10 billion for mass transit projects.The Natural Resources Defense Council had compiled a list of more than 80 environmentally friendly infrastructure and transportation projects worth about $405 billion. Only a small number of these projects made it. What is in the stimulus to create jobs and stimulate capital investment? Businesses get bonus depreciation, which speeds up depreciation deductions for companies that invest in plant and equipment. The stimulus doubles the amount small businesses can immediately write off for capital investments and purchasing new eqipment, and gives incentives for businesses to invest in renewable energy. States get help with $90 billion going to increase the federal share of Medicaid payments, and an additional $79 billion to help states avoid cutbacks in education and other services. And there is a "Make Work Pay" tax credit for $500 per worer and $1000 per couple. Experts say the effects of the stimulus will be felt in the latter part of 2009 and into 2010. Which is one reason the view of economists that there would be a second half recovery does not reflect conditions on the ground. Goldman has revised its view to 2010 and even that may be optimistic. One example of what has happened in the stimulus in this respect is that the earlier optimistic view of largeinvestments in science and technology, broadband networks, and transportation projects for fast rail and transit have all been trimmed down. Part of the reason may be that the bill for the nation's banking system revival may be larger than realized as an additional amount of $15-20 billion is being negotiated for Bank of America and more money will go to Citigroup. $6 billion is shown for highspeed internet access for rural and underserved areas. Science facilities get $10 billion. Repair of public infrastructure (read roads and bridges) gets $31 billion. School modernization gets $21 billion. And modernization of health information technology systems gets $20 billion which its hoped will provide equivalent or higher returns to pay for some of the universal health care costs, and preventative care gets $4 billion. There is a tax credit for R&D work on energy innovations and renewable energy production of $20 billion, and $32 billion for a "smart electricity grid." These are the proactive parts of the stimulus that create something new and make improvements. They add up to $144 billion. So much money goes to shore up the existing services and supplement incomes, and to relieve stresses on the banking system, and other ways to shore up the system, that the proactive expenditures are only a small fraction or 17% of the $825 billion stimulus. And all the time the federal deficit and debt increases with these huge outlays just to shore up the system. The Heritage Foundation Data Analysis Director Mr. Beach told Congressmen at a discussion chaired by Congressman Cantor (R), on January 16, 2009, that the federal debt would reach 92% of the nation's GDP in 2009 from 58 billion or 70% in 2008, with the $825 billion for stimulus. The federal deficit would go up to $1.31 trillion or 9.2% of GDP up from $541 billion in 2008. See the research paper on the Heritage website. ...

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Galston of the Brookings Institution says globalization has hurt workers in manufacturing with job losses and declining incomes. It has produced outcomes that have favored some industries such as tech, and not others such as automobiles which in the past helped create the broad middle class by offering good paying jobs to people with less than a college education. Immigration has created an issue that political leaders outside of the main parties have appealed to in France, the U.S. and Britain. The result is a polarization in the voters that has rarely been seen to this extent before. The middle class in the period from the 1950's to the 1980's is not the middle class that we see today in Europe and the U.S. The 2008 financial crisis added to the problems with the slow and uncertain recovery for some groups such as white men, the less educated, students, and people on minimum wage. 

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The U.S. Dow Jones Industrial Average passes 15,000 in May 2013. The DJIA average has increased by 130% after reaching a low in March 2009. The DJIA peaked at 14000 in July 2007 before falling 54% and recovering to the 14000 level in Feb 2013.

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Germany's Bundestag parliament vote eases constitutional "debt brake" March 2025. CDU's Merz and the SPD join with Greens to provide the two thirds majority to remove a constitutional debt brake put in in the Merkel years. Germany's dilapidated infrastructure from rail to other transport and public facilities, to poor childcare are a sign of how the Merkel debt brake has hurt the German economy. Four years of the Greens SPD coalition government of Scholz were wasted when the SPD and Greens wanted investment in infrastructure starting in 2021 but included Lindner of the super cautious Free Democrats as Finance Minister who opposed spending and vetoed it every step of the way. The results can be seen in Frankfurt and other cities and in the underinvestment in Deutsche Bahn rail and all over the country. Merz of the CDU and the SPD and Greens finally fix this problem starting with removing the debt brake.  What happened to Lindner and Free Democrats? They did not make the threshold of 5% for representation in the German parliament, the Bundestag in Berlin. Lindner resigned for his failure. ...

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After the huge crisis the debate about capitalism. What went wrong, and importantly what did not go wrong. Not in the sense of more punditry to place the blame but to ask questions to have a better grasp of the fact and better understanding of the twists and turns of the last decade, the complexities, the frailties, the errors of judgement, and the failings, and the outright falsehoods and ethical breaks. So that the good things are not lost for instance the individual initiative and the bad things are corrected and measures put in place to prevent recurrence and minimize damage. Has the model of anglo-saxon capitalism failed? Actually some specific things failed, deregulation at a time when banks and markets were behaving irresponsibly and without any restraint internal or external, credit ratings agencies failed, financial institutions failed in performing their first line of business which is to finance investment in the economy not in housing and mortgages, and American consumerism failed in that value of saving disappeared and abundance of debt brought American savings to zero, leaving little for investment in the economy and infrastructure except by borrowing from other countries. And living on illusions and not on sound basics the leadership failed thinking that free enterprise and technology and productivity improvements somehow allowed a country or group of countries to live way beyond their means, and a tendency to excess in the popular mood of the country, excesssive consumption, excessive and profligate use of energy which sent trillions of dollars overseas over decades, and excessive expectations of the lower classes for housing and goods beyond their means, all played a part. What did not fail is the freedom to trade, the fall of "barriers to intercourse" between nations, that produced gains on a big scale so that computer and cell phone technology developed in one part of the world quickly spread around the world and the innovations and technology developed in one country spread producing benefits all over the world. It created amood of optimism in developing countries whose incomes rose especially where countries encouraged growth as in China, India, Russia, Brazil, Eastern Europe and pulled hundreds of millons out of poverty. With China, America and Germany in effect shipped technology goods in return for lower value added goods like textiles and shoes, to help China industrialize, and American consumption played a useful part until things reached an extreme and the system was abused by forgetting the basics and allowing excesses and failing to respect ethical responsibilities. Regarding regulation excessive regulation and red tape has proved to be bad as in the license Raj in India which stifled private initiative and new enterprise till it was abandoned in 1990, and no one in India is calling for more regulation. What is bad is to abandon good common sense and to rely on the illusion that no regulation is needed to run a complex financial system like we have today, a laissez fairre libertarian philosophy that was rampant in the Bush administration and in the country's leadership in the Bush years. As a result an underfunded SEC failed to deliver on its basic mission and responsibility, and the lack of a centralized regulatory authority with powers and funding to meet the challenges of modern finance as for instance ineffective derivative regulation under the CFTC, simply aggravated things further. ...

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In this interview with Varoufakis, the Greece finance minister in the negotiations with the European Union and the IMF in 2015, Suzy Hansen provides a detailed account of Varoufakis's view on the Greece bailouts and a sense of looming failure in the negotiations. Varoufakis says he was willing to make concessions by holding off on action on the minimum wage, but cannot make concessions on paying out pensions to the elderly. Varoufakis concedes he is not a good negotiator or a politician, and negotiating skills were critical for Greece to tap into the goodwill in the eurozone's southern region to win a package that would give the Greek economy a chance to grow. Additional handicaps may be his outlook which was shaped in his younger years by the "junta years" when Greece was ruled by a military dictatorship, and a family history relating to Greece's civil war between royalists and communists. In this interview he compares himself to Margaret Thatcher, who he says should not be held responsible for the state corporatism following the war, remarks that may show a finance minister out of touch with the present situation. There is no lack of criticism of the way some of the bailout actions took place to protect French and German banks in 2011 and 2012- in fact some of the strongest criticism, well formulated, was on the editorial pages of the Wall Street Journal. Yet Varoufakis had a special responsibility to build on the goodwill generated after years of austerity, and the efforts of the Samaras administration to work with the EU. On both counts he appears to have failed as he realizes that the 4 months of uncertainty ending in a total lack of communication between both sides, has cost Greece by worsening the economy. Posturing and personality, compounded by inexperience, may have distracted from the real work of serious negotiations. The IMF chief Christine Lagarde had emphasized at the outset the need for Greece to fix its tax system with high degree of tax evasion, an issue on which Syriza could have acted quickly. Some of the period before the elections was used to prepare the EU for negotiations with Syriza, and Syriza needed to be prepared on this issue. Yet no action was taken on a plan to tackle this issue- on the grounds, says Varoufakis, of lack of time. He only rationalizes this when he says it is only a short term cost for the long term future of young people. ...

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The EU statistics agency Eurostat reported that the eurozone countries GDP declined by 0.3% in the 4th quarter compared to the third quarter of 2011. The decline for Germany was 0.2%. For Italy the decline was 0.7% over the prior quarter according to Istat, the Italian statistics agency. Spain 0.3% decline over the prior quarter. France experienced 0.2% growth over the prior quarter with larger exports by Airbus and more business investment. Italy plans cuts to military spending reducing aircraft purchases, buying 90 instead of 131 Lockheed F-35 fighter jets. Only France and Slovakia showed quarterly growth.

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Automobile parts imports into the U.S. have increased from $89 billion in 2008 to $138 billion in 2014, up from only $31.7 billion in 1990. In a huge shift in wages with increasing global competition wages at an American Axle plant in Michigan at $10 an hour are about what Target stores and Wal-mart pay for retail workers. An new generation of workers in manufacturing are seeing a shift from being in the middle class during their parents generation to lower class, with this downward pressure on wages as parts are manufactured in places such as Mexico and China.

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Robert Shiller of Yale University, calls for revenue sharing by the federal government with local governments. This should go beyond the $26 billion approved this month for aid to local governments, designed to assist with Medicaid and hiring teachers. It is difficult to create jobs quickly and disperse and use money wisely, without the help of local governments, military or nonprofit organizations- as these organizations have the necessary infrastructure that can be used to get things done quickly. He cites the Civilian Conservation Corps created by FDR, using the Army as the organizational framework.

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Under the Energy Independence and Security Act of 2007 the government is authorized to give upto $25 billion in low interest loans to auto companiesto retool plants to make smaller fuel efficient cars. Lobbyists for the auto industry are trying to increase that to $50 billion. The package of loans is presented not as a bailout but as a way to offset some of the $100 billion it is estimated it would cost the industry to meet the new fuel economy standards enacted in that bill. GM's 7.2% bonds due 2011 were trading at 64.25 cents on August 27, 2008, translating nto a yield of 29% for that debt. In the credit default market it costs $4.5 million upfront and 0.5 million anually to insure $10 million of GM bonds for 5 years. The govenment loans at 4-5% would cost significantly less as borrowing costs are very high for automakers at present. Both Senators McCain and Obama see Michigan and Ohio as crucial to a win and support the loan package. It would cost $3.75 billion in insurance costs for the $25 billion loan package. Because of the automakers precarious financial condition and no improvement in consumer demand or in financial markets in sight in the next 2-3 years as a plausible scenario, and more losses looming for automakers, this package may turn out to be a crucial element in the recovery of the American auto industry and in turning over almost America's entire fleet of cars on the road into more fuel efficient cars....

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Suki Kim describes how South Korea got addicted to credit cards. In 1999, after the Asian financial crisis, he says the South Korean government tried to stimulate consumer spending to help the economy. It encouraged banks to issue credit cards freely. By 2003, a South Korean journalist Dong-A-Ilbo says, the streets of Seoul were filled with credit card vendors, handing out cards to anyone willing to fillout an application, to college students, to the unemployed. By 2003, every South Korean had on average 4 credit cards, and collective debts of $100 billion. The cards became a status symbol, but many families lost their savings as credit card debt mounted. After millions defaulted and an increase in crime, prostitution and other problems, the South Korean government went in and bailed out LG Card, the largest issuer of the cards. The rescue worked, as credit card companies tightened standards. But South Korea has changed in one way- the national savings rate in 1998 was 25%, by 2007 it fell to 2.5%!...

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This WSJ editorial describes Hillary Clinton as being part of the problem of highly paid CEO's she described in Iowa making 200 times the average worker, because of the large amount charged for her speeches and expenses. This it says exceeds the ratio of highly paid CEO's pay to average worker pay.

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In nominal terms China's currency, the yuan, appreciated by 3.7% in 2011. The real effective exchange rate, measured on a trade weighted basis and adjusted for relative consumer prices is the more significant rate. The real rate shows the yuan up by 5.3% in 2011, according to the Bank for International Settlements. In November 2011 the yuan appeared to be weakening, and China's prime minister, Wen Jiabao, says China wants to see the renminbi more flexible "in either direction."

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Fausset of the NYT looks at a rust belt city in the U.S. midwest that has suffered as U.S. manufacturing declined. Much of the decline happened in the 1980's in the steel industry in competition with Japanese imports. North of town there is a GM plant that makes the Chevy Cruze. The unemployment rate of 17% in 2010 has dropped to 7.6%. Fausset describes the life of a retired steel worker on state pension who works in law enforcement. He is Joe Marshall Jr. from the song by Bruce Springsteen about a steel worker who the singer read about in a book. Youngstown appears to be divided by people who support Trump and Clinton.

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Brazil's GDP increased by 0.34% for the 4th quarter of 2011 from the prior quarter. For the full year GDP increased by 2.7%, with an actual decline in GDP for the third quarter of 0.1%. The GDP growth for 2010 was 7.5%. The slowing economic growth reflects an overvalued currency, weak manufacturing competitiveness, and inflation. Brazil's growth will be lower than potential say analysts, and it will be tough to get to even 3.5% growth in 2012-2013. A similiar process is seen in other emerging markets. China's premier Wen Biao announced lower growth targets of 7.5% and a shift in priorities recently. And India's growth rate for 4th quarter, 2011, was 6.1%.

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Weakness and lack of economic growth in the rest of Europe is having an impact on the growth rate in Germany. In the second and third quarters of 2011 combined, economic growth in Germany was 1.6%. The economic growth for France during that period was 0.6%. For the third quarter, acccording to Eurostat, the European statistical agency, Belgium had no growth, and the Netherlands reported a GDP decline. Spain showed no growth. Germany had higher growth rates during the early period of recovery after the 2009 financial crisis, and it now appears that this may be because German companies were better able to export, having held down labor costs, and the euro was weaker than what the rate for the deutsche mark would be. This shows a slowdown across the whole of Europe replacing the earlier situation where Germany far outpaced other European countries.