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Over the weekend June 25-26, 2011, the Basel Committee made the decision to raise bank capital reserve requirements from 7% to 9.5%. Wall Street Journal and analyst estimates show that Bank of America, Citigroup, and J.P. Morgan Chase will have to together raise $150 billon in additional capital. The rule gives the banks time till 2019 to reach the new goal. Banks that get even bigger could face an additional one percentage point increase to 10.5%. As of the end of the 1st quarter of 2011, J.P. Morgan had an estimated 7.3% ratio and would need $35 billion to meet the 9.5% capital reserve requirement. Bank of America would need $68 billion and Citigroup $48 billion to reach the 9.5% target.

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The title is misleading as the US president DJT has said on Air Force One on Tuesday -"I don't care what she (Tulsi Gabbard) said, I think they were very close to having them." Most administration officials including the head of Central Command see the risks growing by the week. Here is what Gen. Erik Kurilla told the Senate Armed Services Committee last week- Iran is merely "steps away" from uranium enriched to weapons grade level of 90%. He said if Iran decided to build a nuclear weapon it could have the first 55 pounds of weapons-grade material “in roughly one week and enough for up to 10 nuclear weapons in three weeks.” 

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Tim Pawlenty, former Republican governor of Minnesota, and co-chair of the Romney campaign, becomes the head of the lobbying organization for U.S. banks, Financial Services Roundtable. He succeeds Steve Bartlett. During his brief presidential run in 2012, Pawlenty raised $5 million in donations from banks. Sorkin talks to Bartlett about the appointment and Pawlenty's criticism of banks during the bailout. Bartlett says that in Washington what you say and think depends on the position you are in.

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DJT 1.0 was led on the tariffs policy by USTR Robert Lighthizer, who had experience negotiating with the Japanese negotiators in the Reagan era. He is today respected by  Republicans, is seen in an important role in economic policy and to prepare the tariff policy actions of the new DJT administration. Lighthizer prefers to get Congress to take action with legislation. He also believes that domestic manufacturing will make gains with new and higher tariffs on Chinese imports. Lighthizer policy is falsely compared with Hoover Tariffs Act of 1930 when world trade was 9% of world GDP, today it is 63% of world GDP, and where under Hoover in 1930 the tariffs were across the board all countries 20,000 goods. Under Lighthizer on specific products where dumping is happening -steel, aluminium, autos, with Japan in 1960-70 or China 2000-2020 targeting American industries + technologies for takeover. And falsely when it comes to raising costs to each American family on average by $4000 a year by economists. The conventional view for business for 2000-2016 through Bush and Obama favoring free trade did not take into account the unusual experience of China which entered WTO in 1990, then expanded in a way unprecedented in history at 10-12% growth rates for 15 years destroying American manufacturing with dumping, having support of outshoring by companies in the US, and not giving reciprocal treatment for exports from the US to China. China also had unrestricted access to US technologies in this type of trade. Lighthizer's approach was to specifically address this problem not a general across the board tariffs on all goods (20,000 goods) on all countries as with the Hoover Tariffs Act in 1930. Lighthizer's approach adopted by DJT called for reciprocal trade response with China as the US had already done with Japan, not unilateral across the board tariffs, and when world trade had advanced to about zero tariff rates. And falsely compared to Hoover 1930 Act because under Hoover tariffs were 29-40%. raised to 60% when world trade was small, was 9% of GDP. The Biden administration has tacitly agreed with Lighthizer's vision by not reversing DJT tariffs. A new higher tariff will probably be selective based on the industry, country and what goals the US has set under the new administration for that industry. Some of the tariffs revenue may also be used for tax cuts. ...

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Remote learning during the pandemic left students with a lack of basic skills. Companies are now working to address these skill issues and training is provided on the job. The scores on tests for students in all professions from nursing and medical to engineering have fallen with remote learning.

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The Wash. Post says the former president's speech as it wore on for 90 minutes rambling on without clarity on discussion of issues and policies for the future was a missed opportunity. Nothing was said about bringing down the cost of living when so many actions on multiple fronts are needed. Nothing on climate change or climate change action but leaving it out out of denial it exists during the worst heat waves and floods in a century. It is now Biden's turn to spell out the details of policies for cost of living action step after step of action, says the Post. Post readers say so far the Post titles and phrases it uses are more out of social media and ask ominously is it itself turning into social media as shown by the post of Letters it has received on coverage of Biden and the future 2024-2028 on this Lyrarc page.

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Rapid growth and higher costs have led Vanguard to slip in customer service in recent years. WSJ looks at customer complaints about Vanguard service. Vanguard offers low cost index funds and is the largest company in this business. A new CEO is expected to tackle this issue.

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French officals are pushing for a new eurozone architecture to address many of today's problems. This includes setting up a pathway that leads to the joint issuance of eurobonds. It also would include coordination of monetary policy with the budgets and fiscal situation in the eurozone. French officials see the lack of this as the cause of many of today's problems.

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The Detroit News Daniel Howes draws UAW leader Gettelfinger's attention to how serious Obama is about this auto loan not being a bridge to nowhere, and how Obama expects union, management and others to kick old habits and start building areally viable competitive future. Howes thinks Gettelfinger and the UAW may be doing what they did before in kicking the proverbial can down the road, as they said they would ask Obama and Democratic leaders to help the unions take out clauses for unions to do their part in the road to recovery that are stated in the term sheet for the loans. Howes reflects Detroit opinion in favor of the loans and helping GM, UAW and management get the bridge loan, but here he makes a marked shift in view. Howes accepts that the situation now is where with a bailout weary public and Democrats in the new Congress (more keen on getting energy efficiency and a competitive car industry than helping out the UAW and current management), and Obama, are not likely to support the old habits and ways of the car industry, its unions,its old managements and boards, and its old way of doing things. Howes is even skeptical of Wagoner's claim that he is going to reinvent the company. There are only 3 months between now and March 31st and the term sheet for the auto loans says the time between now and then should also be used to prepare for an orderly bankruptcy with government support and financing in place. No less than in a place like Detroit this columnist is calling for serious attention to be paid to what this term sheet implies and the public mood is saying by all concerned. In a sombre message to union bosses and management and politicians, Howes says its Big Three communities that would be paying their own prices as CEO's, union bosses, politicians and bankers, played chicken with other people's livelihoods and lost anyway. So the bridge loans given that there are only 3 months to come up with plans and action for viable futures for GM and Chrysler, are in fact a serious step for the last act before an orderly bankruptcy takes place, unless every stakeholder gets his act together. ...

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Koichi Hamada, a former professor of economcs at Yale University, is one of prime minister Abe's advisors for the policy called Abenomics. He says the increase in the consumption tax was never part of Abenomics. It was the legacy of the previous Democratic Party of Japan's policies and of prime minister Noda, who pushed for it in the last 2 years of his administration. Nikkei polls in 2011 showed 53% of the public opposed to the doubling of the consumption tax to 10% by 2015 proposed by Noda and passed in 2012. Ichiro Ozawa's group of legislators left the DPJ over this issue. The real force behind the push to double the tax was the Finance Ministry, which warned the Abe government that not increasing the tax would make Japan look fiscally irresponsible. The Finance Ministry appears to have lost sense of the timing and fiscal hawks in the LDP party had gone along with it. The deteriorating global economy in the third quarter has hurt Japanese exports, and the lack of wage increases coupled with the increase in the consumption tax to 8% from 5% made Japanese feel poorer, leading to conditions that exacerbated the situation. Recognizing this Yamamoto says Abe has called the snap election in Dec. 2014, after postponing the second increase in the consumption tax to 10% in 2015 which the Noda legislation set to the future date of 2017. He says Abe had to have the guts to take on the Finance Ministry for Abenomics to work....

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Sarah Needleman's interview with GoDaddy CEO Blake Irving. GoDaddy registers new web addresses for internet customers such as .com and .org, charging subscription fees for the service. In 2011 private equity firms KKR & Co,, Silver Lake Partners, and Technology Crossover Ventures acquired GoDaddy. Irving is a former product manager at Yahoo who joined the company in January 2013. He says the advertising now focusses on the company's product compared to the racy ads in the past associated with the company.

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New rules by the Government Accounting Standards Board (GASB) and Moody's would show U.S. public pension funds as about 57% funded instead of 75% funded under earlier rules. This will open up an even wider gap in how much they have in the funds and their promises to retirees to about an estimated $2.2 trillion. This puts pressure on state and local governments to either reduce benefits for new hires, have workers increase contributions, or set aside more money from the budget. Local governments face the risk of credit downgrades and higher borrowing costs if no action is taken and finances are worsening. An example is Illinois retired teachers who earn annual pensions of about $46,000 on average, and do not participate in Social Security under state opt-out. Even under old accounting rules this pension fund had $37 billion of assets and $81 in future liabilities. Under the new rules the unfunded liabilities could jump to 83% by one estimate, from over 50%.

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VW's plan for recovery in China- more new models, the Jetta's adapted version for China, responding to competition.