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News on several fronts in June 2009. On housing, a month to month improvement but still stuggling compared to a year ago levels. The Commerce Department said that an increase in multifamily units led to housing starts jumping 17% in May from April to a 532,000 annual rate. Compared to ayear ago level housing starts was down 45% from May 2008. There were 10 times more homes for sale in April as sold that month, with the typical ratio at 6. With layoff, tight credit and rising mortgage rates laying aheavy hand on these markets, even as developers cut prices deeply to clear unsold homes. On Manufacturing. Industrial production fell 1.1% in May from April, according to the Federal Reserve. Capacity utilization fell to 68.3%. See the graph for the steep drop for auto and auto parts manufacturing. On inflation. The producer price index showed its largest decline in 60 years, according to a Labor Department report. The PPI was down 5% from one year ago, the biggest decline since 1949. It went up from April to May by 0.2%. Part of this was rising oil prices. The core PPI which excludes food and energy dropped 0.1% in May from April. Rising oil prices, a falling US dollar and stabilization in the economy are reducing defaltion risk. At the same time the sign that inflation is not taking root are clearly evident in the slack that is building up with the drop in the capacity utilization rate to 68%, and further declines expected as the auto industry shrinks in 2009, with the huge overcapacity worldwide in that industry. ...

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Ford CEO, Bill Ford's interest in the environment and his interest in lobbying the government for a delivery system for ethanol. He will meet President Bush at the White House. Mr. Ford says many of the 1.5 million buyers who own Ford's flexible-fuel vehicles either do not know they are able to run on both fuels, or are unable to find ethanol-based fuel at gas stations. He says the U.S. has only 600 gas stations with ethanol.

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Failure has to be an option for Lehman, this is a widely heard opinion. Unlike Bear Stearns swhich had $13 trillion in notional derivatives exposure the systemic risk is thought to be muted in the case of Lehman. In this case neither shareholders or debtholders should be protected with taxpayer money by the Treasury to avoid reckless lending or reckless leveraging in the future.

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As a result of provisions in the bailout, GM won't have to pay about $45 billion in taxes on future profits. In a little noticed ruling in 2009, the federal government decided that companies receiving TARP bailout money won't fall under the rule which restricts their tax benefits. The rationale was that the tax credit would make these companies more attractive to investors, and the value of the benefit is greater than any lost tax payments.

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The Panic of 1907, the run on the bank for the Knickerbocker Trust Company, and its collapse. The intervention of JP Morgan that year came too late for Charles Barney, the President of Knickerbocker Trust, who shot himself and died after 4 hours. In the preceding years Knickerbocker went through rapid growth in deposits, and in 1903 Barney even had a huge Corinthian columned structure of Vermont marble, and a lavish banking room inside built at Fifth Avenue and 34th Street. See the pictures of that structure. It shows how things end up with rampant expansion. Growth, rampant expansion, flamboyant display, excess, crisis, panic, disaster and rescue. A cycle that repeats itself as new generations have no recollection of what had happened before, and no sense of history. With the expansion a sense of exhilaration and selfcongratulation makes way for abandonment of caution, excess, paving the way for disaster. And this hits those involved in the excess as the AIG's and the Citigroups, but also those who have gone to sleep like the GM's, and those who have some exposure like GE with its GE Capital business. What is different in today's economy, and true of the 1930's, is the global nature of this when the excesses are of a global nature, and the countries are intertwined. In this sense the current period involves Asian economies also, in addition to the European and American economies that was true in 1930's. The contrast with today is that a year later by October 1908 the panic had ended, and depositors of the Knickerbocker and other banks had received their money in full. A recovery was on the way. This was isolated to the US economy and to the banks. The global crisis of the 1930's was 23 years away. In 1997 the Asian economies like S. Korea, Thailand and Indonesia suffered a banking crisis, before this there was a finacial crisis in Mexico, and around this time a financial crisis in Russia. There were smaller crises like the LTCM crisis in the US but most were localized like the 1907 Panic. Now 11 years after the 1997 crisis in Asia, we have a global crisis and it is multifaceted, affecting banks, but also consumers and export driven economies in Europe and Asia with spillover effects. ...

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Twitter share price is down 23% to March 2014 year to date and declined 11% in March. Tesla Motors and SolarCity both declined during the 1st quarter of 2014 after sharp rise in prices.

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Senator Dodd's involvement in making a last minute change in the new executive compensation legislation that exempted bonuses protected by contracts. The AIG bonuses are protected by contracts. Dodd has represented Connecticut in the Senate for 28 years. The constitution does not provide for term limits for Senators. Dodd has close ties to the financial industry and has received donations from AIG.

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What is the Winter Fuel Payment in the UK? The Independent provides some answers. It was introduced in 1997 by a Labour government in Britain. It now provides 200 pounds to people over age 66, and 300 pounds to people over age 80. To get this payment pensioners and retired people have to be eligible for pension credits. This is possible if your income level is - Income at £11,343.8 a year if single, or a shared income of £17,313.4 for two or a couple is what qualifies one for this winter fuel allowance. The British energy authority says winter fuel costs will rise by about 300 pounds. This means a 500 pound hit to budgets of pensioners who are not eligible for winter fuel allowance under the Labour plan. The Labour plan is to do this because of the hole in public finances left by the Tories of 22 billion pounds. Starmer and Reeves say this is needed and the responsible decision. One million pensioners face a loss of Winter Fuel allowance and Age UK says: “Older people in this group often tell us they really struggle financially; the proposed change will make it even harder for them to afford to stay warm when it gets chilly. ...

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Emily Glazer of the WSJ interviews Clorox CEO, Don Knauss. Knauss talks about his strategy to focus on the U.S. and Latin American markets and not make a costly effort to enter markets in Asia. He sees competition intensity in Asia and Brazil as much higher today with P&G and Lever focussing on these markets. Clorox is concentrating on brands known for being environmentally friendly such as its Green Works line of cleaners, Brita water filters, and products of acquired companies such as Burt's Bees. Knauss describes the Hispanic consumers preference for Clorox and Pine Sol for cleaning and the use of bleach 70% for cleaning. Hispanics use 25% more bleach than other consumers and prefer fragrances such as lavender for Pine Sol. These are some of the insights the company is using to maintain its penetration in this market.

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Brett Lee recalls the one time when he was bowling very fast at 165 kmph and Sachin hit the ball for three fours in an over leaving Lee spellbound. Here he recalls his amazing friendship with Sachin and how it meant so much to him. Invited for dinner by Sachin they got to know each other off the field. Brett says of the encounters on the field "we respected each other."  As the Aussies meet India in Adelaide for the first Test this brings back memories of Aussie cricket over the years going back to Richie Benaud and Neil Harvey, Norman O'Neill. 

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Greece's new finance minister Euclid Tsakalotos meets finance ministers of the EU in Brussels following the referendum. Chancellor Merkel opens the possibility of renegotiating the debt at a later stage. Merkel says: "Ofcourse, at the very end, one will have to discuss how debt sustainability can be recreated but not by saying first 'How do we close the gap?' but 'What can Greece do?' " Merkel added that "this program is, according to the now-withdrawn Greek request, meant to be two years long, so it is a multiyear program." This means that in addition to the pension cuts and tax increases rejected earlier, it would now have to include changes to labor laws to make it easier to fire workers, changes to product markets and the privatization of state assets.

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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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Hirofumi Gumi, a top official of Japan's Financial Services Agency, during the administration of prime minister Junichiro Koizumi, says he cannnot understand why America is making the same mistakes as Japan. It took some tough actions under the leadership of prime minister Koizumi (2001-2006)- after 6 years of failed policies till 2002 following Japan's banking crisis in 1996- that helped restore the country's banking system. Under Heizo Takenaka, as head of the agency supervising banks, a large part of the bad loans in the Japanese banking system were taken off the bank's books. Some banks with insufficient capital, such as Resona Bank, were nationalized. Takenaka told the banks not to cover up or pretend the problem was not big enough, and declared he was not open to negotiating. Gumi says Takenaka's tough actions helped to restore credibility in the country's banking system. One of the key lessons from Japan is that no stimulus is likely to succeed until the banking sector is fixed. This is the lesson the Obama administration has failed to grasp....

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DJT says- “We have to get something. We can’t continue to pay this money, and look stupid." 

Zelenensky of Ukraine agrees that the US should get something back for the billions it has send to Ukraine. There is agreement in principle and this is something of an achievement as access to rare earth is something the US needs- Ukraine having extensive rare earth resources.

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Trade between Russia and Germany was about $100 billion in 2013, or about 3.3% of German exports. About 300,000 jobs depend on exports to Russia, according to Germany's DIHK Chambers of Commerce. A poll released by Der Spiegel on July 27, 2014, shows 52% of Germans now support tough sanctions on Russia, with the mood shifting following the death of 193 Dutch residents on Malaysian Airlines Flight 17. Finance minister Schauble told the Bild newspaper- "Damaging pece and stability would be the biggest risk for the economy."