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Polish and other Eastern European immigrants to Ireland return home from the Ireland aand the UK as the economies of the 2 countries and unemployment deteriorate and improved job prospects draw the immigrants back home. In fact share of immigrants in ireland reached a high of 155 as Ireland averaged economic growth rates of 5% for many years. Nearly half a million received the irish version ofa social security number. Polish immigrants were the highest almost two thirds followed by Lithuanians and Slovakians. Hourly wages for Eastern European immigrants are 45% less than for Irish people with the same education and experience. Now Ireland's growth has dropped to 1.2% for the last quarter. The reversal is also of the similiar magnitude. A citigroup econ9omist in Warsaw estimates that half of Polish immigrants to Western Europe will return home in the next 2 years. In the UK half of an estimated one million Eastern European immigrants have already left says London Institute for Public Policy Research in an April report. As the immigrants return the currency dynamics also help the pound has lost 40% of its value against the zloty, Poland's currency, and this makes the UK less atttractive to immigrants. Overall the EU immigration opening has helped both sides, as it has helped stabilize the Polish economy and the UK has gained from the immigrants services as it moderated wage inflation and increased domestic demand and met the demands of the economy as it was growing. Now there is a fear that too rapid an exit of immigrants would hurt demand in these economies and also overwhelm labor markets in Poland. Another noteworthy feature of this immigration wave was the low cost of airlinne tickets which has helped travel across europe and also helped European integration. One immigrant a polish mechanic says that he felt more like a commuter than a migrant, as it conly cost $150 a round trip. How are things in Poland today as they return. Very very different. EU entry has really helped Poland through foreign investment and aid from Brussels to assist the country in its catching up progress. Average monthly wages have gone up 30% with construction wages up 50%. and inflation a low of 4.4%. The difference is striking in the medieval city of Krakow in the southeast that has emerged as an information technology and outsourcing hub. where a steady stream of returning workers is helping companies hire workers to meet the new growth. German commercial truck maker MAN has finished recruting 250 mechanics for a new plant in Krakow with 40% of applications from returnig workers. And those who are returning bring fluent English skills and expertise gathered during their stay overseas, and new attitudes to work. This happened to Ireland as Irish workers returned home in the early years of its boom, they hared skills and attitudes learned abroad, according to an economist at Dublin's Economic and Social Research Institute who sees the same thing happening in Poland....

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Leonhardt points out that public workers receive lower salaries and higher benefits than private workers. They are being paid in the wrong ways. For example with health insurance coverage that require little or no co-payment, which lead to overuse of healthcare services that don't necessarily improve health. Politicians and unions appear to have accepted this practice over the years. Public sector unions have blocked efforts to improve efficiency and find better ways of doing things from the classroom to work in government offices. Reforms in states such as Indiana have produced some results. But even these improvements do not address the magnitude of the problems facing the U.S. which stem from the public's desire to have it all- from large defense spending, public services, low taxes and no changes to Social Security and Medicare. Polls show Americans want to reduce deficit spending, but the same polls show Americans unwilling to make some difficult choices.

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An Italy based auto analyst for Global Insight consultancy, Pierluigi Bellini, says Marchionne understands how the system works in the US compared to Daimler executives, who had a difficult time understanding and integrating themselves with the Americans at Chrysler. Marchionne has worked in North America, and brings a youthful culture with plenty of creative energy, which could work well with Chrysler. Chrysler is also at the similiar stage that Fiat was in 2004, when Marchionne came in from outside- it is broken and everyone including the Obama administration is looking for a fresh start. In such a situation its easier to tear up the old organization charts and bring in fresh blood, young people with new ideas, and make a fresh start. Wth the government providing the financing, the financial risk is minimized. What remains is the risk in a drastically smaller and rapidly declining market. Here the lack of mass market small cars in the US, may work to the advantage of a European maker with fresh ideas and speed, and popular European small car models, which is what Fiat has at this time. It is quite possible that the idea that Americans do not like small cars may turn out to be not true. The market is changing and the demographics and economic situation is changing dramatically, cost conscious Americans may like to have a popular small car. Americans with larger cars may like to have a less conspicuous, and easy to drive and park car for short city driving, as their second or third car. If a economic recovery does not occur for several years and Americans downscale in everything from homes, appliances, electronics, and cars to what their European and Asian brethren are used to, both from an environmental point of view, and from a practical commonsense point of view of gettting rid of excess and extravagance, size may be sacrificed for convenience and practicality. Smaller cars are well equipped in Europe with all the comforts and electronics so small does not have to be cheap. In short in a growing small car segment, innovative design and speed of development, with quality engineering may be the ticket for Fiat and Chrysler to the American market....

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The size of the municipal CDS market is about $50 billion. Five large derivatives dealers- Bank of America Merrill Lynch, Citigroup, Goldman Sachs, J.P. Morgan Chase, and Morgan Stanley- met in November 2010 to discuss standardizing paperwork for "muni CDSs" to attract more buyers and sellers. The biggest banks are hoping to profit from the deteriorating finances of US cities and states. The CDSs or credit default swaps require swap sellers to compensate buyers if a municipal issuer misses an interest payment or restructures its debt. This makes states nervous and they are suspicious of CDSs, believing that this encourages speculators to bet on, and worsen states' financial situation. California is about to require all 86 of its underwriting banks to disclose what CDSs they have traded on the states' debt, for customers or for their own accounts.

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About Brazil's Bolsa Familia program to help the very poor by having requirements that they send their children to school and get them vaccinated. President Lula who comes from a poor background himself introduced this program to reduce poverty. This is done in a way that requires families to send their children to school and improve the chances of reducing both hunger and malnutrition as well as help bring improvements through education and health care, so that poverty is not passed on from generation to generation. It is unique in the developing world and making a real difference in Brazil. Brazilian advisors are helping India with its program, which merely provides food subsidies but does not have the requirements of Bolsa Familia, which help the next generation build better lives.

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A House budget bill passed in Texas would cut an already lean budget- because of years of prudent fiscal policies- by $23 billion from the current level of state and federal spending over the next 2 year budget cycle. This is a reduction of 12.3%. The budget makes large cuts in public education, healthcare for the poor, highways, prisons and state parks. It takes away full day preschool, cuts teacher incentive pay, and reduces scholarships for college students by two-thirds.

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The State Budget Crisis Task Force is co-chaired by former Fed chairman Paul Volcker and Richard Ravitch, a former lieutenant governor of New York. The Report of the Task Force says rising pension expenses and healthcare costs for public sector employees and Medicaid costs are severely reducing the ability of states in the U.S. to fund essential infrastructure improvements, education for low income students and other services. The report said there were six major threats to the fiscal situation of states- including Medicaid spending, underfunding of retirement, "budgetary gimmicks" to address the short term needs, and uncertain tax revenues. Ravitch told a news conderence: "It will be a hell of a lot more expensive to deal with theses problems in five or ten years than to deal with them now." The report focussed on California, New York, New Jersey, Illinois, Virginia and Texas. It was funded by the foundation of Blackstone Group co-founder Peter Peterson, and George Soros's Open Society Foundation....

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Fed's Bernanke sees cuts and higher taxes by state and local governments combining with higher oil prices slowing the U.S. economy. He told the Citizen's Budget commisson in New York, that in the long run the most important issue in fiscal matters will be whether the composition of the federal budget serves the public interest. And in saying this he emphasized the benefits of early childhood education, preschool programs and lifelong acquisition of skills. He advised states to take anticyclical steps to avoid the impact of boom and bust spending. One way to do this is to build rainy day funds that are then used for capital investment when times are bad.

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CEO Shigetaka Komori of Fujifilm Holdings Corp. describes how Fuji responded to the technological changes that made photographic film obsolete. Kodak recently filed for bankruptcy protection. Fuji made the transition to other products to cope with the change. Komori became president in 2000. He says one of the responses was to reduce costs. In 2005 and 2006 Fujifilm reduced costs by $2.5 billion mostly in photographic film. Fuji's management asked the question what technologies the company possessed and how they could be applied in new business areas. This led to new businesses in making the films used for making LCD panels used on PC's, televisions and other devices. These materials generate 10% of sales. The other areas are in medical equipment, drugs and cosmetics. Fujifilm acquired health care companies Toyama Chemical for $1.4 billion in 2008 and agreed to buy SonoSite for $995 in Jan. 2012. Health care now makes up 12% of sales.

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WSJ reporters Grant and Berzon provide an indepth account of how Donald Trump survived the worst crisis of his business career in the 1990's, as his deals involving the Taj Mahal casino in Atlantic City collapsed. By describing how Trump responded the report provides insights into Trump's manner of operating, character, and the financial maneouvring to avoid the worst effects of the crisis. It shows Trump's resilience, and also the nature of the risky business deals that led to the crises in Trump's business life.

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Jay Powell, a former US Treasury official, now a scholar at the Bipartisan Policy Center, says the fears of budget problems in US states are survivable, even though they will be difficult and painful. He does not see widespread defaults, the way Meredith Whitney has predicted. Kenneth Rogoff of Harvard University, says a major default would cause serious macro-economic dislocations. It would have impact beyond the US, in the European economies with serious budget problems such as Greece, Portugal and Spain. Analysts cite the following reasons why a widespread debt default by states and local governments is unlikely. Municipal bonds are held mostly by individuals, who own about two thirds of US municipal bonds, directly or through mutual funds. Most state and local government debt is long term, and does not rely on short term borrowing the way a Lehman Brothers did in the recent financial crisis. The states can raise revenues, as Illinois did recently. With the economy improving state tax revenues were up 6.9% in the fourth quarter of 2010, compared to a year earlier, according to preliminary data from the Nelson Rockefeller Institute of Government, Albany, New York. That said, the following reasons show that life will be difficult and painful for states and local governments. State budget gaps total at least $125 billion, as they look to the coming fiscal year, according to the Center on Budget and Policy Priorities. And no federal help is in the works, as it was in 2009. Far less of newly issued muni-bonds are insured today - 6% compared to 57% in 2005- according to the Bank of America Merrill Lynch. Insurers are still recovering from losses in the recent financial crisis. A massive supply of new bonds has depressed the market just as Dec 31 expiration of a federal program, Build America Bonds, which provided help to states that were borrowing. Investors withdrew $23.6 billion from muni-bonds mutual funds since November, 2010. Moody's Investor's service has listed the states that will need to issue bonds to fund current operations. California will borrow billions to cover cash flow needs, and Illinois is considering an $8.75 billion 'debt restructuring bond' to pay past due bills, and a $3.75 billon bond for contributions to its pension system. Because banks have only 1.3% of assets in muni-bonds any defaults will not affect their ability to lend. But the impact will be felt in the US economy and overseas. In the event there was a default, some analysts believe the federal government would find it hard to say no when the federal government said yes to AIG....

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The use of Chapter 11. or the US bankruptcy code, was astrong point of the American system of free enterprise, because it gave enterprises with problems but otherwise having healthy businesses a chance to reorganize and emerge stronger from the crisis. DUring the time in bankruptcy it could work out its debt load with creditors under court protection. Now this is no longer working in the current economic crisis. Because under current law derivative transactions are given preferred creditor status in a bankruptcy many creditors are designing their loans as derivative transactions. And creditors are creating the empy creditor situation by taking credit default swaps to ensure that they get paid if acompany fails to make apayment. In the process the creditor does not have the same interest in the company staying in business as it did before. This happened with Goldman Sachs buying credit default swaps on its loans to AIG. Complicating the situation further creditors are using the law to seize inventories and in other ways get aclaim on the assets if acompany like Circuit Stores for instance runs into difficulty. As aresult CIrcuit City was gforced into liquidation. So on one hand businesses that have achance if reorganized under Chapter 11 are being forced into liquidation and on the other hand companies that are not going to be the source of innovation or productive gains for the economy like Citigroup are simply tying up huge amounts of government money as there is a fear that a proposed bankruptcy could lead to arepeat of the Lehman collapse, where bankruptcy proceedings are too slow and cumbersome for this situation and things fall apart in days. ...

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Friedman reviews Acemoglu and Robinson's new book, "Why Nations Fail." Acemoglu says that nations fail when wealth and opportunities are concentrated in the hands of few people, that a condition for societies to succeed is to create opportunities for more people. For this to happen it is important to create inclusive political and economic institutions. This is an important insight, but for Western society this is an insight as old as Adam Smith when he pointed out the importance of this aspect of western societies after the feudal period in his "Wealth of Nations." For Smith it was the failure to create inclusive societies that led to the gradual unravelling of societies in the river valleys of the Yangste and the Ganges, in China and India, of increasing poverty and the gradual disappearance of what constituted the middle class in India and China. Chapter 8 titled "Of Wages and Labor" in the "Wealth of Nations" makes specific reference to this.

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Jose de Cordoba of the WSJ provides this excellent story on the nature of the migration crisis in the U.S. that is creating political divisions in the U.S. What is causing this surge in migration to the U.S.? Cordoba provides some useful insights to understand the nature of this problem. Nine out of ten migrants in Guatemala which sends most of the migrants from Central America are moving north from Guatemala through Mexico to the U.S. for financial reasons, it points out. Only 10% are because of violence in the region, the rest for financial reasons according to the United Nations International Organization for Migration The jump in apprehension of Guatemalans at the American border shows a surge from 15,000 in 2007 to 236,000 in 9 months of 2019, according to U.S. government data. The surge began in 2008 and jumped in 2014 after U.S. court rulings that first required migrant children to be allowed to join relatives in the U.S. followed by a ruling in 2015 that allowed a parent to join the children and allowed court proceedings to take place that takes years. The result was that smugglers advertised on radio and families sold small plots of land to join relatives in the U.S. who had gone before them. The migration is also specific to certain areas hit by damage to crops, including coffee crop from drought, or certain towns that simply sent more people simply for financial reasons advertised openly.  For 8 hours of work a migrant could make at $12 per hour amount of $96 per day, in Guatemala the daily wage would be about $5.  Overwhelmingly it is financial reasons or economic opportunity that sends migrants north. After it became known that kids could help migration the people in family groups apprehended at the border jumped from about 40,000 in 2015 to 390,000 in fiscal 2019. Smugglers charge $8600 per adult and half that for a child and an adult that can be dropped off at a checkpoint. The efforts of president Trump to close the border to this migration include having Mexico sign an agreement to police its southern border with Guatemala using its newly setup National Guard. As a result the migration has actually surged in 2019 with migrants seeing this as their one last opportunity to join relatives in the U.S. or to migrate to the U.S. The Trump administration tried separating families because of the loophole in the law that allows children to be not deported and parents to join their children. But this created a public outcry and the effort now is to close the loophole in the law. It is also strange that as many migrants are coming from one town Joyabaj  with population 100,000 as from Guatemala City the capital population 2.5 million. In fact the economy has grown by 3.4 % a year in Guatemala and efforts have been made to improve conditions with the help of donor countries in the West for several years, though the drought conditions exist. The situation is similar to that in Europe. If one looks at the violence by gangs in central American region after the end of the guerilla wars and compares it to the wars in Syria and Iraq, one can see how humanitarian concerns preceded what eventually turned out tobe a full blown migration for economic reasons. Initially chancellor Merkel adopted a humanitarian stance but failed to recognize that there was another side to his situation that would attract a wave of economic migrants from places as far apart as North Africa to Afghanistan. Poverty has existed in these regions for many many years before the current migration, with drought and lack of economic opportunity going far back in time. Merkel only recently recognized this problem and the new CDU leader Kambrauer has clearly recognized this. CDU policy shifted in 2018-2019 with curbs on economic migration that has reduced it to a trickle. This process is underway in the U.S. at its border with Mexico and for Mexico with its border with Guatemala. In the short run Europe and the U.S. are paying a price. Not just in the way it has divided each country with a far left and a far right eroding the centrist parties that existed before. In some cases centrist parties that were popular on the right and the left now hve leaders from a far right or a far left faction within the centrist ruling parties. Boris Johnson in Britain, Trump in the U.S., leaders in Italy, Austria and Hungary. Or as in Germany and Spain new far left or far right parties causing the centrist parties to dwindle in influence or as in Germany this combined with a shift to the Green Party in Germany and Liberals Party in Britain as a show of disapproval for how the migration issue has been tackled.  The Economist in a July 2019 issue also points out that the country's own citizens have fared worse with migration. It shows how the Conservative Party's austerity cuts for welfare budgets was popular in Britain as long as eastern European migration at high levels in Britain were allowed starting with the Labour party under Blair. This disproportionately hurt the middle class and the poor after the hit already taken from the faulty banking caused recession. With the drop in migration it is now felt by a majority in Britain that the austerity cuts have just gone too far and a mood is set in to restore many of the cuts and fund public services. Meantime some of the damage has been done and will take a decade to correct as the issues that mangled the centrist parties and led to fragmentation on views of what society should look like have taken place with Brexit and high levels of poverty, income inequality in Britain, lack of investment in infrastructure with overallocation to tech with declining productive benefit for every additional dollar spent. ...

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How does the National Rural Employment guarantee Scheme compare with what Brazil has done under President Lula with the Bolsas Familias program to help rural people with income below the poverty rate? India its reported is looking at the Brazilian program. There the focus is on cash payments with cards like debit cards issued on each individual's name that only that person can use so that the funds cannot be stolen by corrupt intermediaries with the person receiving it having to make sure that his children are in school and vaccinated. The focus there is on nutrition, education and health care especially of the family unit and in this way it has been a success according to the World bank and other experts.