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Republican presidential candidate Rick Perry tells an audience in Cedar Rapids, Iowa: Printing more money to play politics at this particular time in American history is almost treacherous- or treasonous, in my opinion." He was referring to Federal Reserve chairman Bernanke when he said: "I know there's a lot of talk and what have you about if this guy prints more money between now and the election... I don't know what y'all would do to him in Iowa, but we would treat him pretty ugly down in Texas." Perry's spokesman said Perry feels strongly about printing money, and "got passionate" in his comments.

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In 2010 Chicago Federal Reserve president Charles Evans sugggested the Fed adopt a "7-3 rule"- the Fed would keep interest rates low and credit flowing till unemployment dropped below 7%, and inflation was below 2.5% and not taking off. He modified this to keeping rates low till unemployment reaches 6.5%, as long as inflation remained below 2.5%, on Nov. 27, 2012. In Fed meetings Evans was supported by vice chairman Janet Yellen, with Minneapolis Fed president Kocherlakota and Boston Fed president Rosengren offering similiar proposals. On Dec. 12, 2012, Fed chairman Bernanke announced a position very close to what Evans has suggested. Charles Evans, worked on the staff of the Chicago Fed for 20 years before being appointed president of the Chicago Fed in 2007, at the beginning of the financial crisis.

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Wall Street Journal reporters Walker in Berlin, Forelle in Brussels, and Meichtry in Rome, reconstruct the events during critical days after the indecision and failure to reach agreement during the July summit of eurozone countries. This took the form of intervews with leading players and over 25 policy makers. What emerges are accounts of how Germany's Angela Merkel, daughter of a Lutheran pastor, and protege of Eurozone founder, former German chancellor Helmut Kohl, handled the crisis. Merkel was widely criticized in the media for indecision. What emerges is an account of a leader who took decisive action at key moments in the crisis- leading to the formation of new governments in Greece and Italy taking action to improve finances, and negotiations with banks represented by the International Finance Corporation leading to acceptance by banks of a 50% loss on loans to Greece to reduce Greece's unsustainable debt burden. Merkel also worked with the European Central Bank's departing president Frenchman Claude Trichet and new president Italian Mario Draghi to resist French president Sarkozy's efforts to have the ECB assume responsibility for the crisis through large scale buying of Italian and Spanish bonds; which was opposed by German public opinion as a backdoor way of having German taxpayers assume responsibility for European debt. Shown are three critical moments when Merkel intervened. In October 2011, after Italian prime minister Berlusconi reneged on promises to make pension and other reforms to improve Italian finances because of political resistance. He survived a parliamentary no-confidence vote by one vote. Merkel took the lead on October 20, by directly calling Italian President Georgio Napolitano on the phone, to urge him to take action for forming a new government in Italy. The result was Napolitano talking with all political parties to form a new government, leading to the formation of a government by a non-political figure respected in Italy, former EU commissioner Mario Monti. A day earlier, on October 19, French President Sarkozy met ECB president, Trichet, at an event honoring him as departing ECB president in Frankfurt's Alte Oper concert hall. Trichet, Merkel and Sarkozy met in a side room. Sarkozy asked for decisive help from the ECB for large scale buying of Italian and Spanish bonds to lower yields, which had reached 7% on Italian bonds. Trichet responded that the ECB's charter did not allow it to finance governments, with the meeting ending in a shouting match between the two leaders. On October 21, EU and IMF inspectors warned that Greece's debt was reaching unsustainable proportions and austerity measures alone would not work, unless the bondholders, the European banks, took losses of 60% on their excessive lending to Greece. At this point France agreed to the German position arguing for this level of bondholder haircuts or losses, fearing the prospect of large future bailouts that would jeopardize France's triple AAA credit rating. The July 2011 summit accord had only provided for 10% in losses for bondholders. On October 27, at a meeting that went past midnight, Merkel and Sarkozy called IIF head Charles Dallara, who headed negotiating for the banks, to EU headquarters in Brussels. Merkel handed Dallara an agreement containing the 50% bondholder loss demand, and told Dallara- "This is the last offer." Merkel was saying banks would be left with nothing if they rejected it and Greece defaulted. Dallara called bankers and the IIF accepted Merkel's agreement. The final moment that October came on October 31, when Greece's prime minister Papandreou said he would call a referendum on the bailout provisions and austerity measures demanded by the IMF, the EU and the ECB. Bond markets reacted negatively to the announcement fearing a rejection and a Greek default. The Group of 20 leaders was meeting in Cannes, France on Nov. 2, 2011. Papandreou was asked to come to Cannes for a pre-summit meeting. Here Merkel told Papandreou- "the real question" for the referendum was, "Do you want to be in the euro, or not?" Days later Papandreou, lacking support in Greece from political parties and opposition inside his party, submitted his resignation. A non-political figure respected in Greece, former ECB vice president, Lucas Papademos, was appointed prime minister to head a Unity government. Polls after the appointment showed three fourths of Greeks said that this was "a positive step for Greece," with Papandreou's party getting only 11% support and the opposition led by Samaras about 20%. The criticism leveled at Merkel is that Germany should take responsibility for debt throughout the euro area through the issuance of eurozone bonds or the ECB buying large amount of bonds of Spain and Italy. Merkel faced strong opposition inside Germany and from the Bundesbank to this idea. The other criticism was based on austerity measures worsening the finances of Greece because of a lack of growth in the economy, which is true; yet Germany may see the situation in Greece as taking a long time to be resolved in any event because of excessive and faulty financial management. For Italy and Spain putting finances in order was a necessity, and austerity measures should lead to short term sacrifice but improve prospects for the long term by returning the economies to growth. Another criticism is the installation of governments that lack popular or electoral support. As the polls in Greece showed the Unity government there has far greater support and public opinion blames the politicians for the huge mess. In Italy, Berlusconi was widely seen as losing popular support when he resigned. And in Spain Mariano Rajoy, the newly elected prime minister, was elected with a huge majority in parliament following winning in local government elections. Merkel also held her own party, the Chrisitian Democrats together at the recent Leipzig convention. Mario Draghi, was elected with German support to head the European Central Bank. He has long argued for better management of Italian finances as head of Italy's central bank. Draghi was able to support Merkel with carefully planned and managed actions. First to reduce interest rates to support economic growth in a slowing eurozone. Following this with the ECB's Long Term Financing Operation in late December 2011, to provide unlimited loans to European banks at 1% interest for three years in exchange for a broadened list of collateral deposited at the ECB. In a final twist in this drama, Charles Dallara, who was a key negotiator for the U.S. Treasury in setting up the Brady Bonds- that converted bad Latin American government debt owed to U.S. banks in the 1980's into long term debt with large reductions in principal owed and lower interest rates. This was in exchange for guaranteed repayment with 30 year U.S. zero coupon bonds. Dallara was now a negotiator for the banks to reduce the chance of the very same bondholder haircuts that he had negotiated in an earlier period to solve the Latin American debt crisis. Other players in the drama were Axel Weber, head of the Bundesbank, Germany's central bank, who resigned after strong and outspoken opposition to the ECB's large scale purchase of bonds of Greece, Italy and Spain. Jens Weidmann, his protege, who replaced him. And Jurgen Stark, German representative at the ECB, who also resigned in opposition to Germany assuming responsibility for eurozone debt. ...

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For the first time the U.S. focuses on the huge trade deficit with China in a serious way. The trade negotiating team led by Robert Lighthizer has set forth its negotiating terms.  1. China must reduce its trade deficit with the U.S. by $100 billion in the first 12 months. In the next 12 months it must reduce its deficit by another $100 billion. In 2 years the trade deficit the U.S. has with China must come down by $200 billion. The issue is no longer just the tariffs on steel, it is about the core issue of balance in  trade. 2. The U.S. says subsidies to state industries in the "Made in China 2025" program must stop. Here the focus is on gaining an unfair technological advantage with a combination of U.S. technology imports and subsidies to state advanced manufacturing industries to erode over time the U.S. technological lead.  3.  China is expected to cut its tariffs by about two thirds on imported products so that the tariffs match that of the U.S. This is the first serious negotiation the U.S. has conducted with China on the core issue of the trade surplus which is growing with a stronger dollar not declining. The surplus approaches $1 billion each day for about $365 billion a year, unsustainable from any perspective. The vital issue of the erosion of the U.S. technological advantage under the Made in China 2025 has turned this issue into one in which the U.S. is unlikely to back down. Especially now that Mr. Lighthizer is leading the  negotiations and has the confidence of the president of the U.S. Lighthizer is a veteran of negotiations from an earlier period -under the Reagan administration in a similar situation with another national competitor- then it was the Japanese. A relentless negotiator as the U.S. seeks to reverse a trade imbalance of stupendous proportions neglected by previous administrations.           ...

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Indian Finance Minister Nirmala Sitharaman is interviewed by Ashok Malik for the Economic Times in this videocast. On what India did right and lessons learned from addressing the pandemic and the supply chain crisis, inflation, Sitharaman says-Getting input and listening to people about what was needed and the pain, was critical in developing the financial plans. On the realization of India's potential in manufacturing, exports, and industrializing its economy, Sitharaman says-India's strength is its rule of law, so that the country is tolerant of criticism including of the prime minister, and there are democratic institutions that protect ordinary citizens, the business and other sectors. Also important is friend shoring as expressed by US Treasury Secretary Yellen alongside Sitharaman, that sees India as a favored destination for the US and the EU. The efforts to develop first rate infrastructure and logistics removes impediments to foreign investment. Training and education of workers is part of this effort to create a supply of trained labor for foreign investment factories in India. The competition between states is also part of this effort to build attractive locations for foreign investments in manufacturing in India. On 20th century financial institutions transforming into 21st century institutions for the IMF, the World Bank and other international financial institutions Sitharaman says- India has full support from all G-20 countries on debt crisis of countries in Asia and Africa, Latin America to change the way in which help is provided. And the skills are put in place to access financial markets on terms that help meet the aspirations of the people in poor countries or middle income countries, including some G20 countries such as Argentina. Sri Lanka she says, is an example where India is the governor and representing the country at the IMF and World Bank for its financial needs. India took up the interests of Sri Lanka with the G20 and the US, so that the loans are not delayed or given in ways that lead to the country exiting the program, unable to meet the aspirations for development of its people. Sitharaman says the G20 found complete agreement on 15 issues facing the world out of 17 issues, these two related to the war in Ukraine and that too from only 2 countries. This suggests that the media focus creating a general perception of lack of unanimity does not reflect what happened at the G20 meetings in India, and is distorted. What really happened is that all countries agreed on the substantial economic issues facing the world- of food insecurity, of development needs, and of climate change impact.  Sitharaman's responses showed optimism based on the hard work put in at the Finance Ministry and connected to all ministries and agencies of the government. And of a resilient attitude, of concentrated effort on the issues facing India and its partners in growth in the US and EU.  ...

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In this essay in Der Spiegel, Charles Hawley says that the Trump movement has become a movement of patriotic downtrodden whites, with a whole range of interests-of extreme right talk show hosts, Tea Party politicians, white power supremacists, those left out by globalization in the working class especially in the midwestern states. The danger he says is that this movement of which Trump has become a part, rejects the narrative on which America is based of the Constitution and the Founding Fathers establishing a country based on principles of "the inalienable rights of man," that have evolved through the years to include black people, women, and minorities.  To put this in perspective, president Obama writing for The Economist magazine in October 2016, puts this movement in a different context- that of the Alien and Sedition Acts of 1798, Know Nothing Movement of the 1800's, the anti-Asian sentiment in the late nineteenth and early twentieth century, periods when anti-immigrant or anti-foreign sentiment gained prominence. Obama's view is that it is not fundamentally economic. In this he is right in that some of the forces on the far right do not stem from globalization. Yet he would be missing a great deal if he did not address the economic problems for the middle and working class that have given such views the support of a broad segment of the population, especially in some midwestern and older industrial states compared to say the economy of California or New York. Obama is aware of the problems in his essay as he points to the problems of workers trying to get a decent wage, of job losses through globalization, and the aggravation of these problems by the financial crisis of 2008 when some of the potential physicists and engineers as he calls them went into the financial sector to create faulty mortgages. Yet he goes back to the free trade and global networks of supply chains as having reduced global poverty, without showing a keen awareness of how it has through a combination of events and decades of policy indifference to manufacturing communities in the U.S.- as documented by experts and shown in Lyrarc, with David Autor and Gordon Hansen in the WSJ, 2016- 08-16. A Gallup Study, WSJ, 2016-05-16, supports Obama's assertion by showing that many of Trump supporters are actually self-employed and not in economic distress. Yet the movement would not have taken its proportions without the merging of different groups particularly largely disadvantaged working class voters, and fortunately Hillary Clinton, Bernie Sanders, have a better sense of this than the president. It is by their efforts that income and wealth disparities can be tackled in a way that restores the social fusion of all parts of society- in Hillary Clinton's emphatic words in the final debate by "growing the middle," growing the middle class. This is the task of the next decade, or possibly two decades. (For Gallup study see WSJ, How Economic Anxieties Explain Trump's Appeal- And Where They Fall Short, Nick Timiraos, 08-16-2016. And for Autor, Hanson, see Tallying the Toll of U.S.-China Trade, Justin Lahart, 08-27-2011)   ...

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The eurozone economy has grown by 3.6% and created 4 million jobs since the start of the bond buying program by the European Central Bank in 2015, according to the ECB. This means that the program has largely accomplished what it set out to do to revive the eurozone economy.

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What changed asks the Economist between the summer when the stimulus was petering out and analysts sniffed deflation for 2011, and today with the euphoria for stock markets and estimates of 4% growth for 2011? Much of the reason for the change is a second round of quantitiative easing for $600 billon announced by the Fed- buying bonds with newly created money to push down rates and stimulate lending. And the December 2010 compromise for across the board extension of the Bush tax cuts. But even though this improves the prospects for 2011, the situation after that is still in the medium term as treacherous as ever, even more so, says the Economist. High interest rates and shaky business confidence can be fixed with strong stimulus, but households and banks have to work off the excessive debt taken on in the last decade. And this deveraging has years to go. So expect more difficult patches where investor euphoria quickly turns to gloom. One other aspect of the current situation is worrisome. The bipartisan deal for the Bush tax cuts was not real bipartisanship, as each side agreed to the others huge giveaways. Real bipartisanship must mean more painful decisions in spending and taxes. The US government's failure to sort out its finances will continue to cast a shadow over the future of the economy....

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Sheila Bair releases her new book in Sept 2012 on the financial crisis of 2008-2009 and the efforts to introduce financial reforms for a safer financial system: "Bull By the Horns: Fighting to Save Main Street from Wall Street and Wall Street from Itself." She is particularly critical of U.S. Treasury Secretary, and former head of the New York Federal Reserve, Timothy Geithner, as protecting the interests of Citigroup and Wall Street in his position as Treasury Secretary of the U.S. government. She describes in detail the situations in which Geithner tried to water down essential reforms to the financial system to make it safer, including the Volcker Rule. Of particular concern is the revolving door by which banking regulators or government officials join banks after service in the government which leads to weakening of regulatory and government oversight and systemic risks as in 2008-2009. Sheila Bair is widely respected for her efforts during the financial crisis from 2008 to 2011, when she headed the Federal Deposit Insurance Corporation, the FDIC. Her active involvement in defending reforms and setting up the system by which financially failing banks could be taken over and unwound without risks to the U.S. financial system are lasting contributions. She also succeeded as a manager by setting up an experienced and effective successor in Martin Gruenberg as head of the FDIC, to continue this work. A former Congresswoman, she describes herself as a Republican populist from Kansas. Her current role is as senior advisor to the Pew Charitable Trusts, which itself is a rare phenomenon today for a senior government official leaving government....

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US Senate lawmakers agreed to increase the FDIC deposit insurance limits to $250,000 from $100,000. These limits have not been permanently increased since 1980- the increase in late 2008 was a temporary measure to support the banking system. Credit rating agencies pushed hard to avoid the setting up of a credit ratings watchdog agency and succeeded. Under Senator Al Franken's provision a government overseen credit ratings agency board would be setup and it would assign new financial products to ratings agencies for rating. 63 Senators had supported this provision in a Senate debate. Intense lobbying from ratings agencies to avoid this government oversight resulted in shelving of this provision. The change is to ask the SEC to study the conflict of interests issue and how an independent agency might function, and give the SEC authority to setup such a system.

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The US housing market in 2022 with sharp increase in cash out refinancing and home equity financing. Total home equity increased 20% in the first quarter to $27.8 trillion, a record high, according to the Federal Reserve, the US central bank. About 60% of equity was withdrawn through cash out refinancing in 2021, according to mortgage data. Cash out refinancing simply adds the amount borrowed to the existing mortgage balance. The amount borrowed through such financing by homeowners adds to inflationary pressures with more cash borrowed on the house for home improvement projects, gardening projects, appliance spending and automobile purchases. The increase in the interest rates by the US Federal Reserve including the 0.75% increase in the rate announced on June 15 slows the amount of borrowing through cash out refinancing. The supply chain disruptions disrupted flow of goods at a time of high demand in 2021 following the lockdowns, and then the war in Ukraine added another layer of inflation from high gas prices. The combined effect with housing price pressures created the perfect storm in inflation the US is facing with the rest of the world. ...

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A group of neurological expeorts in the UK help us with advice. Includes things like avoid hearing and vision loss that lead to not driving or isolating. Social interaction and learning are key so take up a hobby, find new interests , learn a new language, travel, and link this up with other people, new people you can meet. Get plenty of exercise, core building. Nature walks, hiking in the mountains, swimming, outdoor activity. Good sleep begins in the morning so that by the time it is 9.00- 9.30 pm one is ready to go to bed. It helps not to stay up late. Eating healthy, olive oil and Mediterranean diet instead of butter, and eating fruits and vegetables, nuts.  Mindfulness helps. There are four forms of mindfulness. On the leftside Menu for Lyrarc there is under Lyrarc Insights the section Mental Well-Being which gives a translation from the original Pali text of the Buddha describing the Four Forms of Mindfulness in the Sattipana Sutta. This spiritual training, a reading of the Bhagavad Gita or the Bible, nourishes brain health and gives clarity of mind. ...

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Lt. Gen Trainor and Michael Gordon describe the situation during the last months of U.S. presence in Iraq. President Obama is ambivalent about the size of the military presence he would like to leave, settling for 3000 troops and a few F-16's from a inital figure of 10,000. Obama sees the presidential election approaching and sets an objective of keeping it minimal. The military cooperation treaty with Iraq has to be approved by a Iraqi parliament with different factions in parliament not likely to approve it. Prime Minister Malliki decides not to move ahead. In the end no military cooperation treaty is signed after 8 years of war and a date is set for a complete withdrawal. Iraqi airspace is used by Iran to ship supplies to Syria's Assad regime, and the U.S. has less leverage in the region as the Arab world goes through a transition to popular government and elections. The Obama administration shifts most of its attention to Afghanistan where the U.S. has no vital stake in the long run compared to the Middle East region, with its large population, growing economies, move towards democracy and meeting the aspirations of hundreds of millions of young people. One Middle Eastern leader says the U.S. had no long term policy under the Obama administration for Iraq, and this applies also to the rest of the Middle East region, and mostly reacted to events as they happened. The Obama administration's committment to the war in Afghanistan, just as it focussed on winding down the war in Iraq, responded to the American public's waning support for the war in Iraq. It did not reduce the total cost of the conflicts because of the initial escalation of the war in Afghanistan and later slow progress towards a negoiated settlement to that conflict. A negotiated settlement is the best the U.S. could achieve, and the best desired objective considering the limited interests in Afghanistan. In Afghanistan most of the dynamics would be determined in the long run by the situation in Pakistan, and India-Pakistan relations, which the U.S. could influence constructively only through dialogue, promoting cooperation between the two countries, and economic relations....

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U.S. Federal Reserve chairwoman Janet Yellen's speech at the Federal Reserve Bank of Boston conference on inequality was remarkable in the clear focus on the increase in inequality of the last three decades. Yellen calls it "the most sustained rise in inequality since the nineteenth century." Yellen also described the stark inequality between the lower half of households and those at the top- "The lower half of households by wealth held just 3 percent of wealth in 1989 and only 1 percent in 2013. To put that in perspective... the average net worth of the lower half of the distribution, representing 62 million households, was $11,000 in 2013. About one fourth of these families reported zero wealth or negative net worth, and a significant fraction of those said they were "underwater" on their home mortgages, owing more than the value of the home." Without saying this explicitly Yellen has accepted the Fed's own role in this situation under Greenspan and Bernanke. Under Bernanke Yellen was vicechairwoman. Yellen participated in many of the decisions of the Fed that kept interest rates low- hurting savers and those who could not take the risks of a volatile stock market. Yet Yellen has shown courage in stating the problem with all the facts she could muster, and making clear that Fed sees the long term unemployed as a critical driver for Fed policy....

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Robert Lighthizer, was deputy trade representative for the Reagan administration. He says, trade is one area in which the establishment has simply got it wrong. In this area there is little difference between George Bush, Bill Clinton, Obama and Republican politicians. It is one area, he says, where the feeling that elites are thwarting the will of the voters resonates most. He says the talk about America's decline, and the idea that the 21st century belongs to China, leaves voters unconvinced that our trade policy is working for America. For voters who are unconvinced, it makes sense to have a nationalist trade policy that takes on foreign abuses and fights for American interests. He cites 2 statistics that worry these voters. One is the huge trade imbalances that require the USA to sell hundreds of billions of dollars in assets each year. The value of foreign investments in the USA exceeds the value of American investments abroad by $2.74 trillion, and China by itself has $2.5 trillion in foreign currency reserves, mostly in dollars. The other fact is that while the trade deficit for the last decade was about $4.3 trillion for the last decade, America also lost 5.6 millon jobs. And its becoming increasingly clear that as with managed currencies such as the Chinese yuan, and other trade practices, the rest of the world is stacking the free-trade deck against us. ...

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The U.S. and China sign Phase 1 of the trade agreement in a sign of reduction of trade tensions between the two countries. Difficult issues of state subsidies under China's state enterprise model of development, and technological competition were put off for the future. China made the deal possible by agreeing to double its purchases of agricultural products, and offering to purchase about $200 billion in American goods and services over the next two years. This gives relief to farmers, a key part of Mr.Trump's support base. This also helps achieve a key Trump and U.S. goal of cutting the U.S. trade deficit with China quickly, just as happened decades ago with Japan.  See the related article and link on how for the first time in decades China's trade surplus with the U.S. is now set on a path for permanent decline. It dropped significantly in 2019 by 12.5% even though China's imports from the U.S. dropped by 21%, based on Chinese customs data released for 2019. With China increasing these imports significantly and the U.S. holding on to tariffs of 25% on $250 billon of China's exports to the U.S. which are outside the Phase 1 agreement, the downward course is set for the next few years for correction of a dangerous trade imbalance. That imbalance was allowed to develop over successive Republican and Democratic administrations. China already has the European Union as its first leading trading partner and south east Asia as its second. China plans to not be so closely intertwined with the U.S. in trade, and yet preserve its state sponsored development model and drive to compete in technology. China's increased purchases from the U.S. of $200 billon are broken down in terms of farm products- $32 billion, manufactured goods- $80 billion, energy products- $50 billion, services $35 billion. In effect the U.S. gets its goal of cutting the unsustainable China trade surplus quickly and with certainty in 3-5 years. China uses the period to transition for less trade linkage with the U.S. yet preserving its state sponsored model of development and drive for technological advancement.   ...

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David Blanchford of Dartmouth College and Adam Posen of the Peterson Institute of International Economics argue in a recent paper that the true indicator of unemployment in this economy -with a low participation rate and millions dropping out of the labor market unable to find work- is the wage growth. This is particularly true with the U.S. Labor Department report of 288,000 new jobs in 2014 and a 6.3% unemployment rate, yet wages flat for March and April 2014, and no improvement in the participation rate. Blanchford says one should look at the wage growth and consider the rest to be noise. The Yellen Fed is looking closely at the participation rate.

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Clements provides an exceptionally useful reasoning for the average investor to give an important role to high dividend paying stocks in retirement planning. This applies to today's low interest environment with stock market volatility. The higher dividends help reduce the need to sell stocks in a volatile stock market and limit this to occasional selling. Using estimates from Yale Prof. Shiller's website for past 100 years data diversified U.S. stocks with high dividends pay about 4.4% in annual dividends outpacing the inflation average of 3.2%, and 5.6% appreciation in value of the stock each year. This helps preserve retirement capital. As many high dividend large cap stocks are also value stocks there is an additional value effect in holding these stocks.