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Microsoft CEO, Satya Nadella, is intervewed by Shira Ovide of the WSJ. Compared to Bill Gates and Steve Ballmer, Nadella has a quiet demeanor. Responding to a question about how he made it from heading R&D for the Bing search engine to the CEO position, he says what helped him most was working in different jobs at Microsoft with different contexts and challenges, including a mix of some where success was achieved and some in which it was much harder. The experience of people in his management team is similar. He says his sense of being an outsider while being an insider is something he always had in him, and something he now encourages as a CEO. Reading outside of work is his only rule, and this may help him maintain some distance from work to think like an outsider. His preference is literary reading not common among senior managers- T.S. Eliot's poetry. Taking some off from work for medical leave or other reasons, is something he supports, especially from his own experience needing such leave as a 29 year old at Microsoft....

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How Martin Feldstein weighs the risks of inflation and of moral hazards in helping those who fueled the subprime crisis with their mistakes with the risks of a sharp downturn, and what thoughts he has on the issue of lowering rates just as the Bernbanke Fed prepares for its policy meeting September 18, 2007. He looks for a cut starting from the current 5.25% to 4.25% or even less depending on the situation as it evolves. Feldstein gives a measure for household wealth that will be lost and what will be lost in consumer spending as a result. His measure is for a 20% cumulative fall in house prices that would reduce household wealth by $4 trillion which would impact consumer spending by about $200 billion, thats about 5% consumers would spend more if they had that $4 trillion. This works out to about 1.5% of GDP which he suggests would tip the US economy into a recession. This is not counting the loss of access to spendable cash that the consumer has used for the last decade in terms of mortgage equity withdrawals which totaled $9 trillion this last decade and financed a lot of the sustained consumer spending, these mortgage equity withdrawals to finance spending would decline significantly in the new conditions. In addition with more defaults and falling prices in a vicious circle the process could accelerate quickly, further impairing the portfolios of banks and financial institutions causing some to collapse. ...

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In a Senate hearing Dr. Fauci, head National Institute of Infectious Diseases, Dr. Redfield, head of CDC, and Dr. Hahn, head of the FDA, answered questions from U.S. Senators including committee chairman Lamar Alexander and Senator Murray. Dr. Fauci told senators that with some states reopening without meeting federal guidelines that include seeing an extended period of falling numbers of cases and deaths, "there is a real risk you could trigger an outbreak ... that could set you back rather than going forward."  Dr Fauci is concerned about the situation in the fall when schools and colleges reopen with possible spread. In other comments Robert Redfield the CDC head told the committee- "timely testing is vital to reopen America, increased contact tracing is critical." Redfield says CDC has created a state by state assessment of contact tracing and was working with states on these surveillance systems. This contact tracing effort is one of the less developed areas in which the focus is being shifted to along with testing capabilities. Admiral Giror who heads testing capability buildup says 40 to 50 million tests should be available by September 2020, so that hotspots could be addressed quickly. ...

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Christian Noyer, the Governor of the Bank of France, says that the supervisory infrastructure and deposit guarantee structure for the eurozone has not kept up with the creation of a single currrency, leaving an obvious gap that has to be fixed. Of particular importance is the link between sovereign and banking risks that is behind dangers in today's eurozone crisis, especially in Spain, which he says should be broken. The creation of a single euroarea supervisory authority is a prerequisite for a deposit guarantee fund that will separate and delink bank and sovereign risks. The other step is to create a banking resolution scheme similiar to what the U.S. has setup, with the FDIC having a resolution plan to come in and unwind a failing bank, include large banks with systemic risk.

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The 2016 primaries with Sanders and Trump have brought to the forefront voter dissatisfaction with the agenda of both parties, especially so for Republicans with the lack of specifics and personality driven campaign of frontrunner Trump. On a whole host of issues from poverty, wages and inequality, regulatory reform, to trade, borders, security, ISIS, both parties are facing questions from voters. Particularly the Republicans who have lacked specifics during the two terms of the Democratic Obama administration with a divided Republican Congress, and the risks for Republicans running for Congress under frontrunners Trump or Cruz who have provided few details on their agenda. The Agenda project of Ryan will have about 25 meetings and prepared specific agenda, including white papers and legislation, that would give Republicans hope to run on positive proposals that are placed before the Republican Convention in Cleveland. Chairmen of House standing committees were assigned 6 areas- health care, taxes, national security, regulatory reform, poverty, and Congress reasserting constitutional authority. Ryan told the Ethics and Public Policy Center on April 19, 2016- "A lot of people don't like conservatism as they know it. For too many people Republicans seem to be caught in a time warp. They're thinking, 'We don't control our borders. Wages are going nowhere. College and healthcare keep getting expensive. ISIS continues to spread. And what are Republicans going to do about it?' So we need to adapt our policies to meet the challenges of the 21st century."...

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An account by Journal reporters based on over 25 interviews with eurozone policymakers shows how the central players in the eurozone drama acted to defend their national interests during the period April to July 2011. On one side France's president Sarkozy, Frenchman Claude Trichet at the European Central Bank, arguing in favor of the banks not to take bondholder losses or haircuts on loans made to Greece. On the other side the Bundesbanks Axel Weber, and Jens Weidman, Jurgen Stark and German Finance Minister Schauble. The Germans argued strongly for bondholder losses to take responsibility for bad loan decisions by French and German banks. French banks had committed more loans to Greece than German banks and had more at stake. German public opinion was strongly against German taxpayers paying for the losses, making German politicians insistent that European banks take losses on their bad loan decisions, or Germany would not support additional loans to Greece. Throughout April to July the two sides were locked in an impasse. The French feared losses for their banks and a Lehman Brothers bankruptcy style situation. The Germans at the Bundesbank and the Finance Ministry were equally insistent. A July 2011 summit meeting did not settle the issue. The events not covered here from the July to the December summit of eurozone leaders resulted in bondholders taking 50% haircut on loans to Greece, reducing the debt burden in Greece after austerity measures led to popular protests. The French pushed hard for the ECB or the EFSF to be allowed to make large purchases of bonds of troubled eurozone countries in an effort to protect Spain and Italy from contagion through higher bond yields. The Netherlands and Finland supported Germany's position. German bankers Weber, Weidman at the Bundesbank and Finance Minister Schauble opposed large scale buying by the ECB of Italy's and Spain's bonds and Chancellor Merkel said about a common eurobond that "this is not going to happen." Governments changed in Greece, Italy, and Spain by Dec. 2011, which committed to austerity programs and spending cuts. Italian Mario Draghi was appointed with German support as new head of the ECB. In late December 2011 Draghi launched the Long Term Financing Operation for lending unlimited amounts at 1% for three year loans to European banks and relaxing the terms to accept government bonds and other debt as collateral for loans. The effect of this was to provide a large infusion of liquidity into the banking system in Europe and drastically bring down the yields on bonds issued by Italy and Spain....

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Hilsenrath describes how the Federal Reserve missed the signs of the mortgage financial crisis of 2008, the bubble economy, and how low interest rates and other actions of the Fed to rescue the economy led to a situation which hurt savers. The lack of a serious plan for homeowner rescue as part of the actions by the government further hurt the working and middle class. The rescue also lacked credibility because the banks ended up becoming bigger than they were, and no action was taken in the U.S. which had been pushed by the U.S. in similiar situations overseas- for example on South Korean banks for overborrowing during the 1997 Asian financial crisis.  At the 2014 Boston Fed sponsored conference on Inequality, Fed chairman Janet Yellen described what she called the largest inequality in the U.S. not seen since the 19th century. The average net worth of the lower half of the distribution, said Yellen, of 62 million households, was $11,000, and a quarter of them had zero net worth. These were the shocking statistics that propelled two unlikely outsiders forward- Donald Trump to the Republican nomination for president, and Bernie Sanders who coming close to getting the Democratic nomination settled for a big part of setting the Democratic agenda supported by nominee Clinton in 2016. ...

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Brent crude drops below $60 by Dec. 15, 2014.

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Fisher and Taub of the NYT look at the populist politics in Europe and the U.S. following the French election first round. Trump won in the U.S. with the deep polarization of politics in the U.S.- leading to the Republican Party to decide to support him to avoid the result of four more years of an administration led by Democrats, and with the support of discontented voters in midwestern states with falling living standards. The situation in Europe is different as the mainstream parties have united in the past to block populist politicians with negative messages on immigration and an open economy. This happened in the Dutch election, by the co-opting of the nationalist message of populist politicians by mainstream parties and mainstream politicians, and is likely to continue in the French and German elections in 2017. Fisher and Taub point to another development that is happening- shifting the debate to ethnonationalism vs. open economies, which has happened with Brexit and the UK Independence Party. They cite the 2015 British elections in which UKIP won 13 percent of the vote, as having influenced prime minister Cameron to call for a referendum on Brexit, in a effort to revive the fortunes of the Conservative Party. In the end this resulted in the 52 percent vote supporting Brexit.  Another way of looking at the populist movement is that with Trump it called attention to trade and the way working class Americans were being marginalized especially in the industrial midwest. With this problem being addressed in a Trump administration and a reviving economy, the mainstream parties have an opportunity to reassert themselves. In Europe the AfD called attention to immigration issues, and the Merkel coalition government of CDU and SPD by making changes such as the deal with Turkey, and returning economic refugees, is able to assert the role of mainstream parties. In Britain the situation could be a result of a brash decision by a Conservative prime minister Cameron, in making a bad miscalculation, that has put Britain on a course that is likely not in its best interest. The Brexit referendum yes vote galvanized opinion by showing an endless stream of refugees in their advertising- a development following the opening of borders by Germany and Austria to address the plight of Syrian war refugees. That situation has passed and is unlikely to happen again as both the SPD and CDU parties in Germany have pointed out that this was a one time situation that they responded to following the exodus from Keleti rail station in Hungary under special circumstances. With this kind of perspective populist politics can be seen as reflecting other voices in a democracy, that are heard and responded to, yet keeping the sense of balance and openness necessary in today's global economy and societies. This is also the perception of Germany's outgoing popular president Gauck in his final address, pointing to the need to listen to other voices in a democracy, and the need for openness in a democracy, as well as democracies always in the process of Becoming and evolving to adapt to new situations in economy, society, and politics.     ...

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Consumer prices rose 0.4% in June 2013, in early signs that the policies of the Abe administration against deflation are working.

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Italy and Spain get Germany's chancellor Merkel to agree to direct recapitalization of eurozone banks by the European rescue fund instead of the government having to ask for rescue funds as happened for the $125 billion aid request from Spain. The condition is that a European banking regulator with wide powers to regulate eurozone banks has to be setup first. This means Spain will have to provide the initial funds to recapitalize its banks but can reduce the stress this places on its debt by letting the banks get aid directly from the European rescue fund later this year. This is one of the short term measures needed to restore market confidence. Italy pushed hard for the rescue fund to be allowed to buy Italian or Spanish bonds in the private markets to reduce the high yields on Spanish and Italian government bonds, which reached 7% for 10 year Spanish bonds in June 2012. Merkel agreed to this with fewer strings attached. These are the immediate short term measures which were very important for Spain and Italy. Through marathon 14 hour discussions described by Monti as "hard and tense," the Italian and Spanish governments stood firm on these short term measures, and at one point indicated their willingness to let the talks collapse if Germany did not agree. France's president Hollande stood by Italy and Spain in the negotiations. Other long term fixes such as a European authority for country fiscal policy review and a detailed road map were left for future meetings in October 2012....

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Gretchen Morgenson describes the issues of regulatory capture for Treasury Secretary Timothy Geithner during the 2008 financial crisis and the first term of the Obama administration, which affected how Geithner treated homeowners and banks. Morgenson describes close ties to Citicorp.

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WSJ's reporters Meichtry, L, Pokharel, and Soon look at the extraordinary rise of Gautam Adani through his efforts to develop reclaimed land at Mundra port in the state of Gujarat. Adani who started with a small family owned plastics maker in Ahmedabad developed Mundra port around 2001 with the help of the Modi administration. Modi saw the electricity shortages in Gujarat as an opportunity to tackle India's chronic electricity shortages. Adani's early development of a deep water port at Mundra offered both Modi and Adani the opportunity to tackle the electricity shortages by bringing coal in large ships to Mundra in the way that China was already doing by 2005 in its own efforts at industrialization. So deeply immersed was India under the Congress Raj of licenses and closed economy that India's established business failed to see what China was doing to break into the ranks of industrialized nations. India's first prime minister Nehru had build a command economy where not much happened without government licenses and approval often riddled unwittingly with corruption. Modi needed someone outside the established companies operating under the Congress Raj command economy and with a vision of an India with abundant electricity to take the risks Chinese companies were taking to build an entirely new economy. By 2005 Guangzhou was importing coal with large ships from Indonesia and Australia. State owned companies moved slowly and would take years to develop the port capacity. Using China's example Modi pushed ahead with Adani on a rapid time delivery making Mundra a Special economic Zone and helping to connect Indian Railways to the port of Mundra for coal deliveries. Adani Enterprises built the thermal power plants near Mundra and build electricity transmission lines on a rapid mission mode giving Gujarat abundant electricity supplies and giving Gujarat state in northwestern India a great leap forward in the way China was already doing right in front of everyone's eyes by 2005 with world class ports built at Guangzhou, Shanghai, Shenzen, Hong Kong and logistics connections set with the help of Maersk.  Maersk is now doing the same for modern logistics in India in collaboration with the Modi administration.  Modi and the younger generation of aspirational youth in India see a New India that can break into the ranks of the largest industrialized nations with world class infrastructure in the way China has done, and use new technologies with innovation that will speed up the process in a way that the world has never seen. A quick look at Mundra Port in Wikipedia shows the timeline, It starts in 1998 when Adani Port Ltd was setup and Mundra port work began, 2002 the port integrated with Indian Railways, 2003 when it was made a Special Economic Zone by the Modi government in Gujarat, 2007 when IPO of 40 million shares at price band of around Rs 400 was done.  The Biden administration and the Trump administration support India's efforts to build a new modern economy with a rapid shift to renewable energy. As India is building the ports and logistics with the help of Maersk and other companies in the European Union, president Biden is working with prime minister Modi to build a new supply chain that removes the overconcentration of manufacturing and supply chain logistics in China. This means new ports with the latest technologies in India to handle shipment to the US and the EU. Jake Sullivan set out the goals for president Biden to accomplish this task in meetings with his Indian counterpart Ajit Doval this week on iCERT. President Biden and Republicans, Germany and the EU, see India as a critical part of the Initiative on Critical and Emerging Technologies, and the new supply chain. For the Adani Group the IPO pause offers an opportunity to do what Nirmala Sitharman has done in the Indian Budget this week- build a stable growth path ahead for the long term in line with India's Amrit Kal the next 25 years to centenary of freedom in 2047. Nirmala Sitharaman set a goal of rapid capital spending and investment increasing capital spending in 2023 by 33% in 2023 over 2022, yet maintaining a stable fiscal path by keeping the deficit below 6%. ...

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Toyota reported a 77% drop in earnings in the first quarter of 2011, with a large loss in the Japanese operations. The strong yen trading at 81 yen to the dollar is a significant factor. And for the first time Toyota's CFO Satoshi Ozawa said "we have reached the limits of profitable Japan based production at 80 yen to the dollar." Japanese operatios lost $2.4 billion. Honda reported a 38% drop in earnings for the 1st quarter.

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This New Yorker has resilence in his roots in the Scottish Hebrides islands. No wonder he was able to take up the challenge of a US unable to extricate itself from  wars in the Middle East (Reagan, Bushes, Obama), and unfair trade with China, and an onslaught of unfavorable media attention. His name is DJT. According to the BBC in this story on Donald Trump's mother Mary Ann Mcleod, she was a regular churchgoer, well respected in the community, who visited her homeland in Scottish isle of Lewis, British Hebrides, frequently. Mary Ann McLeod is the youngest of 10 children of a Scottish family in the town of Tong in the Hebridean isle of Lewis in the North Sea, northwest of the Scotland mainland. Her father ran the local post office. The family was  relatively poor coming from Scottish people cleared of Highlanders during the Clearances and with fishing disasters in the family. Two hundred servicemen returning from the first world war to Tong lost their lives in a shipping disaster and the economy of the island was in poor shape. With no opportunities or future many immigrated to Canada. Mary Ann's sister Catherine immigrated to Canada and on a visit to Tong she took Mary back with her to New York in 1930. Mary worked as a nanny for a wealthy family in New York before meeting a socialite of German immigrants Fred Trump. Mary returned to Scotland in 1934 and by then she found a new life with Fred Trump whom she married. The couple lived in a wealthy area of Queens and Fred Trump ran a real estate business he had inherited with his mother. Donald Trump still has three cousins in Tong in the British Hebrides Scottish isles. His older sister Maryanne Trump Barry regularly visited Tong. Donald Trump visited Tong in 2008. Of this family a local who knows the cousins and the family John MacIver, a local councillor and friend of the cousins told BBC in 2017- "They are very nice, gentle people and I'm sure they don't want all the publicity that's around. I quite understand that they don't want to talk about it."   ...

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Vikram Pandit's style at Citigroup after 4 months, thoughful, asking lots of questions, fixing the little things that actually matter a lot, like the unwillingness of some heads of divisions to sit together in the same room, some hiring decisions and new lines of reporting and responsibiity and interaction in the organization structure that call for teamwork, discussion and collaboration. The oldtimers like Krawcheck used to clear lines of reporting are now getting used to the new culture of collaborative working. His style is first to come to grips with issues and not to come to snap decisions based on intuition, such as interviewing at length and asking tough questions at length to Ajay Banga, head of Citi's international group about the extensive defaults in Citi's consumer loan business in Japan. One of his views is that only if you get the foundation right can you talk about vision. Regarding pettiness in management and small grudges, its either going to be a partnership or you're not going to be here. some of his colleagues like James Forense say that they would take substance over form, judgement over form, any day of the week. And while he does not shy away from details like expecting lower level employees to pay for sporting event tickets Citigroup earlier gave out free, and he himself rides the subway sometimes, he has made some of the bigger decisions. Among these, getting capital from outside sources by travelling extensively abroad, urging Citigroup's board to slash the dividend for the first time in 20 years, selling off 2 peripheral units that did not belong and a third Primerica on sale also. And urged by his mentor former Treasury secretary Rubin who also used a note pad and a thinking thoughtful style like Pandit's at Treasury during the Asian banking crisis and the Mexican financial crisis, Pandit has been direct and realistic. He tells Wall Street that the fate of Citigroup is going to be decided to some extent by the duration of the environment we are going through, the twin perils of the debt-market crisis and the sluggish US economy. And that for now issues like these are going to overwhelm our actions. Pandit's father was a senior executive of one of India's leading pharmaceutical companies when the family moved to New York, so he has grown up around business, and is able to ask the question quite sincerely and matter of factly of his managers at the beginning of every meeting. "What are you doing with the shareholder's money?" After which come the torrent of well thought out questions, probing deeper each time, especiually where issues are festering for a long time, and remain unresolved. ...

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The feud between New Jersey Governor, Chris Christie, and the head of the state teacher's union, Ms. Keshishian. Governor Christie called the state legislature into an emergency session and pushed through a 2% cap on annual increases in property taxes, which have risen 70% over the last decade in New Jersey. The issue is whether the extent of spending on education is sustainable in New Jersey. New Jersey's median property tax is the highest in the nation, at $6,579. By comparison New York is $3,755 and Illinois $3,507. New Jersey residents pay an average of 11.8% for property taxes. Both sides have engaged in strong rhetoric and the teachers union has attacked the Governor in television ads. Governor Christie refused to discuss issues with Keshishian, and ended a meeting in his office, with "Not with you. I don't." The teachers argues that New Jersey schools provides some of the best schooling in the nation- the state's high school graduation is 82%, and it ranks among the top 5 states in key subject areas, according to the Education Law Center in Newark. Its graduation center for black males is 69%. New Jersey also has a heavily unionized public sector with relatively high wages for public workers of all kinds, including teachers. This and a state supreme court decision mandating increased funding for schools in poor communities raises the cost per pupil to $17,794, the highest in the nation, after Washington D.C. New York is at $16,981. California, and Illinois spend $11,000. The average New Jersey teacher makes $61,277 a year, well above the U.S. average of $52,800, according to the National Education Association. Medical and other benefits add $19,140 according to the teacher's union. And the unsustainability goes back to issues such as unfunded liabilities for benefits and pensions in New Jersey. New Jersey's Treasurer estimates the unfunded liabilities relating to lifetime health benefits for current and retired teachers at $36.32 billion....

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The system of using performance evaluations for "forced" or "stack" ranking of employees started with Jack Welch at General Electric. Microsoft adopted the system under Ballmer till 2013, when it decided that the need for teamwork was more important and discontinued the practice. Welch used it to get rid of "underperformers" or managers who did not conform to his requirements when he became CEO of General Electric. It was his personal style and way of bringing change to GE. The practice of "forced" ranking increases competition inside the company instead of teamwork, say managers, and leaves a lot to the caprice of individual managers. In December 2013 Ballmer facing criticism from his Board for missing some of the disruptive technologies in the information tech business and falling behind Apple and Google, sought the advice of Alan Mulally of Ford Motor Company. Mulally had to fight entrenched Japanese competitors and pull Ford out of a crisis in which even Ford's logo had been put up as collateral for loans. Meeting for 4 hours on Mercer Island in Seattle Mulally told Ballmer that he focussed on teamwork and simplifying the way Ford did things. Ballmer phased out the "forced" ranking system as one of the last major steps before he leaves Microsoft. In today's environment for tech companies of intense competition worldwide and disruptive technologies without teamwork and employees looking to come up with new and exciting products the future is surely lost. Having the "bottom" 50% of the employees compete for limited positions can be dangerous or suicidal without the dominant position in markets that GE and Microsoft had. It also makes no sense to substitute internal competition and capricious manager behaviours for teamwork. It is the responsibility of managers to do as much as possible to make good hiring decisions, and then motivate and help employees to achieve their best performance with frequent helpful feedback, and to promote teamwork. This is the lesson Ford learned through its crisis and Microsoft is now learning....