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This report in the NYT looks at the support for the AfD stalled at about 11% nationwide but closer to twice that in East Germany where years of neglect have led to voters shifting to far right parties. The view is presented that there is a core hard right of 10%. Yet it ignores or prefers to overlook what happened in the east which provides the real clues to what happened, so that future policy could be designed to address social goals in a way that never happened in Germany. This is in line with developments in China where president Xi is addressing social goals after years of tech and infrastructure expansion that neglected rural areas and urban poor. It is in line also with the same action taken to address social goals in US president Biden's $3.5 trillion workers and families plan. Social Democrats under Mr. Scholz and a younger generation represented by the Greens have the same challenges facing them to come up with the plans to correct these problems in Germany and with a plan designed for the neglected eastern part of the country. Helmut Kohl pushed for reunification of Germany. With the collapse of the Berlin Wall the momentum was set for this to happen. Yet looking back over that period since 1990, German chancellors and administrations for three decades from both CDU and SPD have failed to invest and create opportunities in eastern part of Germany. It makes German reunification an empty concept looked at from outside. The previous administrations including Kohl and Merkel relied too much on market capitalism to do what it has been shown not capable of doing- tackling social goals and economic crises, much less  political storms such as creation of GDR following Soviet army entering Berlinin 1945. Much commentary on the issues in east Germany show people there left to themselves after mass migration out of the east to the west leaving older people and pensioners in the east, and a sense of being ignored or forgotten. US president Biden said today in ther UN General Assembly- "Our shared grief is a poignant reminder that our collective future will hinge on our ability to recognize our common humanity and to act together." And he went on to say the next ten years to 2030 "will quite literally determine our futures."  The Social Democrats under Scholz and the Greens under Baerbock and Habeck have to come up with plans and programs that will increase ease of living and opportunities for a thriving eastern part of Germany, after the failures of market capitalism in its unregulated form during the Merkel years and predecessor administrations. ...

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Greg Ip of the WSJ looks at the result of changes in supply chains away from China, and the new trading relationship with China to 2028. He says the shift to a new global supply chain that diversifies it away from concentration in China is taking place. Would taking the tariffs from 30% to 60% under a new Trump administration be a good idea? Greg Ip thinks it is a bad idea as the change is gradual and is actually taking place. It may have the unintended effect of worsening US China relations essential for global stability when it is coupled with erratic or retaliatory rhetoric. Rhetoric that appears to China that it is being singled out in world trade beyond what are changes that have taken place with Japan in the past in trade. The Biden administration is for good reasons working to restore a balanced yet stable relationship with China. Apple is shifting production of 25% of iPhones to India. Samsung is investing more in Vietnam. The trade deficit with Mexico has reached $151 billion twice as large as in 2017. And $100 billion with Vietnam three times as large as 2017. The US trade deficit with China has dropped from $381 billion to $281 billion in the last 12 months, the Commerce Department reports show. And from $1.1 trillion with the whole world from $1.2 trillion for the last 12 months, 4% of US GDP. Overall the Trump era tariffs of 30% have not reduced the US  trade deficit substantially but has shifted American and European foreign investment to India, Vietnam, Mexico and other countries as well as to the home country. Over time the supply chain would become truly diversified as India makes great strides to become the third largest economy with new infrastructure by 2030. The head emeritus of the European Union Chamber of Commerce in China, Joerg Wuttke, says the pressure to export will be high for China as its economy shifts more to manufacturing from construction. Most Chinese companies are producing more than internal demand in China, and most companies in solar are losing money, in wind turbines and solar all are losing money, Wuttke says. This means China will double down and increase its investments in Mexico, Vietnam, Morocco and other countries so that it can send its products to the US through third countries that do the final export. One expert even says removing a few screws here and some there, find a different supplier, and shipping to a third party for final export that makes it not 100% Chinese content, the pressure for that is high. ...

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There is a price for a socialist state run society adopting capitalism without understanding it. Russia experienced this in the 1990's as the Soviet system collapsed and the capitalist system took its place by 1990 with flagrant abuses. Only to be stabilized in the Putin years till the war in Ukraine affected the Russian economy. China avoided this fate by continuing its accelerated path to industrialization till the 2009 financial crisis. But hidden in its seemingly successful modernization effort was the role of LGFV's and selling of land to support the LGFV's. Local governments did not take on debt themselves, they passed on the debt to Local Government Financing Vehicles LGFV's- about 8 trillion dollars of debt 80%-90% not serviceable for interest payments, zombie status requiring borrowing for annual spending.  Most city councils or mayors did not understand these vehicles were debt and some even asked "do we have to pay it back?" LGFV's were not understood by mayors and city councils brought up under a socialist state run economy. They used it to follow the central government in Beijing's orders to come up with projects to boost growth year after year to rates of growth of 10% in the 1990's and 2000's, heedless of the risks because they never really understood the capitalist system and its pitfalls.  As long as land could be sold there was some revenue for local governments and room for shifting $8 trillion in debt to other LGFV's. Once the construction industry collapsed and companies went bankrupt their were few buyers for land. The central government cannot take on some of this $8 trillion in debt. As a result China is now facing what the Russians faced - a crisis from lack of grasp of the severe pitfalls of capitalism when its risks are not understood for economies that were in the 20th century experiencing upheavals, wars and then socialist state run economies. What this means is that the Chinese economy will slow, has no choice but to slow down for the next decade to find solutions to this debt overhang over its economy and industrial plans. It also means China's support for Russia in the Ukraine conflict is also problematic for China's internal growth to meet the aspirations of its people. As long as the administration in the US continues to pursue its own economic policies for growth as Biden has done by investing in the American economy, it will have the opportunity to lead the free world and be able to hold out hope for aspirations of countries and regions such as India, Africa and Latin America. ...

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The cost is $117 million the number of students estimated at 20,000 who can be educated in this way who cannot afford the high tution fees at the universities in Minnesota including the University of Minnesota system. In opposing access to higher education the Wall Street Journal Editorial Board also reflects the views of billionaire owners out of touch with the people of America and the Nation. The WSJ Editorial Board says nothing about the egregious situation today shown on its pages of capital allocation that has gone upside down and scary. For example it showed in one week : $110 million capital allocated to invent a better golf ball $700 million lost in capital allocated by investment funds in a facial lotion brand that uses natural ingredients. This is just to cite 2 of thousands of such capital allocations many of them shown on Lyrarc.com as examples of poor and egregious scary capital allocation for a nation built on fairness and building opportunities for workers and families through the Enlightenment and the Industrial Revolution. The very investment that differentiated America and Europe from the feudal societies of China and India that self destructed in the 20th century after enormous suffering for hundreds of millions of the Chinese and Indian people. Isn't this like turning ones back on the Advantages that accrued to Europe and America from its wise investments and turning one's back on the Enlightenment in Europe and America itself? This is the statement to be found on the Minnesota Office of Higher Education- "Beginning in fall 2024, the North Star Promise (NSP) Scholarship program will create a tuition and fee-free pathway to higher education for eligible at eligible Minnesota residents at eligible institutions as a "last-dollar" program by covering the balance of tuition and fees remaining after other scholarships, grants, stipends and tuition waivers have been applied. By making college accessible and affordable, NSP is intended to have a positive impact on multiple fronts: Help stabilize enrollment at Minnesota public institutions of higher education; Serve as an economic driver for Minnesota by educating qualified workers who are much needed to fill vacancies in the state's labor force; Create a viable higher education path for Minnesota residents who may have previously thought education was not a possibility for them. We estimate this program will impact 15,000-20,000 students in the first academic year." The cost estimate at $117 million a year . ...

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Making some territorial concessions appears to be the only way for peace talks to succeed. For a long time there was insistence on territorial sovereignty of Ukraine by EU and NATO leaders. This appears to have prolonged the war- with needless loss of life on both sides, and costly damage to Ukraine infrastructure, a population that had to face additional winters and hardship in war ravaged areas. NATO's Stoltenberg from Norway, leaders of northern Nordic and Baltic countries, the UK, could take that position without having to face the hardship of the war. NATO had to be re-formed under a new name and new structure  following the collapse of the Soviet Union, with wariness about the possibility of centuries old since 1700 UK and Nordic historical adversarial relationship with Russia casting a shadow over that organization, and embroiling the US in conflicts not of its own choice or of wise leadership. This is the root cause of the Ukraine war. It would have been best to completely restructure NATO and give it a new name without Northern European nations leading it. Principles matter once soviet communism was no longer there NATO formed for its expansionism in 1950's had served it's purpose. Rasmussen from Denmark and Stoltenberg from Norway led the organization for the last decade and half from 2009-2014 and 2014 to 2025, with backing from Obama/Merkel for most of the period of the war in Ukraine. Also most of the period NATO expanded to Russian borders happened under Northern European leaders from Spain, Britain and Nordics (Solana, Robertson, Scheffer, Rasmussen and Stoltenberg) and the organization NATO getting the northern European slant based on historical adversarial relationship of Britain and Russia since 1700- for no other reason than the British wanting to protect its large Empire and commerce in India which in the 18th and 19th century included most of Asia. Under Robertson the UK Defense Secretary much of this transformation into turning NATO into something anti-Russian happened which was primarily because of British and Nordic perceptions of Russia as an adversary. Robertson added the following countries at the Prague Summit in 2002 to NATO- the Baltics, Romania, Slovakia and Slovenia. Russia faced internal upheaval in those years and Yeltsin in resigned in 1999, Putin was elected in 2000. It is clear that Russia had suffered severe economic hardship in that period and Putin's first goal in 2002 was to stabilize the economy.  It could be said that this turning NATO over to UK and Nordics was a huge mistake considering that Russia was still the largest nuclear power after the US, and British policy was now determining US policy. And Britain's Robertson/NATO should not have involved itself in the Afghanistan war using Article 5, as the US could have handled this alone and limited that engagement. It got US involved in another conflict, conflict with Russia that was to come in Ukraine on the side of the Baltics and Ukraine, without US clearly understanding what the roots of that war was about and implied confrontation with Russia 20 years after the Prague Summit in 2002 under George Bush junior. The incompetence of Bush and Obama/Merkel laid the seeds of the Ukraine war in 2022 following Robertson, Rasmussen, Stoltenberg, small Nordic nations and Britain creating a conflict that did not need to happen, with loss of hundreds of thousands of lives of Russian speaking fraternal peoples of both Russia and Ukraine. The Republican sentiment under DJT of the tragedy of such huge losses of young people, and desire to end this loss of life, can nowhere be seen in bellicose talk in northern European nations, that take the US for granted to fight their wars.  The wisdom of Washington, Lincoln and TR/FDR clearly caution in getting involved in European centuries old animosities. For the US it meant in practical terms that it could no longer carry out the Monroe Doctrine essential for peace and good governance in the western hemisphere as only a Russia desperate to make its views known about NATO would interfere in the western hemisphere against US assertion of the Monroe Doctrine with the US Navy. Instead drug trafficking gangs took over Latin American countries and created a flow of fentanyl and millions of people through migrant traffickers across the US southern border. As America has expressed its concern for loss of Russian and Ukrainian men in the war for the first time under DJT Russia has distanced itself from Venezuela, Mexico and Latin America. The loss of hundreds of thousands of young Americans to fentanyl is a shared tragedy with the loss of hundreds of thousands of young Russians and Ukrainians in the last decade. How reliable are Northern European countries when it comes to protecting the eastern seaboard of the US with the acquisition of Greenland? It is a policy pursued by presidents since the Alaska Acquisition from Russia. By Seward, Teddy Roosevelt, Harry Truman and DJT. Denmark the land where NATO secretary general Rasmussen was from followed by Stoltenberg from Norway  (for 15 of the years of the war in Ukraine 2010-2025) the US efforts to protect its eastern seaboard are rebuffed by both Denmark and Norway, and the US presented in a negative light as an imperialist power in the face of Danish East India Company's  colonial attitude since 1700 clearly imitating the colonial British East India company.  It shows Northern European nations looking out for themselves not for the US, and embroiling the US in their wars at the cost of the entire western hemisphere being destabilized. The population of UK, Denmark and Norway, Baltics is far less than the Mumbai, Shanghai, Sao Paulo , Berlin and Tokyo regions. Should the views of a small population in northern Europe of 2% of the total determine the future of US, Europe, China, India, Brazil, and other parts of the world with 5 billion people the 98%, when issues of war and nuclear conflict, nuclear buildup, the western hemisphere destabilized with drug trafficking gangs running rampant in countries, divide the world in opposing blocs, when the wellbeing of most of the world's people in Asia and Latin America, Africa is at stake by establishing a essential degree of cooperation by all sides. The US under DJT has chosen a wise policy of cooperation over conflict -with China, with Russia, with all the major powers, and with smaller powers. Reading the wisdom contained in the writings of Washington, Lincoln, TR/FDR confirms it is clearly the wise choice. ...

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Raghuram Rajan warns about the difficulty of central bankers worldwide to escape from the scenario of ultra low interest rates.

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Wildfires burn on 1.4 million acres in California as it seeks help from Australia and other places. These fires are the second largest in its history.

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The FBI and the IRS were working on the same investigation of FIFA from different directions and began working together since Dec. 2011, as they found that the same people were involved. Richard Weber of the IRS, says another round of indictments can be expected. The IRS case starts with investigation into tax fraud and one discovery leads to another in the case. By 2013 Chuck Blazer had pleaded guilty to tax and corruption charges and agreed to cooperate with the IRS and the FBI, leading to the breakthroughs that followed. Enhanced cooperation between the Justice Department and international banks since the indictments against banks for illicit operations has made banks willing to cooperate with investigations fully. Once the case was built up getting FIFA officials at one place for the meeting in Zurich made it easier to make the arrests.

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Russia's decision to make Crimea an autonomous region inside Russia. This follows a referendum in which Crimeans voted to join Russia. Russian president Putin says Russia has no further interest in the rest of Ukraine.

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Lagging growth in GDP per capita, productivity growth, in Italy, with small family business unwilling to take risks for growth, and bureaucratic hurdles for business. To get an idea how Italy has lagged severely behind other countries in Europe, consider that GDP per capita increased by 28% in Spain, and 22% in France, compared to only 8% in Italy during the 20 year period 1993-2013, according to the Conference Board. Productivity growth measured by GDP per hour worked for Italy showed growth of only 13% in that 20 year period, compared to 30% in France and 23% in Spain. Since the 2008 global financial crisis the Italian economy has shrunk by 9% and growth is barely 1% in 2014. During 1993-2003 top performers Germany showed 31% increase in GDP per capita and 32% increase in productivity growth, the UK showed 44% increase in GDP per capita and 38% in productivity growth. Because of slowing population growth GDP growth has to come from productivity increases in Europe. France is the strongest in terms of productivity with $59 of GDP per hour worked, UK $51, and Germany $57. Italy at $45 has fallen behind Spain at $50. Conference Board statistics show GDP per capita in inflation adjusted, purchasing power adjusted 2013 dollars at $35,847 for France, $40,868 for Germany, $30,145 for Spain, $39,904 for Britain, and Italy lagging behind at $31,386. Most of the gains were made before 1993 for Italy, whereas Spain surged in the period after 1993 only slowing after 2008. The struggles in the U.S. auto industry showed how well meaning changes for labor in the early postwar period if not adapted to changes in the global economy decades later can lead to sharp decline before adjustment is made. In Italy well meaning labor laws in the early postwar period not adapted to changes in the global economy decades later, combined with cultural behaviour of entrenched group interests, and a bureaucratic government, have stifled growth and productivity....

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The new government of prime minister Enrico Letta takes office in Italy in April 2013 following the reelection of president Giorgio Napolitano. Letta is 46 years old and represents a new generation in Italian politics. He is a former Christian Democrat and member of the European parliament. Letta studied at the University of Pisa, and did graduate work in international affairs. In the 1990's he was president of the European Young Christian Democrats. He was associated with Beniamino Andreatta, a Christian Democrat economist and founder of research group Arel. Letta was his chief of staff when he became foreign minister in 1993. In 1998 Letta was minister for European Affairs, and the following year Industry minister. In 2009 Letta became deputy secretary of the Democratic party. The firm European connections, a good sense of how Italians feel about the economic changes, a connection with young people, and his grasp of the needs of business and labor in improving Italian competitiveness, make him an excellent choice after the inconclusive parliamentary elections in Italy. ...

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Toyota revised its profit forecast downward for the current fiscal year ending March 2012, by 54%. The revised forecast is for net profit of 180 billion yen ($2.32 billion), down 54% from a prior estimate made in August, and half the 408 billion yen earned the prior year. The strength of the yen has impacted the price competitiveness of Japanese exports. It has also affected the value of overseas profits on Japanese financial statements. Toyota makes half of its global production in Japan compared to a third for Honda and Nissan, leaving it more vulnerable to the value of the yen. Also affecting Toyota are the severe floods in Thailand which led to shortage of parts from component suppliers in Thailand. The new forecast uses an exchange rate of 77 yen to the dollar and 105 yen to the euro. That compares with the exchange rate for the prior fiscal year of 86 yen to the dollar and 113 yen to the euro.

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What it takes to put a CDU/SPD coalition government in Germany- 16 working groups, 250 negotiators, 10 work days. And that is only the first step. It then goes to party leaders talking with their working groups. Taxes and migration policy are 2 key hurdles. Lars Kingbeil on the Social Democrat side, Carsten Linnemann on the Christian Democrat side with to be chancellor Merz. Both sides say some friction, dissent is normal after an election in which the CDU barely crossed 29% and the SPD made it only to 16% of the vote. Both sides see each other as indispensable. CDU feels SPD is sticking to its positions. Migration- SPD's Carl Stegner says- "The SPD will not engage in a contest to treat as badly as possible those who have come to Germany and have done nothing wrong." The CDU wants to give only "bed, bread and soap," to rejected asylum seekers. It sees its promises in the election as real when it made clear statements to stop migration and cut benefits, with its credibility at stake. CDU also believes that like DJT in the USA this tough policy is certain to make such migration unattractive. The other difference is on Taxes- the SPD wants to see higher taxes on the well off. ...

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John Lyons of the WSJ writes in this report from Seoul, South Korea, that president Moon may have inadvertently contributed to the sense of the futility of talking to South Korea about missile defense when he opposed the installation of the Thaad, Terminal high altitude missile system, in his election campaign. This led to the U.S. and the South Korean government of president Ms. Park moving ahead with the system before Moon was elected. Moon is a human rights lawyer who favored improved relations with North Korea. Domestic South Korean politics were decided by younger voters alienated by the existing business structure, leading to the conviction of president Park and later the head of Samsung on corruption charges, and the election of Mr. Moon. In foreign affairs the picture is quite different as Moon is seen in South Korea as not being consulted by the U.S. as it frames policy for the region. South Koreans call this "Korea passing." As U.S. and Japan are directly affected by North Korean missile tests, the most recent on August 29th passing over Japan, U.S. president Trump consults with Japanese prime minister Shinzo Abe. People in Japan are cited in the NYT as saying recently, that they knew they had to worry about earthquakes, but had not expected to have to worry about missiles. A recent report in NYT showed that most people in Seoul have not prepared seriously to use underground shelters because they do not believe a war could take place with Seoul only 35 miles from the North Korea border. The U.S. policy is now focused on working with China, and coordinating its policy with Japan. A U.S. anti ballistic missile test was conducted from the ship USS John Paul Jones on August 29th. Moon has changed his position and now supports Thaad missile defense. South Koreans are apparently resigned to the prospect of "Korea passing." ...

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The former Attorney General of Ohio, Richard Cordray, was nominated to head the U.S. Consumer Financial Protection Bureau. Cordray is the current head of enforcement at the new agency. The CFPB is part of the overhaul in regulation of the financial industry mandated by the Dodd-Frank legislation. This agency has the authority to write new consumer protection rules, see that federal consumer financial protection laws are enforced, dispatch examiners to review bank accounting and records and look into consumer complaints. The new Bureau's rules can only be overturned by a super majority in the Financial Stability oversight Council, which is headed by the Treasury department, or by appeal to the courts.

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Cotton prices were up significantly in 2010. Prices of other commodities are rising in early 2011.

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Raghuram Rajan interviewed by BW's Peter Coy. Rajan was prescient in questioning the Greenspan Fed's policies and the risks posed by the excessive leveraging in the financial system at the 2005 Jackson Hole conference. After the excessive monetary easing by the Bernanke Federal Reserve, Rajan questions the wisdom of keeping interest rates too low for too long. He joins John Taylor, George W. Bush presidential advisor, and Allan Meltzer of Carnegie-Mellon in making this point. Rajan was the chief economist at the IMF from 2003 to 2006. He is the author of a 2010 book, Fault Lines: How Hidden Fractures still Threaten the World Economy. The fault lines he describes are rising inequality in the US and the dependence of the US on loans from China.

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Michael McConnell, was Assistant General Counsel of the Office of Management and Budget from 1981-1983. He is now a professor of constitutional law at Stanford University. Here he tries to throw light on how the budgetary process that is required by law, and which makes the formal budget proposed by the president available for public scrutiny, was circumvented through a sequence of events starting in February 2011. The Budget Act of 1974 sets specific deadlines and a process for generating revenue, setting spending priorities, and setting the debt limit. The President first submits his administration's budget by the first Monday in February. The Congressional Budget Office has until Feb. 15 to score the budget using identical metrics for all proposals for a consistent scoring. The budget President Obama put forward in February did not take into account the growing deficit and was rejected by the Senate 97-0. The President proposed a new plan in April 2011, but the proposed budget was so vague that CBO Director Douglas Elmendorf said he could not score it. The subsequent efforts in June and July 2011 were carried out in closed door negotiations between senior Republican leaders and the Obama White House. This subverts the original intention of the law. The Budget Act says that both the House and Senate hold hearings on the proposal, with testimony from the administration, "national organizations" and the "general public." Transparency, openness and accountabilility are key aspects of a proper process that is democratic and prevents the parties from engaging in blame and competing claims. The closed door negotiating sessions and the lack of a concrete written budget proposal from the President has turned the current budget process into an effort by each side to see how it can best position itself for the 2012 presidential election. ...

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Spain's 2015 general election leads to the likelihood of a coalition from the centre right or the centre left parties. The conservative Partido Popular lost its parliamentary majority and won 123 seats as the largest party in the new parliament. The centre right have 163 seats, the centre left have 159 seats, leading to an inconclusive result with both sides seeking to form a new coalition government. Years of austerity policies under prime minister Rajoy and high unemployment of about 20% hurt the ruling party, even though the economy has recovered from the worst effects of the housing crisis and is growing at 3%.

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Steven Mnuchin, a former Goldman Sachs executive is the new Treasury Secretary in the Trump administration. His ties to Goldman Sachs go beyond his own work at the firm. His father joined Goldman in 1957, and worked for his entire career at the investment bank. Steven's brother Alan also worked at Goldman. During the campaign Trump was severe in his criticism of his opponents Cruz and Clinton's ties to the bank. Ironies abound, not only is the new Treasury Secretary from Goldman, his connections go back a generation. The Treasury Secretary under Clinton was Goldman Sachs executive Robert Rubin. Under Bush who followed Clinton the Treasury Secretary was Goldman Sachs executive Henry Paulson. Under Republican and Democratic administrations Goldman Sachs executives have held key positions. Mr Mnuchin was campaign finance chairman for Trump for 6 months leading to him being chosen for Treasury Secretary. Mnuchin joined Goldman in 1985. During the campaign Trump was also severe in his criticism of financier George Soros, making this a key point in a debate with Clinton for taking Soros's support. This report by Das and Ensign points out that in 2002 Mnuchin left Goldman to run a credit fund set up by George Soros. In 2004 Mnuchin founded hedge fund Dune Capital Management LP with Soros support.  When IndyMac bank collapsed a deal with the government was arranged that covered a part of any future loan losses being taken by FDIC, and Dune was one of several hedge funds and private equity funds including Soros funds that acquired it for $1.5 billion. The renamed IndyMac bank was called OneWest with Mnuchin as chairman. OneWest was sold in 2014 at a large profit to CIT Group Inc. This report says CIT Group took a $230 million charge in July 2015 for accounting problems at OneWest.  During the latter part of the Trump campaign after he joined it in May 2016, Mnuchin set up a joint fundraising agreement with the Republican National Committee. This made it possible for major donors to give to the Republican party and Mr Trump. The head of the Republican National Committee is Mr. Lewis Eisenberg. Having run the technology division at Goldman, Mnuchin was prominent in Goldman and investment banking circles in New York.    ...