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As unemployment rises and industrial production drops Democrats in the states with dependence on heavy manufacturing and use of coal are going to have to make the difficult tradeoffs between their support for controlling emissions and favoring the environment versus their interest in keeping industry. According to the Department of Energy, in 2005 the state of Ohio derived 86% of its electricity from coal compared to California which derived 20.7% of its electricity from coal, 40% from hydroelectric power and renewable sources. Other Great Lakes and Plains states are similar to Ohio. Yet the key committees in Congress and the Senate are controlled by Ms. Boxer, Mr Waxman, and have the backing of Speaker Pelosi.

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Ways to increase transparency in government spending by showing on the internet a host of different measures of how the government is doing in achieving the goals set in prudent and effective spending to shore up the economy and create jobs, and help the unemployed. All these indicators should be available to the public to be able to hold the government accountable and see what has been accomplished. Kennedy and Enzi, 2 Senators, are introducing a bill to allocate $7.5 million for such adatabase of ational indicators. The data would be selected by the National Academy of Sciences, and would cover education, the environment, energy use, housing, health care, and roads and other public works.

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Cities like Huntsville, Alabama that have alarge presence of military defense contractors and have NASA presence are doing well in this downturn. So are cities that have industreies or plants not affected as much by the downturn. Cities like McAllen and Brownsville in Texas, Mobile, Alabama, Ogden and Provo, Utah, York, Pennsylvania, Youngstown, Ohio, Yakima, Washington and Lafayette, Louisiana. Consumer loan balances for these cities are shown as increasing in these cities from data developed by Equifax and Moody's Economy.com. Some of this could be from more overborrowing but other information suggests that local economies and employment have held up well in these places. Also problem loans at local banks in places like Huntsville, are a low 2%.

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Rep. Frank is saying he will move slowly on the bill that gives government the powers to put bankholding comapnies, insurance companies, and other large financial comapnies, into receivership. Now he wnats to put in the same bill the creation of a body that would act as systemic risk regulator. So instead of next month, this may take several months. Senators Dodd and Shelby on the Senate banking committe are also inclined to move slowly. Its hard to say why, because the government has been doing this on an adhoc basis for Lehman and AIG, and it ends up costing the economy even more, and creates more uncertainty. Congress would also need to provide funds for this.

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Interesting insight on the election of December 2007, why it was held, and the differences between warring factions from the FSB, the military and other parts of the government and business leading to conflicts just before the elections. The election and the vote for putin was Putins way of reasserting his authority in Russia even as he nears th expiry of his term and names a successor. It shows how fragile the situation politically is in Russia even as the country has made economic proress from the Yeltsin years and a succession is not to be taken lightly to continue the work of economic progress and further development of democratic processes without the chaos of the 1990's.

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The UN Report on Afghanistan's opium growing areas and harvest for 2008. The sucess in the north but the drought and poverty and hunger there after other crops are not doing so well. The failure in the insurgent areas in the south where opium growing in Helmand province makes it the larges opium growing country if it were so in the world says the report. See the link to A narcotics officer from the USA who wrote about this in the New York Times and the failure of the Karzai government to support eradication efforts because some of the Karzai regimes supporters are also engaged in opium farming as well as the insurgents.

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Daniel Howes commentary in the Detroit News goes right to the crux of the matter, one of the Detroit Big 3 may not survive. Cerberus would like to get its hands off Chrysler at any cost even if it means a merger with GM, which would in the current circumstances at GM combining engineering and other operations, at the cost of huge swaths of Chrysler and those jobs disappearing. GM is running short of cash and combinig with Chrysler does not make any sense except for Cerberus, and for GM it would means using the cash from Chrysler to buy time while eliminating most of Chrysler's jobs and operations in what would be a travesty of the word merger.

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Kerkorian will lose $640 million of his $980 million investment in Ford made in April of this year at $7 a share. He sold a portion of his shares at $2.43 a share and is expected to sell the remainder soon. MGM Mirage stock that he owns have fallen by 85% since hitting $100 a share last October. The value of his 54% stake in MGMMirage has sunk from $13 billion to just over $2 billion. Its not clear that sale of Ford shares were prompted bya margin call. After seeing the debacle of Kerkorian twice once before this with GM shares in recent years other investors are likely to be wary of auto stocks.

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Private equity firms loaded their companies with a lot of debt and now the debt payments come due at the worst possible time when they are frozen out of the credit markets. While experts like Kaplan at the University of Chicago think that while things may not be pretty it may not be as bad as 1986-89 when a lot of companies defaulted on their debt, and private equity firms like Blackstone and others are more long term investors than hedge funds, this downturn may be different from any other in the postwar era in its prolonged nature and depth and global impact. Already even the most optimistic experts like Rogoff are saying it could be ten years.

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Brazil's Embrapa, the Brazilian Agricultural Research Corporation, has helped revolutionize agriculture in Brazil since its formation in 1973. The agricultural improvement conducted by Embrapa includes turning the acidic soil of the cerrado region of Brazil into soil fit for agriculture, new agricultural methods, and dissemination of techniques developed in its labs, including new grasses developed in its labs for cattle. This has helped turn Brazil into a major agricultural products exporter, producing a third of world soyabean exports. Brazil has more renewable water than Asia, according to the UN World Water Assessment Report. And more farmland than any other country, at 300m hectares, according to government figures, only 50m of which is cultivated.

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Galston says the Hillary Clinton campaign strategy may be flawed. Following a president from the same party who has served two terms is difficult for a presidential candidate because of an anti-incumbency mood that sets in after 8 years. Galston cites an expert from Emory University about this costing the incumbent party about 4 percentage points in votes. This would eliminate President Obama's 3.9 percentage point win in 2012, says Galston. Hillary Clinton's cautious campaign sticking to the themes set by the Obama campaign and appealing to the core base of young people, women, minorities, and upscale professionals, runs the risk of not appealing to other voters needed such as the working class white voters. Stanley Greenberg, a pollster with much experience is cited by Galston as showing that the women's vote also is not the same for Democrats. Among unmarried white women for instance it has dropped from a 20 point margin in 2008 for Mr. Obama to a 4 point margin in 2012. By 2014 this was down to 2 points, and in 2015 this is now down to zero margin, with both Republicans and Democrats even among unmarried white women. Unmarried and working class white women are described by Greenberg as looking for a candidate who can help the middle class, with Democrats perceived as the party of government and special interests, making the 2016 election different from the ones before it....

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U.S. Fed governor, Daniel Tarullo, said in a recent speech that U.S. financial institutions could be required to meet stronger capital requirements than the Basel international standards. The Fed is considering requiring the riskiest financial institutions to put aside 8.4% to 14% of capital. The Basel standards require institutions to gradually increase the capital cushions to 7% by 2019 from about 2% at this time. Less risky institutions would would have a smaller increase over the Basel standards- about 20% compared to the 100% increase over Basel for the riskiest institutions. Speaking at the Peterson Institute for International Economics, Tarullo said- "The regulatory structure ...should discourage systemically consequential growth or mergers unless the benefits to society are clearly significant." Tarullo said no one wants to see another TARP. Banks would have to build up their capital reserves using common equity and not other forms of less reliable capital such as contingent capital, where banks convert debt instruments into equity in an emergency. Tarullo emphasized the need for the U.S. to move beyond the Basel requirements, known as Basel III, because they are narrowly designed for individual institutions and do not adequately address the systemic risk. When there is a high degree of risk correlation among many actors in fast moving markets additional risks are created which require stronger capital standards. Tarullo said systemically important institutions have "no incentive to carry enough capital to reduce the chances of such systemic losses."...

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Questions about the true cost of the Obama health care legislation and the assumption that the legislation cuts the deficit by billions of dollars. This WSJ editorial says one has to look at this closely, and not merely look at CBO projections, which may be based in a certain context and not reflect the true costs, especially because many accounting gimmicks and use of numbers to present a particular picture is taking place. The information this editorial cites is that: it uses 10 years of taxes to fund six years of subsidies, Social Security and Medicare revenues are double-counted to the tune of $398 billion, a new program funding long-tem care frontloads taxes but backloads spending, and the assumption of an automatic 25% cut to physician payments that Congress is unwilling to authorize. Rep. Rand Paul has tried to present an alternative view which needs to be studied just as closely, because of the enormous impact of a jump in spending at a time when the public finances are fragile. WSJ also cites the work of Richard Foster, the chief Medicare actuary, as an alternate perspective of how things could turn out, Doug Holtz-Eakin, and Eugene Steuerle. It calls for common sense in evaluating programs, entitlements, defense or other government spending. They not only cost money, but costs escalate over time as history has shown over decades, till they eventually are discovered to be not affordable unless the middle class is willing to dig deeper into its finances to pay for them. Alternate perspectives from a range of informed opinion, Howard Dean, Martin Feldstein, and the head of Harvard's Medical School show that the issue needs to be looked at closely and carefully and cannot be something in which CBO numbers can be trusted to tell the whole story. Especially when common sense, history, and informed opinion across a spectrum of thought advises caution, and fragile public finances also suggest caution. Howard Dean, former Governor of Vermont, says the health care bill is not real reform, and may do more harm than good. He says in a Washington Post article, December 17, 2009, the Obama health care bill does not insert competition into insurance markets, does not significantly reduce costs, and does not improve the delivery and use of health services. It was he says done with a political calculus and crafted for votes not real reform. Jeffrey S. Flier, Dean of the Harvard Medical School, gave the Obama health reform bill an "F" grade, saying in a Nov 18, 2009, WSJ article, that it was disingenuous to call this reform, Congress and the White House were simply deceiving the public. He said the bill will accelerate US health care spending, postpone most of the major health care problems, expecially the ones that drive cost, including the "fee for service" system and delivery of health care. He says in his discussions with economists and other health care leaders the opinion was unanimous that the bill will accelerate health care spending. He cites Massachusetts as an example, where access to care was expanded under the same dysfunctional system, and spending went up, and it doesn't work. Feldstein, who in early 2008 suggested proactive solutions to the mortgage debt crisis which were never adopted, says that the Obama health care law means higher taxes in the long run to pay for the $1 trillion cost of health care for the uninsured group over 10 years. Feldstein says that the Obama plan is to cut Medicare to cut spending, and will reduce the amount of medical services, as reduced spending comes from fewer services, not reducing payments to providers. And he asks if the cost reductions are weighted too heavily towards reduced services and not reduced payments to providers ,would this result in large cuts to services to affect the quality of healthcare for the 85% of the American people who are accustomed to a different pattern of healthcare. ...

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Friedman compares the anti-corruption movements in India and the U.S., the world's two largest democracies. The Occupy Wall Street anti-corruption movement in the U.S. focusses on the excessive influence of banks on lawmakers, regulators, and the government, through the use of campaign money, revolving door for government officials and regulators to join banks, and intense lobbying. The anti-corruption movement focusses on corruption in government at higher levels, such as the handling of government licenses, and at the basic levels of needing to bribe officials for something as simple as getting a birth certificate or other government document. Both have pernicious effects, in the U.S. excesssive bank influence leads to taking excessive risk for higher bonuses, putting the entire financial system at risk and creating a crisis in housing that delays the economic recovery. And in India the corruption leads to retarded progress, as funds to invest in infrastructure and development are siphoned off, business and entrepreneurs are required to pay bribes at each step, and ordinary people face the need to pay bribes for the most routine interactions with government officials. In the process this creates more unequal societies by skewing the distribution of benefits from wealth created to groups that are better equipped to game the system. The economic system once distorted in these ways has tendencies to take talent away from productive activity and innovation which create wealth, and direct it towards speculative activities....

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Abercrombie & Fitch sees a sharp drop in sales and 33% decline in profits in the second quarter of 2013. CEO, Mike Jeffries, says younger consumers are struggling and not fully a part of the recovery in consumer spending in the U.S. Other retailers appealing to a younger demographic, Aerospatiale and American Eagle Outfitters are also seeing decline in U.S. sales. Many younger consumers are weighed down by student debt and a weak job market.

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Expectations of inflation are rising but how serious should one take signals of expected inflation from gauging consumer sentiment and other gauges of inflation expectations. As the economy slows down it should keep wages and prices incheck especially with flexible labor markets as in the USA. The ECB takes these inflation expectations seriously and has increased rates cautiously whereas the Fed is taking note of inflation but has taken a neutral stance withinterest rates.

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Poland's president Kaczynski says after the Irish No vote to the Lisbon Treaty that he does not know which way this whole thing will end. President Sarkozy of france who has assumed the six month rotating presidency of the european Union says Kaczynski agreed to the Lisbon treaty in negotiations in Brussels last year. Poland like most other European nations approved the treaty through its legislature and Mr. Kaczynski's signature gives it ratification by Poland.

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The deterioration in the Irish banking crisis. An additional 13 billion euros will be needed by Irish banks to pay bad real estate debt, after this round of stress tests in March 2011, according to Ireland's Central Bank. This is on top of the 85 billion euros rescue package after collapse of the banks, and the 10 billion euros given by the EU and the IMF. Some estimates say the cost of the banking bust could reach $140 billion for a country with GDP of $241 billion. Ireland's interest payments on debt are estimated to rise to 13% of government revenues by 2012. Serious calls are being made for bondholders to share in the losses as the crisi escalates. Daniel Gros, Director of the Center of European Policy Studies, says policymakers in Europe saw the experience of Lehman Brothers and do not want to see a repeat of that experience at any cost. The weak banks in Germany and other lender countries are too politically connected in his view to be allowed to fail. German banks hold $62 billion in Irish Greek and Portuguese debt and French banks hold $26 billion. Hypo Real Estate, taken over by the German government, holds $14.5 billion of this debt. Bank assets in Europe are a larger share of the national economies in Europe than in the U.S. making the situation more intractable- In Britain over 3.5 times the economy, Ireland 2.5 times, in Netherlands 4.4 times, in France 3.25 times, in Spain 2 times and in Germany 1.5 times GDP, compared to 60% of GDP in the U.S. After the Irish government decided to guarantee the debt of its banks two years ago, Irish taxpayers are stuck with the entire cost of bad debt at the Irish banks....

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Dudley Althaus looks at Mexico's 2018 election from a working class suburb of Mexico City called Valle de Chalco. Once a squatter settlement outside Mexico City this area was courted by the ruling PRI Institutional Revolutionary party for 3 decades with a social investing program building sewers, water and power lines. Today this area like others in the state of Mexico have turned to a new party Morena led by Manuel Lopez Obrador, to find a way out of the corruption, violence and failure of the rule of law under the PRI. Obrador left the socialist PRD party to form Morena in 2014 after running for president on the PRD ticket twice. The thirst for change is widespread inside Mexico giving Obrador a higher vote margin in state of Mexico than the 53% he won overall in Mexico. The PRI won just 16% of the vote. The old politics of piggy bank and patronage of the PRI is now discredited in Mexico.  The reason the old politics does not work anymore is the change in places like this from a shanty town of tin shacks to a bustling city of 400,000. This place has a technical school, a state university branch, rows of well kept cinder  block homes along with malls and wealthier homes. With basic necessities being met Mexican workers are turning to larger issues of national identity and how the next chapter can be written in the social contract. Obrador's nationalist message and criticism of the globalized economy struck workers and middle class as the right direction for Mexico. This came just as president Trump brought new views on immigration and NAFTA on the other side of the border challenging Mexico to find its own direction and independent position in the world economy, even building new links to other countries in Europe and Asia. ...

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The May 6 episode of the stock market plunge of 900 points in the U.S. and then recovering had the effect of rattling investors nerves especially retirees. The impact of this episode is recorded in the experience of one Charles Schwab broker office in Englewood, Colorado. By the end of that day this broker had 50 calls on his answering machine from a fifth of his clients, all seeking to know what happened. Charles Schwab, who helped launch a period of individual investing in the U.S. after 1982 by cutting fees and going after the average investor, (along with others like Jack Bogle of Vanguard Funds), is also on edge. He says he has not seen anything like this since his early days. Schwab confirms Yale Prof. Shiller who says (see link) that his index for markets shows a lot of nervousness. Saying that 98% of people are still very concerned, coming after the May 6 incident, and the Greece and eurozone crisis that impacted US stock markets. One other factor he points out is the constant flow of headlines that suggest certain business people engaged in fradulent practices, something that fuels a lack of trust. Charles Schwab ponders from his office across the San Francisco Bay Bridge, whether words like safety and soundness mean anything anymore. Another factor of concern, Bogle points out, is that institutional investors now own 70% of American corporations, up from 35% in 1975. And the advantage has veered sharply in their direction as institutions, hedge funds, and investment banks trade on their own account, with wealth moving in that direction. This leaves the individual investor and especially the retiree or those about to retire in a severe predicament....

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Iranian missiles and drones flying low and close to the ground avoided detection by Saudi and American air defense systems. The missiles and drones hit Saudi oil facilities stopping about half of the Saudi oil production. Iranian cruise missile technology was used for the attack, according to U.S. officials. The attack also showed how vulnerable the oil supplies from this region are to disruption. The U.S. is not dependent on Saudis for oil as it has increased its production from shale. China, Japan, South Korea and India are dependent on Saudi oil supplies. Yet the U.S. is shouldering a greater burden for ensuring reliable supplies to Asian countries, something the Trump administration sees it should be compensated for. Tougher sanctions on Iranian oil hurt its economy, resulting in actions taken by Iran to disrupt Saudi oil supplies. The Saudi intervention in Yemen is another source of tensions in the region. The Trump administration says it is not interested in endless wars in the region, yet its tougher oil sanctions on Iran are pulling it into the conflict in unpredictable ways. China, India, and other countries had sought sanctions waivers to import Iranian oil, and see the sanctions as hurting oil supplies. India with limited supplies of its own was affected by the oil sanctions. ...

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The auto sector has an outsized effect on economic growth that is not easily grasped. The IMF sees a fifth of slowdown in growth of global gross domestic product and a third of world trade coming just from low demand for autos. The auto sector feeds into demand for steel, aluminium, copper, plastic and electronics, so it feeds into other sectors. Aging populations, stagnant incomes, ride sharing, and economic headwinds on trade for China, slower demand with lower economic activity in India from bad loans and low credit in the finance sector, all have cut into growth. Tariffs from president Trump and tit for tat tariffs increase costs and cut into profits. In Europe there is added factor of mandated drop in carbon dioxide emissions by 20% by 2021. The new technology will increase costs of autos by 800 to 5000 euros and add 5-11% to the selling price, reducing sales by about 5%.  A fast growing market is India but companies such as Ford and GM have moved out as it slows down. Higher emissions standards in India for 2020 are likely to increase prices in a very price sensitive market. Lower availability of credit in China and India have led to drop in sales of about 15% in both major markets for autos since mid 2018.   ...

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The election in Catalonia leaves the region as divided as before. The pro independence parties won 47.5% of the vote and the parties opposed to independence won 43.5% of the vote, so that only 4 percentage points separates the pro and anti independence parties. By seats in the Catalan parliament the vote showed pro independence parties with 70 seats, a loss of 2 seats from the previous parliament. The party of Mr. Puigdemont won most votes by a small margin within the pro- independence parties. On the other side the Ciudadanos party which is strongly opposed to independence won about 25% of the vote. About 80% of 5.3 million voters cast ballots. Prime minister Rajoy hoped for a better result to preserve Spanish unity. Most Spaniards support a unified Spain. Pro union Spaniards are strongly opposed because they see the efforts of Mr Puigdemont for independence coming at a time when Spain was just recovering from a deep recession with millions unemployed. This is affecting the economy of Barcelona and the Catalan region. Unemployment is higher and tourist flow has slowed. Because the pro independence parties are themselves divided on how to proceed, and with the anti independence parties also winning a significant share of the vote, the negotiations between the Catalan regional government and Madrid will be protracted. ...

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Showing how much the Social Democratic party in Germany needed to show progress on key issues Martin Schulz of the SPD was ordered by the party to bring up contentious issues in negotiations relating to social cohesion. One was the two tier system in healthcare where some are able to pay for more privileges in the nation's health care system with private insurance and others are in the public health system. The other issue is the ability under current German law for companies to issue 2 year temporary contracts. The SPD party did badly in the last elections because working class voters do not see it fighting hard enough for worker rights and ensuring an equitable system.On the health issue a commission will look into how the system can equalize medical fees between people privately and publicly insured. On the employment issue companies can only terminate without cause in 1.5 years instead of the 2 years. Small compromises, yet in long negotiations with a 24 hour session for a breakthrough and everyone exhausted, the snail's progress over 13 days and one night worked to set up a new coalition after all. Still one hurdle remains- getting the SPD membership to vote yes even though its youth wing is opposed. ...

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This report  by Joshua Partlow in the Washington Post shows frequent and extensive contacts between Mexican officials and the Trump administration. Skeptical experts say this is mostly damage control. Yet it has helped defuse tensions on NAFTA and other issues, in some situations having president Trump reverse his stance. Mexico sends 80% of exports to the U.S., making this relationship crucial. Yet the scaling down of plans for a border wall, the emergence of a solution to NAFTA through changes without canceling NAFTA with support from Wilbur Ross, the Commerce Secretary, show the dialogue has preserved relations. Uncertainties loom such as the trade stance of president Trump, and the potential of front runner Lopez Obrador from the opposition party to emerge in upcoming elections as the new president of Mexico. Obrador, a former mayor of Mexico who was a close contendor in previous elections, says he will take a different stand than the current government in negotiations. Mexico's Foreign Minister Luis Videgaray made 12 trips to Washington in 2017 as part of the effort by the Mexican government to preserve NAFTA with some changes. He has relationships with John Kelly and Jared Kushner in the Trump administration that have facilitated his efforts.  ...