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Article about what should the Fed do by Robert Lucas, Jr, who was given the 1995 Nobel Prize in Economics, and is a Professor at the University of Chicago. He thinks inflation targeting is where the Fed should be, and lender of last resort is a qualification of this role in exceptional times when there is a bank run type phenomena in the market. However he argues caution in the role of lender of last resort so that it does not become automatic based on questionable economic forecasting as this part of economic forecasting can be fuzzy, for example who knows with reasonable certainty that something bad is going to happen. So a good case has to be made for lowering rates and a cautious approach like the one Ben Bernanke took is not at all a bad one. he did lower rates the day prior to this article appearing, by half a point.

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How much is the drop in sales of light trucks, including truck based SUV's? Acttually not much so far, title is misleading! 2004- 55.7% of total vehicle sales 2005- 54.9% of total vehicle sales 2006 1st quarter- 53.8 % of total vehicle sales source: Autodata, NYT cite For GM in April 2006 situation according to GM figures Overall Light Truck sales up 1.5% Escalade up 127% Tahoe up 30% Overall GM down 7.3% in all vehicle sales in April source Ward's AutoInfo Bank But the mix weighted toward the Escalade, Tahoe, and new SUV's which are non-incentive and priced to meet demand, which mean higher profits to make up for lost volume in cars. This is occurring in the middle of bigger changes, and as GM moves to introduction of more fuel efficient cars with better quality and appeal to younger demographics. GM is restructuring to transform itself into a global company with growing Asian sales and shifting volumes overseas. It is shifting employee and capital base to more countries overseas to create new opportunities and make GM a new and different company, a global company. Incentives pay part of the gas price for buyers, and more fuel efficient SUV's also chip in to pay gas costs. Americans are not out to get off the SUV's just yet, as fuel effficiency standards go up.The investments oil companies are making are expected to provide a payoff in increased production by 2008-2009, and the new oil policy of Saudi Arabia kicks in (see Naimi at CSIS 2006 meeting). The situation eases up for families accustomed to carrying kids around or hauling stuff around. See also links to Tradin Frenzy (Mouawad, NYT, 4/29/06) speculators in oil markets cause 10-20% of price rise, could lead to drops later after ethanol part of spike eases, and if global demand drops with economies cooling off a bit. ...

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The mismanagement of the economy under president Macri is leading to an economic crisis in the country. By embracing economic orthodoxy and slashing subsidies for fuel, electricity and transportation Mr. Macri who won the election 3 years ago has cause the prices of these basic goods to skyrocket. This has hurt the middle class and poor in Argentina. For most of this century Argentina has pursued populist policies, and in the last five decades periods of free market principle based economics were followed by severe crises, and subsequent restoration of populist policies to improve the economic conditions that had deteriorated.  The peso lost half of its value in 2018, leading to a IMF bailout of $57 billion. Inflation is at 50%, unemployment above 9%. To stem the fall in the peso the central bank increased interest rates to 60% stifling the economy and business. Under his predecessor Christine Kirchner the peso's value suffered and its currency reserves were low after fall in soyabean prices, yet the currency had not suffered the kind of decline that it has seen under Mr. Macri. The cutting of subsidies and the economic crisis has increased the number of poor to about a third of the population. Argentina now faces another of the repeated cycles of going from a populist Peronist administration to a free market orthodoxy supporting government, followed by an economic crisis and a shift back to Peronist populist administration policies. Part of the problem is that Argentina, and Brazil, and most of Latin America is still dependent on commodity exports, and the economy dependent on commodity prices. The manufacturing sector has not taken off as it has in Asian countries. This has led to repeated crises in times when the currency reserves declined and affected the currency, also leading to bouts of severe inflation.   ...

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This WSJ editorial welcomes the change in India in the form of Modi bringing his executive experience in Gujarat state to the national level. It also points out the risks of Modi following a simple model of state capitalism pursued by China which also has political controls, and of the form in Brazil which invites crony capitalism and limited results. Better says the WSJ to take a new approach to satisfy the growing aspirations of young people who overwhelmingly supported Modi in the hope of better access to jobs and improved standards of living.

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A new plan of the Theresa May government in Britain commits the UK to be part of the EU customs union long after Britain leaves the EU. This avoids the setup of a visible border between EU and Northern Ireland. Ireland remains part of the E.U.  Having a permanent arrangement is needed so that the peace process in Ireland remains in place. A hard border is fraught with consequences of unsettling this.

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The WSJ provides a fact check of Trump statements on crime, debt, and taxes. Trump says he is looking at a new plan for taxes not the $10 trillion in tax cuts over 10 years reducing tax collection by 22%, but something about a third of the size. No details are available on the plan. WSJ disputes Trump's statement that the U.S. is "one of the highest taxed nations in the world." WSJ points out that the U.S. in 2014 for federal, state and local government taxes collected 26% of gross domestic product in taxes, compared to average of 34% for about 30 countries, according to OECD. Debt to GDP ratio is about 75% that is high, but because of low interest rates the budget deficit is less than 3% of GDP, which is close to the long run average. For this reason economists say the government should invest in infrastructure and R&D that supports long run economic growth. On crime the record is mixed with increase in Chicago, Los Angeles, and New York City, but decreases in Washington D.C. and Baltimore. Police shootings were 67 in 2016 compared to 62 in July 2015, and the high being 280 officers in 1974 when Nixon was President. Crime was an issue in the 1968 Republican National Convention during the Vietnam era protests, police shootings and terror incidents attracted attention in July 2016, yet the situation today is very different from the war protests of the Vietnam era. On terrorism fact checks by the NYT and in Lyrarc shows Clinton at State Department and Panetta at Defense Department taking hawkish stands only to hit a barrier from President Obama for taking action needed in Syria, Iraq and Libya. Panetta's new book calls for robust action where needed. A Clinton administration would take action with allies in the Middle East. Even Hollande and Obama who pulled the U.S. and France out of following up in the French-British Sarkozy-Cameron led intervention in Libya, have changed policy, with Obama calling it his biggest mistake. France under Hollande with the U.S. is now actively engaged in the Middle East, having changed policy. It is highly unlikely that a Trump led policy which alienates most allies in the Middle East- Iran, Iraq and Saudis- is likely to work better than a determined Clinton-Panetta led effort which has support of the local countries on the ground actually currently on both sides because of complexities of Middle Eastern politics.  On trade a new administration will still have to work with China, India, the European Union, and other countries, as global trade supply chains are not likely to evolve overnight. Lessons will have been learned by Clinton about the need to bring back jobs and ensure the strength of U.S. manufacturing. Economic and jobs growth will require prudence in strengthening U.S. manufacturing coupled with global cooperation, which a Trump administration that alienates trading partners without the possibility of making any serious immediate gains in jobs, is highly unlikely to do better.      ...

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This article in The Lancet published in February 2018 throws much light on how the ban on gain of function research on virus was lifted -research that carries with it the danger of increasing transmission of virus if something unexpected happens in the manipulation of a virus. It was lifted in 2018 in the US by officials in the US Health Ministry, NIH and HHS. The Cambridge group of scientists and experts opposed lifting the ban on such dangerous research that could make the virus more contagious through manipulation. Epidemiologist Marc Lipsitch of Harvard School of Public Health wrote at the time that the lab research to create a more lethal strain of virus could lead to "an accidental pandemic" yet he was ignored. The public in America and in the world is unaware of how this created serious risks for public health in the world through the coronavirus.  Did US health officials lift the ban on such research without consulting other countries such as India, Brazil, France, Germany, Italy, and the EU on its ramifications. Were public health experts and the publics themselves in the US and around the world not drawn into the discussion of public health and the dangers that existed. Not only did officials in HHS and NIH restart the research by lifting the ban but also sent funds overseas for such research- was this a proper or thoughtful action considering the risks involved.  Is enhanced surveillance of virus- a dubious benefit from manipulation of a virus- something a few health officials can decide for the whole world in addition to the US. How are health officials in one or two countries responsible to the people in India, Brazil, Europe and the poorest populations in the world in the world in Africa, Latin America, and Asia, people who have suffered devastating consequences from transmissibility of the virus, including children and older people with health problems. India, Brazil, Italy, Spain, France, UK, and other countries worst hit by the coronavirus must ask serious questions about how they can protect their people if institutions in the US and international institutions are seen as failing to protect world public health. ...

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Epidemiologist Marc Lipsitch of the Harvard School of Public Health says in Jan 2018 issue of Harvard Chan Institute of Public Health journal that an "accidental pandemic" could result from the lifting of the ban on a risky kind of research favored by some virologist professionals.  In "Three Questions, Three Answers" Lipsitch tells why. Most members of the broader scientific and medical community had serious questions and were fiercely against such research which had questionable value and great risk. At the beginning the interviewer Karen Feldscher writes:  "January 8, 2018- Last month the US government lifted a three year moratorium on funding risky research to genetically alter deadly viruses in ways that could make them even more lethal. Epidemiologist Marc Lipsitch of Harvard Chan School thinks the move could create an accidental pandemic." Lipsitch says rejecting the virologists who supported this dangerous research: "Others, like myself, worry that the human error could lead to the accidental release of a virus that has been enhanced in the lab so that it is more deadly and contagious than it already is." He cites an accident in 2014 at US Centers for Disease Control and Prevention Lab where workers were exposed to anthrax that was improperly handled. "Another accident like that- if it involved a virus that was both newly created and highly contagious- has the potential to jeopardize millions of people."  Lipsitch points out that this kind of research has given us modest scientific knowledge, was not essential to tackling the virus epidemics, was only one type of many types of research, and a type of research whose aims could be achieved in other ways that were not deadly to humans. Lipsitch pointed this out in The Journal of Medical Ethics stating the ethical considerations at stake. The lifting of the ban led to research at labs that is seen as a possible scenario of what happened to cause an accidental pandemic. The people of the world, and not just in America but the people of the whole world, and the poorest countries with little resources- Asia, Africa, Latin America bearing the consequences of this decision that violated medical ethical considerations of setting up a potential accidental pandemic.   ...

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U.S. health insurance company WellPoint Inc. will offer higher payments to primary care physicians. This is part of new strategy to reduce emergency room visits and costs after deterioration in a patients condition by relying on primary care physicians for better care at the outset. Payments to primary care physicians will be increased by 10%, with higher payments when the results show better quality and preventive care. WellPoint has a network of 100,000 primary care doctors. Physicians who meet certain goals such as lowering the overall cost of a patient's health care costs will be given an incentive of 20-30% of the savings realized. The new effort will add 1-2 percentage points to the 6-8% of the $100 billion that Wellpoint pays for claims processed each year. WellPoint's management sees a reduction in medical costs of about 20% by 2015 as a result of such efforts.

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Online protections were provided to tech companies by Section 230 of the Communications and Decency Act of 1996. The U.S. Justice Department is coming up with a proposal to remove some of that legal protection from lawsuits.The U.S. Congress passed the law  because of a court decision in 1995 against online provide Prodigy that held that online content providers could be held liable for defamatory online content generated by a third party. The U.S. president and the Justice Department are in favor of amending this by executive order and through legislation.

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Karishma Vaswani of the BBC points out that the Trump administration tariffs and the response from China with tariffs of its own, are not the beginning of a trade war but negotiating tactics of both sides. Behind the scenes and behind the declarations and position statements both sides are talking to each other and considering the options open to each. The U.S. position is that China has emerged with a bigger share of the global economy by dumping products, subsidizing its industries from solar panels to high tech ventures, and stealing American technology by forcing U.S. firms into joint ventures that increase pass through of advanced technology. U.S. firms seeking access to the Chinese market or using China as a manufacturing base such as Boeing, Apple, GE and other high tech companies are in ventures or manufacturing arrangements where China has access to advanced American technology. Nathaniel Taplin in his article in the WSJ also sees this as a negotiating position set out in the U.S. for talks with China. Taplin says the U.S. is in a stronger position in this negotiation because of the huge surplus of about $300 billion that China now has with the U.S., and which is increasing in 2018 with the strength of the dollar. The Trump administration is looking to correct the trade imbalance in the future by focussing on China's access to advanced U.S. technologies in the next phase of competition between the U.S., Europe and China. This limited objective is more likely to lead to concessions by China Taplin argues, because of two reasons. China needs the dynamism of U.S. firms and technology advances because these firms and Chinese firms that are getting foreign investment are the most productive part of the Chinese economy with jobs generated, rate of return about twice that of inefficient state run firms. China also needs access to advanced U.S. and European technologies even in a limited form as it pursues further modernization.   ...

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The People's Bank of China lowers the benchmark lending and deposit rates by 0.25 of a percentage point, and cuts the reserve requirement ratio by 0.5 of a percentage point. The PBOC said the move was designed to offset "the persisting downward pressures on the country's economic growth." It was also designed to offset the large volatility in China's stock markets. The PBOC also removed the upper limit on interest rates for fixed term deposits of more than one year, as part of interest rate liberalization. The move also counters the large capital outflows affecting China, as is happening for all emerging markets, of $70 billion in July. These outflows may have accelerated in August 2015 with declining investor confidence. Experts say the reserve ratio cut should inject about $100 billion into the banking system.

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In the first quarter of 2011 consumer demand for gold in China increased by 47% over the prior year quarter to 233 tons, according to the World Gold Council's data. Most of this is for jewelry accounting for 64% in 2010, with gold bar demand increasing as an hedge against inflation. Orlik points out that if inflation decreases from the existing level of 5.3%, and with the increase in wealth management products from Chinese banks, the demand for gold may not be sustained as it offers no return. He says urban resident demand may have reached its peak and there is not much demand from the rural population. Central bank purchases to shift a small part of foreign exchange reserves to gold is the only other factor for a push up in gold prices.

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Julie Jargon's interview with Green Mountain Coffee's CEO Larry Blanford. Green Mountain has grown rapidly after it acquired the Keurig brand of single serve coffee makers in 2006. He says K-Cups and single serve coffee is popular because of the broad choice it offers users to have different types of coffee during different times of the day without having to open three or four different bags of coffe that would go stale. On the threat posed by Starbucks single serve coffee machines to be introduced in fall 2012, Blanford says it is basically a espresso single-serve system and does not compete directly with the filtered coffee products from Green Mountain. Espresso is a small part of the U.S. coffee business. He sees growth moderating to 15-20% from the 70% in recent years.

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Marketing campaigns in 2011 for the Toyota Siena, Honda Odyssey, Chrysler Dodge Grand Caravan, Ford C-Max. Sales are up 42% for Honda Odyssey since October 2010, when 2011 models and campaign was introduced. The campaign has helped increase sales by 18.5% through November 2010, for Toyota's Siena. This is double the industry average for minivans and is a bright spot for Toyota, whose overall sales have been flat since the recalls. Toyota's Siena campaign shows rapping parents with kids in the back, making it cool to be seen in a minivan. Toyota's national marketing manager says the stories they heard were that people just did'nt want to be seen in a minivan, the soccer-mom joke or feeling playing a part in this. These ads hope to dispel that notion.

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Studies by Professors who are co-directors of immgration studies at NYU show that the 16 million children of immigrant families are having hard times because of difficulties faced by their families including long periods of separation leading to depression, poverty, isolation. The absent parent being commonly the father. Most of these children are from Hispanic families. Immigrant children were crowded in the lower ranks for English language skills. The professors Marcelo and Carola Suarez-Orozco have studied immigrant children for over 20 years. This NYT editorial says the children are going to be part of a new generation of Americans and are th human capital of the future even as they are tangled up in the messy immigration debate that ends up treating many of these families poorly.

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Sony is trailing badly in the smartphone business in 2014-2015. Global market share is at about 3.1%. Sales in China have failed to gain with only 0.4% market share, as Xiaomi has made large gains in China in 2014, and with other low cost competitors such as Lenovo. Even in India once considered a promising market Sony smartphone sales market share is at about 3.2%. Market share is about 6.9% in Europe and 14.4% in Japan, according to Counterpoint Research. The mobile division is cutting staff by 2100 from current level of 7000, as mobile becomes Sony's only money losing unit. The head of the mobile division and CEO Hirai are now considering options including selling the unit or joining with third parties. Mr. Totoki, head of the mobile division, says Sony has learned through this experience that creating customer enthusiasm for products involves much more than simply putting together powerful parts.

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Some features of the U.S. health care law are likely to be retained even if the Supreme Court overturns the health care law- the feature that lets parents carry a teenager on their polcy till age 26, and the feature that private insurers cover preventive services without copays. These are very popular and preventive services make sense for the insurance companies to reduce higher costs later on. Other features such as the discount pharmaceutical companies must give to seniors falling under the Medicare gap, and annual physicals without copays may not be retained. 3.6 million Medicare benificiaries saved $2.1 billion on prescription drugs, $604 per person, from the Medicare gap discount. And 32.5 million Americans took advantage of the annual physical without co-pays in 2011. About 50,000 Americans insured temporarily for people with a pre-existing condition also may lose their coverage. Another provision which prevents states from tightening eligibility rules for Medicaid before 2014, may be questioned also as states feel burdened by these rules during a period of budget cutting in areas such as education....

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Ezra Klein on the three questions on which the Supreme Court will decide after three days of hearings on March 26-28, 2012- the Anti-Injunction act, The Individual Mandate, and Medicaid Expansion. Related to the Individual Mandate question are Severability issues.