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Japanese prime minister Naoto Kan says he has requested the suspension of operations of all reactors a the Hamaoka nuclear plant in Shizuoka prefecture. This plant is operated by Chubu Electric. Another plant on the Japan sea coast has been shut temporarily to investigate above normal radiation levels. With the government moving away from its policy of cooperating with the industry, there are questions whether other nuclear plants that are on earthquake fault locations may face similiar restrictions. This move will further restrict electricity supplies to companies in the local areas supplied by the plant. The Hamaoka plant has been described as "the world's most dangerous" by Japanese media because it lies near an active fault zone. Government estimates are for an 87% likelihood of a magnitude 8 earthquake in the next 30 years. Pressure is growing on premier Kan to take action to show he is listening to public opinion and not following old practices of collusion between bureaucrats, politicians and the nuclear power companies....

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HSBC CEO, Stuart Gulliver, says the bank will move away from its emphasis on retail banking. After completing a stategic review of the bank's businesses Gulliver says the global retail banking business has grown haphazardly, with HSBC trying "to be all things to all people in all markets." There are about 39 countries where the retail operations are smaller and less efficient than competitors. HSBC has 6000 plus retail outlets worldwide. And Gulliver says outside of the U.K. and Hong Kong retail has not added substantially to the bank's returns. This means capital will be allocated in a more disciplined way going forward.HSBC will pull back from retail operations in Russia and focus on key markets- Germany, Turkey, Brazil and Singapore. Cost cuts of $2.5 to $3.5 billion are planned by 2013. Costs went up after management was preoccupied with the disastrous acquisition of Household Finance in the U.S. Focus will be on growing business such as the Global Banking and Markets Business which Gulliver headed previously. ...

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Solomon and Said give a detailed account of the events leading to the steep decline in oil prices to $61 a barrel by December 2014. The steep declines have caused a shock for OPEC and non-OPEC producers. A price decline of this magnitude may not have been anticipated by the Saudis, and there are divisions among Saudi officials and in the royal family about whether such steep cuts are best for Saudi Arabia. The price per barrel of oil for each OPEC country to balance its budget varies widely, according to IMF and IEA, WSJ, sources. For Saudi Arabia this estimate is $106, Iraq 101, for Russia $98. The Saudis have $750 billion in foreign currency reserves. At the high end are Libya at $184, Iran at $131, Algeria $131, Nigeria $122, Venezuela $117. The UAE is at $77, Qatar $60. Norway is at the low end at $40. On Dec. 19, 2014 the price of Brent crude, ICE for Jan. delivery was $61.38.

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Abigail Johnson, brings a different style of management to Fidelity Inc. compared to her father "Ned" Johnson. Both are quiet and like to stay out of the limelight, but Abigail is more methodical. Her father was known to take risks to build the company. Abigail is cautious and likely to study each situation very carefully before making a decision. She also requires input from managers at Fidelity who are not accustomed to this. "Ned" Johnson rarely asked for advice and made decisions on his own. Abigail believes actively managed funds will do well once the market performance improves. Critics say this trend is not temporary, as investors have shifted funds into passively managed equity funds at Vanguard, and into ETF's. Morningstar shows about 17% of all mutual funds are now passively traded funds compared to 10% in 2006, a shift of about $700 billion. On ETF's Abigail preferred to partner with Black Rock, because it had more experience in the field.

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The Environmental Protection Agency moved to assume authority over 14,000 coal burning plants, refineries and industrial complexes that emit more than 25,000 tons ( or emissions from burning 131 railcars) of of greenhouse gas emisssions, and are the source of 70% of the U.S.'s greenhouse gas emissions. The bill exempts the smaller facilities, "every cow and Dunkin Donuts," as Lisa Jackson EPA administrator put it. It exempts millions of other sources like bakeries, dry cleaners and hospitals, and focusses on the 400 largest facilities that do most of the environmental damage. These facilities will be required to obtain construction permits and prove that the best available technology has been applied. Lisa Jackson said we are not going to go ahead with business as usual, and it will give President Obama something to show at the Copenhagen talks. Senators Kerry and Boxer are introducing legislation that will be fought by the power plants, and this move by the EPA will be challenged by the power companies....

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This editorial in the Economist says Brazilians deserve a chance to vote in a new general election for a new government that will tackle problems- including overspending that hurts growth by increasing debt, and the deep seated corruption in the political system. But knowing the history of this parliament and the political parties it says this is unlikely. Brazil will be left to deal with the problems under a weak government that does not have the confidence of voters to take needed action. Eventually an election will occur and voters will have an opportunity to choose a new government. Voters should grasp that opportunity to opt for better governance.

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There are about 2.4 million workers on American farms. 44% of them are undocumented workers says the Department of Labor.  They do jobs such as picking the fruits and vegetables that are part of the food supply. Deporting them all will increase prices of farm products as harvesting fruits and vegetables will be difficult. During the Eisenhower administration in 1953 deportation plan large growers in California and New Mexico used seasonal agricultural labor from Mexico, and the nation's food supply of vegetables and fruits depended on these workers. These companies lobbied hard for ways to keep these workers. On the other side were smaller farm owners who used fewer migrant workers. The complication this time 2024 is that unlike in 1953 under Eisenhower mass deportation when the border was otherwise peaceful, in 2024 the US has faced a decade unprecedented in its history of flows of fentanyl and drugs across the southern border. The deportation is about migrants who are not easily integrated culturally into the US, about the dangers of illegal entry in such large numbers that it disturbs the quiet life of the small towns and cities in the US. The US needs immigrants but in a planned way with legal entry, and no flows of drugs across the Border, that protects the American people and serves America's interests.    ...

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Public opinion in France is divided about France's dependence on nuclear power. Ifop's survey of Nov. 13, 2011, shows 40% of the French are now "hesitant" about nuclear power, about 33% favor nuclear power and 17% are against it. About two-thirds of the ruling UMP party of Nicholas Sarkozy supports nuclear power, while half of the Socialist party supporters say they are not sure about the path ahead. The issue is becoming important in the election, as the UMP claims the Socialist party's proposal to shut down 24 of the 58 reactors if elected will cost thousands of jobs and solar power cannot take its place overnight. The French are a bit puzzled by the nuclear issue in contrast to Germany where the issue arouses strong emotions, because nuclear energy had become accepted in France till the Fukushima nuclear disaster raised safety issues. EDF which operates the plants plans to increase spending on safety measures and on maintenance after audits by the French nuclear regulator. EDF's share price was down 40% since the nuclear accident at Fukushima, Japan....

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The National Association of Realtors reports that sales of previously owned homes dropped by 27.2% from June, to seasonally adjusted annual rate of 3.83 million homes. House prices gained ameasure of stability in 2009, after dropping since 2006. Now that measure of stability may be lost as house prices weaken. The expiry of a home-buyer tax credit was expected to dampen sales but not by this much. Paul Dales of Capital Economics expects a further drop of 5% in house prices. Combine this with sluggish consumer spending and prospects of deflation in 2011, a weak Obama administration HAMP homeowner relief program, fading stimulus and the likelihood of no further stimulus because of deficit fears; and the picture shows serious problems. The underlying picture of housing is not changing. One in four homeowners with mortgages owe more than their house is worth. Banks are handling over 5 million loans that are delinquent, if these loans are modified or short sales are permitted by banks, there would be support for housing prices. HAMP has failed in this regard, see the link to this....

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Even though exports are gaining in Iowa and overall it has benefitted from free trade, the wages in Iowa as elsewhere have suffered as companies pressed hard by global competition are reducing their wage. This is one way globalization is hurting workers in Iowa as it is hitting workers in other states. The two tier wage system at John Deere provides for lower wages for new younger workers. This is hurting incomes in the state. Because of these changes politically free trade is not very popular in the state and this reflects feeling acrss the country. The trend is to argue for protecting the wages of American workers by changing free trade agreements to include environmental and labor protections for oveseas workers so that this closes some of the gap between the wages here and overseas. The advantage to American workers of lower prices at a Walmart is more than offset by the lower wages as products are manufactured overseas and wage pressures are felt at home is the feeling reflected in some of the opinions expressed in Iowa....

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Capital spending by oil companies after you take out the 10% inflation in the cost of most drilling epuipment and people isn't growing by much. In 2007 spending on exploration and production totaled $270 billion, increasing by 10% over 2006 with most of the increase in cost coming from higher costs of everything from rigs to labor and oil field services. And oil companies are pasing back huge earnings to shareholders in the form of buybacks and share purchases, the top 5 western oil companies will have spent an estimated $179 billion in share buybacks in the last 4 years. And the the companies are not able to replace reserves that are used up each year in production. As aresult they are basically shrinking and becoming smaller in the whole oil picture. Only in 2008 is the spending picking up a bit but only by a small amount after one takes out inflation, and that because there may be more confidence that oil prices will hold up better in the long run to justify the higher costs of finding oil....

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Changes that are ocurring in Pakistan that are different from what was seen in the past. Pakistan's elite appears to have lost touch with ordinary Pakistanis. The country is becoming more Islamic in its thinking. America is now cited as the biggest threat for Pakistan in Pew Research and Gallup surveys by close to 60% of those surveyed. India is seen as much less of a threat, less than 20% see India as a threat. Over 10% see the Pakistan Taliban as a threat. Pakistan may be looking more inward now than in the past. In the past India dominated the military's thinking. Now it is concerned about too large of an American footprint in Pakistan, and may be encouraging the perception that America is a threat to Pakistan's having nuclear weapons. Pakistan's failure to invest in education, a budget for the military that takes a disproportionate share of resources, lack of investments in infrastructure continue to affect Pakistan. Female literacy is low, at about 40%. Support for democracy is not strong because of poor governance. Democracy in Pakistan is distorted by the large landowning families dominating Parliament. And the two main parties are dominated by the Bhutto and Sharif families. Only 42% of those surveyed said democracy was the best form of government in the Pew poll. Both the military and civilian governments have failed to make wise decisions that would bring opportunities to ordinary Pakistanis. Too much of the nation's resources were wasted in costly conflicts with India, and involvement in Afghanistan, which have not done much for Pakistan. In this situation Pakistan and Pakistanis continue to struggle along with no clear direction, but somehow make things work. A pullback from conflicts in neighboring states and focus on improving the lives of ordinary Pakistanis requires some far-sighted leadership....

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Under Governor Edmund Brown of California the state's public university system became a model for the whole nation in the 1960's- state spending on higher education doubled, statewide enrollment doubled, and seven new campuses were opened. California's community colleges, Californa State University and the University of California helped educate a new generation of Californians and powered its rise as a tech savy state. Increasing tution is putting higher education increasingly out of reach for struggling middle class families. Edmund Brown's son Jerry Brown, the current governor of California, tells Californians his mother studied basically "for free," and a whole generation that followed her paid modest tution fees. Jerry Brown is a trustee on the boards of Cal State and UC, attends meetings regularly, asks questions about the conditions at the university systems, and is determined to make the higher education system a part of his own legacy. He persuaded voters to approve a tax increase to support the higher education system. Half of the $250 million increase in funding for the university system is contingent on a tution freeze. Brown is also pushing for faculty to teach more undergraduate courses, increase the number of online courses, and reduce administrator pay. His proposals are meeting resistance from academia. Other issues facing the university system are the lack of resources to meet increasing enrollment, issues about reducing out of state enrollment to meet in state demand because out of state students pay higher tution fees, and the general resistance to teaching more undergraduate classes from faculty. To do this Brown is having to engage in a discussion about education and "quality" with academia. In a recent interview Brown pointed out that words like "quality" have different meanings, and are defined in academia to meet internal needs that often conflict with basic societal objectives....

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Ruth Marcus looks at the assumptions behind Romney's tax plan and questions whether simplifying the tax system with lower rates would help create the climate for higher economic growth and lower unemployment. Much of the differences between Republicans and Democrats revolve around this assumption, a core belief on one side and skepticism on the other. An effort to obtain a bipartisan assessment was made with the Simpson-Bowles commission recommendations, which advised closing loopholes and reducing deductions. The work done by Martin Feldstein on the Romney Tax plan builds on this approach of limiting deductions, and reducing taxes across the board. An issue for Democrats is inequality. Lower wages to improve competitiveness in manufacturing industry is a trend in Republican and Democratic administrations, because of the effort to improve U.S. competitiveness against other trading nations and has played a large part in lowering incomes in manufacturing oriented midwest and eastern states. The other cause of increasing inequality is the housing crisis and the effects on the economy through foreclosures and unemployment. The housing crisis developed under a Republican administration, and the lack of effective measures to prevent foreclosures under the last 4 years of a Democratic administration worsened the economic condition of the middle class, and especially so for minorities. During the housing and foreclosure crisis the proposals put forward by Republicans Martin Feldstein, a Harvard economist, and Sheila Bair, head of the FDIC who calls herself a "populist from Kansas," for bold government help to homeowners under water would have helped the middle class financially, and especially minorities, far more than the efforts of the Democratic Obama administration, and under Feldstein's plan even turned aound the housing market and boosted a recovery. Trends in world trade and industry have large effects outside what administrations of either party can control, and a lot depends on the temperament, wisdom and leadership provided....

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In this Agenda column Simon Nixon takes on the U.S. Treasury's criticism of Germany for its current account surplus of 7% of GDP in 2012, and not doing enough for the economies of southern Europe. The German government called it "incomprehensible." Nixon says it is better for the German economy to remain strong and to boost competitiveness and consumer spending in Spain, Portugal, Italy and Greece. He says the low eurozone inflation of annualized 0.7% for September 2013, which prompted the ECB to cut rates by 0.25%, is healthy to the extent that consumer prices are declining to adjust to a decline in wages. The reduction in labor costs is a way to restore lost competitiveness, just as Germany did in the last decade. The criticism is considered by many economists to be misdirected, and seen as "incomprehensible" by Germans, as Germans ask what would the U.S. have them do- provide stimulus when the government debt to GDP ratio is currently 82%, increase wages and how would this help Southern Europeans. Focussing on Germany's current account surplus says Nixon, is obscuring the larger issues of increasing consumer and business confidence and spending in the eurozone, and increasing bank lending. The new ECB bank resolution arrangements and other changes including deposit insurance if done right should help the recapitalization and restructuring needed for restoring bank lending to support recovery. Spain is furthest along in regaining competitiveness, with changes in Portugal, Italy and Greece also supporting a gradual return to growth....

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William Burns, a former Deputy Secretary of State, and a former ambassador to Russia 2005-2008, looks at the U.S. and European Union relationship with Russia following the expulsion of Russian spies in 2018. He says the U.S. and the European Union should take strong action, yet hopes this is a passing phase so that a healthier relationship can be built with Russia in the long run through diplomatic channels. Expressing views expressed by former president Obama and other experts, Burns says Russia lacks the alliances and broader support that the U.S. and European Union have, and is much smaller than the larger economies of the Western alliance. Under Putin a strong interventionist position has made Russia look better at home but may not be the best for Russia in the long run, says Burns.   Burns calls for stronger sanctions on the economic elite and business leaders under president Putin. Yet the sanctions have not deterred president Putin and a long run solution needs to be found, including issues such as Ukraine and issues that affect the Russian economy so that the change in relations since 2014 can be reversed. After the Berlin Wall collapsed hopes for integration of the Russian economy into the West were raised yet were not realized for Russia in the years following the Yeltsin government and the Russian economy suffered, first during that period and then during emerging market crises. Russian disillusionment with the West was followed by a more inward looking economy under Putin to help stabilize the Russian economy, accepting devaluation of the ruble to make the Russian economy more competitive in a period of low oil prices. Foreign investment collapsed following the Ukraine crisis but the Russian economy adapted to the shock from oil prices. This was followed by efforts to preserve these gains with an interventionist policy that made the Putin administration look better at home and win popular support with strong action in Crimea and Ukraine. This interventionist policy has played out too far with the meddling in U.S. and European elections creating a backlash that is now taking place. With the European Union, having a traditional policy of restraint and good relations with Russia, openly questioning Russian policy under Putin. Much of that period when Russia responded first to the collapse of the Berlin Wall with the collapse of the Russian economy, and in the following decade facing emerging market crises and collapse of foreign investment -which created a more inward looking Russia under Putin in his third term- is shown in Lyrarc.com. In some ways the Russian response in Ukraine, the effort to bolster popular support at home in elections, and the interventionist approach are linked to the efforts to find a Russian response to the economic crises Russia faced since the fall of the Berlin Wall. Seen in this way a shift to better relations is still possible as a broader perspective is gained.  ...

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The business model where hedge funds take in short term money from investors for a 2% fee and a fifth of profits, and invest it in longer term bets and sometimes illiquid situations, is breaking down. This happened to the investment banks and ended with the collapse of Lehman and Bear Stearns. With losses approaching 20%, many illiquid investments, and investors asking for their money, this model may lead to a rapid shrinking of the hedge fund industry, which now has about $2 trillion of investor money.

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Britain's National Health Service IT initiative failed because of a top down emphasis and focus on procurement. The project was started by Labor in 2002 and budgeted for 12 billion pounds. Lohr talks with Dr. David Brailer, and Dr. David Blumenthal, who headed the program for health IT in the Bush and Obama administrations, and with Richard Alvarez of Canada Health Infoway, which is the nonprofit corporation setup for conversion to electronic health records in Canada. Dr Brailer says the program in the UK was forced top down on doctors and nurses, and seen as a procurement program, ignoring the human aspects related to doctor preferences. Dr. Blumenthal empasized the need for collaborative effort all the way with doctors and nurses in a program of this kind. The confrontation that resulted from the lack of participation by health care professionals led to failure. Britain's new Cameron government ended the program.

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A Republican says the party's failures to come up with alternative policies instead of simply opposing president Obama, has led to the atmosphere of negativism and anti-immigrant rhetoric that increases support for Trump in the party base. He cites as an example 2012 Republican presidential nominee Romney and his comments about "self-deportation." Other examples cited include pushing Rubio to where he repudiated his own immigration legislation just to maintain support in the party. He says this leaves him little option but to vote for Hillary Clinton.

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Brazil's Senate votes 55 to 22 to impeach president Dilma Rousseff for manipulating financial accounts to cover up a risky budget deficit. With the economy seeing a 3.8% GDP decline in 2015, and unemployment at 10.9%, Rousseff is affected by a stunning decline in popularity to about 10 percent. During the boom years the Workers Party of Rousseff under president Lula enjoyed soaring popularity, which now appears to be in retrospect a result of high commodity prices and subsidies, and not from careful management of the economy. The impeachment also follows corruption investigations of Petrobras with links to the government.