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US ambassador to the UN agencies for food and agriculture describes the precarious situation in Africa and Asia with the lack of food supplies and fertilizer supplies from Ukraine. She says we are nowhere near the 20 million tons that come out of Ukraine normally and there's over 100 ships waiting to get into Black Sea ports. The war is affecting planting season in Ukraine. Cindy McCain is the wife of the former Senator from Arizona, and she says that there is no water in Arizona for agriculture and yet golf courses everywhere, that climate change is a huge part of the food crisis.

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A 2004 rule made under SEC Chairman Donaldson and requested by the investment banks one of which Goldman Sachs was headed by Paulson changed the whole playing field and created the dangerous situation of huge leveraging that has led to the collapse of some of these banks. Older regulations limited the amount of debt that these investment banks could take on. With the new rule billions of dollars held in reserve as a cushion against losses could now be used by these banks to invest in mortgage securities and credit derivatives, a form of insurance for bond holders. Others on the SEC who supported it included Goldschmid, an authority on securites law at Columbia who asked relevant questions but relied on the assurance of Annette Nazareth, head of market regulation that under the new rules the investment banks would also be restricted by the commission from risky activity, that under the new rule the SEC would be able to look into the books of the parent companies and subsidiaries of the investment banks. But no detailed and strict oversight methods were laid out, and instead these banks were allowed to go out on their own without any restrictions. The riskiness of investments would be measured by the computer models and brains not of the SEC but of the investment banks themselves. And these banks went on a leveraging binge with 33 to 1 for Bear Stearns which collapsed in 2008. One lone dissenter was a person who wrote the computer models to determine the riskiness of investments which were used by the banks, was at the University of Chicago, and was a risk management expert. He cautioned in a letter that these computer models had failed in the 1997 LTCM collapse and could not be relied on as environments change. At the SEC oversight was handled by 7 people and this was to oversee some $4 trillion in assets, hopelessly understaffed, and most of them believing that the investment banks would self police themselves as they were ideologically believers in deregulation. So no inspections were done for an year and half upto August 2008 even when there were clear signals of trouble according to an Inspector General's report. This group had no director since March 2007. Soon after the rule Donaldson the SEC chairman left and a Congressman from a conservative district in California became Chairman, Christopher Cox. He favored deregulation and may not have even been aware that the 2004 rule had created a new and dangerous environment, so he followed his instincts and even dismantled a risk management unit Donaldson had established. Which is why McCain has called for his firing....

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Mexican president Nieto's poll numbers are at all time low of 24%, according to Reforma newspaper. He took office in late 2012 and has been hurt by human rights scandal of the murder of 43 students in the state of Guerrero, corruption issues, and failure to improve the economy. The invitation to Trump to visit Mexico left even people close to the president surprised, and was criticized widely inside Mexico. It is not clear what Trump or Nieto gained from the trip. As Trump continued his talk about building a wall on the Mexican border and having Mexico pay for the estimated $23 billion it would cost. He did this in a speech to supporters in Pheonix on the same day he met Nieto, showing the use of teleprompters and prepared script was not his way of campaigning. Just as the message to black people that Democrats take them for granted cannot resonate without the basic message delivered with compassion and understanding- such as done by the presidents Bush and Reagan- so also the message to Hispanic people is suffering from the same lack of empathy. Recent polls show only 3% of blacks support Trump. McCain and Romney gained only 4-6% in the U.S. presidential elections of 2008 and 2012. The message of the wall is also baffling as an election strategy. A Gallup poll in July 2016 shows only 15% of Americans opposing a pathway to citizenship for illegal immigrants, and only 24% of Republicans. There is another problem in the strategy. The rhetoric about walls and mass deportations, and the Trump temperament combined with handling of nuclear weapons is not winning college educated women in the suburbs with polls showing Trump lagging behind Clinton by about 20 points or 4 million voters with this group. It is hard to undo the damage done by this kind of rhetoric used in the primary elections as it gains distrust of voters. It would require a bad economy with illegal immigrants taking local jobs, and handling of immigration seen as weak, for such a message to gain some national traction. Both are absent for the most part with a steadily improving economy since 2012, lower unemployment, a tough enforcement policy on deportatons under Obama that exceeded that under Geoge W. Bush, and the talk of a wall comes with illegal immigration having declined steeply since the 2008 financial crisis. The real culprit appears to be elsewhere, the triple hit taken from hollowing out of the manufacturing economy that hurt the Conservatives in Canada, the insecurity created for older whites from the job losses and hits to net worth from the 2008-2009 financial crisis, and the increasing loss of access to health care and educational opportunities with high  costs. About 62 million households or the bottom half of the distribution in the U.S. have a net worth of about $10,000, a quarter of this group having zero net worth, according to the Federal Reserve's Janet Yellen at an Inequality Conference in Oct 2014. Problems no wall is going to solve, problems that built up over 2 decades, problems that will take a generation to fix.  It shows the tech miracle of the last 2 decades as a mirage for quality of life of the middle and working class. Tech as a tool to a goal, not a goal in itself, is the better way forward. ...

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The plan to prevent foreclosures in Minnesota is supported by the state's Democrat- Farmer-Labor party which has a majority in the legislatre. The Republican Governor of Minnesota Tim Pawlenty is mentioned as running mate to McCain and he will be criticized in the election if he vetoes the bill. A 39% increase in foreclosures is expected for 2008 by Housing Link, a Minnesota nonprofit research group. with about 28,000 households affected. CEO of Toll Brothers, a luxury builder rates Minnesota a F- in assessment of regional housing markets. So what will this bill do? Under the foreclosure deferment plan loans closed from January 1, 2001 through August 1, 2007, when antipredatory lending law took effect would be eligible. Borrowers must be legal U.S. residents and have adjusted household gross incomes of less than $250,000. Second home are not covered. During the deferment period borrowers keep paying a portion of their mortgages. This is set at either the monthly payment of principal and interest when the loan was originated, or 65% of the monthly payment at the time of default, whichever is less. Rep Matsui of California introduced a similar bill in the House of Representatives May 13, 2008. Because the bill limits the benefit to those who are needy and worst affected it would appear to be a sensible approach. At this time there are so many proposals but with little Republican support and a public opinion that sees this as moral hazard or rewarding people for their mistakes with public money, there is little to help the most needy and deserving borrowers for whom a good case can be made for help on a bipartisan basis and with support of the public....

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Former Fed chairman Paul Volcker has opinion about the financial crisis that is deeply felt. He wants the wall that separates banks that take in federally insured deposits from the public separated from the risky trading activities of investment banking houses. That would essentially put us back to the situation that existed before Glass Steagall Act of 1933 was revoked in the 1999. The lessons of the thirties apply today. Says Volcker "people say I am old-fashioned and banks can no longer be seaprated from nonbank activity, but that argument brought us back to where we are today." The Obama advisers like Geithner and Summers are close to the bankers- see the links to Geithner and Summers- and believe that extensively regulating the banks would prevent the banks from engaging in risky practices. However as this reporter Louis Uchitelle of the NYT has not pointed out, the problem is that this is more easily said than done. The very fact that there were close ties between Geithner and Summers and the bankers during the Clinton Administration and Geithner as head of the New York Fed under the Bush administration, and the aggressive lobbying by the investment banks like Goldman and others who are now banks to water down any regulation on derivatives trading and on other supervision, can only lead to a situation where neither Volcker's solution or the Obama people's solution is put into effect. THis will only invite another crisis. With the public anger even worse as the bonuses and compensation from trading profits by Goldman and other banks come through cheap money created by the Fed- see links- for the purpose of addressing the financial crisis. Volcker would separate JP Morgan and Bear Stearns trading operations and separate Merrill from BofA, and Goldman would revert from abank holding company to a investment banking house. Volcker believes that the pay on Wall Street "has gotten grotesquely large." Volcker believes that the separation of deposit taking institutions from investment banking would reduce trading profits and consequently automatically reduce these large bonuses. So is Volcker being ignored by the Obama administration, even as his glow helped the Obama people win public support as a better steward of the economy than McCain during the election campaign? During the crisis Volcker headed the president's Economic Recovery Advisory Board. Today he is rarely seen in his Washington office, he talks to administration officials mostly on the phone, at 82 he is not knocking on doors, and the advisory board has been assigned to look at the tax law on overseas corporate profits. Volcker agrees with most of the Obama plan on financial regulation including higher capital requirements and and pay guidelines, but if this is not enacted because of lobbying by bankers then the nation will have the benefit of neither the Volcker Plan or the Obama Plan. ...

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Timothy Egan points to the huge gap between a T.R. in 1910 making the speech in Osawatomie, eastern Kansas, and Professor Obama making an election speech in 2011. T.R.'s was an election manifesto that brought up the issues of conservation, child labor, a plea for an income tax, call for worker protections, limits on corporate power and influence on the laws and direction of the country. The speech was made in 1910, after Taft had assumed the presidency with Roosevelt's backing, and would lead to T.R. running against Taft and Woodrow Wilson. Most of what T.R. advocated became part of the country's social and economic fabric, much of the work beginning with Theodore Roosevelt's two terms as president, and also pursued by Woodrow Wilson, the president elected in 1912. By contrast, in line with the timidity of today's politics, Obama's speech called for approving his nominee for consumer protection bureau chief, and continuance of tax cuts for the middle class. Egan calls it a curse of today's politics and national debate that no politician can set the course for revitalizing America the way T.R. did. Some of what T.R. said in Kansas that day is: "There can be no effective control of corporations while their political activity remains. To put an end to it will be neither a short nor an easy task, but it can be done." "The right to regulate the use of wealth in the public interest is universally admitted." Jackie Calmes covered the extensive ties of both candidates, Obama and McCain, to Fannie Mae and Freddie Mac, in her report for the New York Times, on September 9, 2008- "For 08' Rivals a Skein of Ties to Loan Giants." Paul Gigot, editorial page editor of the Wall Street Journal, who with his reporters did some of the difficult reporting on Fannie and Freddie, wrote in one of his columns with a note of pessimism, that he wasn't sure that either of the presidential candidates were interested in what was happening. ...

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A professor at Georgetown University on why it takes time to build democratic institutions, with one important omission- the military in Muslim countries such as Egypt have no intention of building these institutions and have undermined the development of these institutions for decades. A bigger omission lies in inability of the military in the most populous Muslim countries with horrendous gaps in development in basic welfare indices such as education, infrastructure and services, that have put these countries decades behind developing Asia and even Latin America which also had a past of military rule. In countries such as Pakistan and Egypt the military simply lacked the skillset and abilities to deliver in economic terms. Therein lies the biggest failure. In China and Russia the governments have popular support because of their capability to deliver economic growth that has transformed both countries and improved the lives of the people in the region. These crucial omissions explain why Republicans such as Senator John McCain and Lindsey see the need for the U.S. to be on the right side for change. Latin America shook off its history of military rule or one party rule and Brazil, Chile, Mexico are part of two free trade regions in Latin America, supporting the free trade system and economic growth in this hemisphere. The issue ultimately rests with the people of Pakistan, Egypt, and other Muslim countries, and a process of learning, compromise, healing and reconciliation that ocurred in Latin America is likely to follow in the Muslim world. It has already begun in Pakistan which like India has a independent judiciary and lively press, and some of the institutions for a functioning demcoracy. The worst omission is unmentionable because it is so obvious - that of firing live ammunition into protesters for democracy. Years after this happened in S. Korea, Mexico and other countries the day is remembered in a certain way. The important point is that when it comes to this there is no exception to the pattern. ...

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Gigot personally faced the brunt of attacks from Countrywide's Mozilo and of Fannie's Raines and of Freddie Mac as he had his reporters look into the workings and shady things that were going on at Fannie and Freddie. Here is his personal account of how it all started and how anybody who raised any questions about these companies was given a lot of trouble by these executives and their lobbyists and the people whose support they bought with donations in Congress and in the political setup, all so that the executives at Fannie, Freddie and Countrywide could enrich themselves. In the end both liberal democrats and countryclub republicans shamelessly supported Fannie and Freddie upto the end when their dishonesty and failure was clear for all to see says Gigot. Says a lot about the political system, its only guarantee for good sense and honesty is in the quality of people and their courage, as leaders so often fail in so many basic ways.

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People with doubts about Obama and McCain being agents of change or just bearers of the latest popular slogan for electioneering, would benefit from looking at the details gathered by the New York Times about the two candidates ties to lobbyists. Obama is second only to Senator Dodd in the amount of donations received from employees and PAC's of the 2 companies Fannie and Freddie. Mr McCain's campaign manager, Rick Davis, is a longtme lobbyist, and previously was head of Homeownership Alliance. Homeownership Alliance is a coalition of banks and housing industry interests led by Fannie and Freddie to counter another organization FM Watch, which was an alliance of financial institutions and lobbying associations that wanted to even the playing field against Freddie and Fannie by challenging the implicit government guarantee that allowed them to borrow funds at lower rates. And both candidate's vetters for vice Presidential picks have links to Fannie. Its former chairman, James Johnson, initially led Obama's search committee and Arthur B. Culvahouse Jr., McCain's vetter was a Fannie Mae lobbyist. For McCain, confidant and adviser, Charlie Black, and deputy Finance Chairman, Wayne L. Berman, lobbied for the 2 companies. For Obama, Robert Tsien, Freddie Mac VP, and directors. William Lewis , Brenda Gaines, a Chicago businesswoman, come up as names of contributors. There are so many such names right at the top of these two candidates advisors, that it makes one wonder seriously who are these people fooling when they make statements about Fannie and Freddie- like the one made recently by McCain about Fannie and Freddie enriching their executives by millions of dollars while things were going downhill, and the picturesque phrase "going to hell in a handbasket". And did he talk to Rick Davis about this. And Obama did he talk to James Johnson about this, and Brenda Gaines? One, McCain is a maverick yes, meaning he is independent, and the other can talk intellectually and excite young people about the future, but its a thin veneer, when all is said and done both promote their careers above anything else, and the difference is in degrees with one perhaps more than the other. And people have short memories. The Times reminds us that McCain was one of the "Keating Five" senators investigated by the Senate, accused of interceding with federal regulators for the operator of a failing thrift and received a rebuke. This is what Paul Gigot, who as editorial page editor of the Wall Street Journal has directed the investigative reporting on Fannie and Freddie for years, says in his recent column about all the dishonesty and failure and efforts to corrupt the whole political system across the political spectrum with lobbying and donations and tactics. In a note of pessimism he says "not that either presidential candidate is interested." Quite a comment on the political system. Which is also why Vincent Reinhart, who headed the Monetary affairs section at the Federal Reserve, when asked about the bailouts of Bear Stearns and of Fannie and Freddie, and the help Detroit auto companies are seeking, on Bloomberg News on September 8, 2008, said that "free markets is a thin veneer" when things really get rough. ...

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A number of critical issues need to be resolved for nuclear energy to play a critical role in energy supply. One is how to dispose of the waste product and storage facilities for the waste product, the other is fuel reprocessing tfor reuse and the separation of plutonium which can then be subject to possible theft for use in nuclear bombs. The other is the rising cost of concrete, steel and other products as well as the labor to build new nuclear plants. So a plant may now cost $7 billion rather than $3 billion for a 1500 megawatt nuclear reactor. Government incentives thus become a necessary part of this to reduce risk to companies. NRG Energy Dominion and Duke Energy have filed applications to build plants based on the incentives put in pklace by Congress. The subsidies include a 1.8 cent tax credit for each kilowatt hour produced which could be worth $140 million per reactor per year, a $500 million payout for each of the first 2 plants built, and $250 million each for the next four. if there are delays for reasons outside the company's control, and a total of $18.5 billion in loan guarantees. The loan guarantees are crucial to get banks to loan the money. Tho other issues are the shortage of skilled workers and contractors with nuclear certification, lack of potential sites for new reactors, and only 2 companies Japan Steel Works and France's Creusot Forge, a unit of Areva, have the technology for building key reactor parts such as massive pressure vessels. Another issue is whether other alternatives can supplement nuclear energy such as solar and the incentives that can be provided to solar energy. So nuclear energy which provides 20% of the US energy needs wil go much higher it will be supplemented by other energy moves and nuclear plants will be built but not to the extent that McCanin would like to see of 45 plants by 2030. ...

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Reilly points out that removing the government and "putting private capital back at the center of a healthier" housing-finance system, as recommended in a policy paper from the Treasury Department, is only possible if the government gives up the idea of a 30 year mortgage. Thirty year loans as currently structured are not attractive to investors without a government guarantee. The revival of securities markets for mortgages not backed by the government is not possible with the 30 year mortgage. There are benefits from the government getting out of the mortgage markets. A significant benefit is that there would be less incentive to invest in housing, so that more capital is available to other productive areas of the economy leading to higher economic growth. In fact the diversion of economic resources from more productive uses to housing was a major problem in the last decade.

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New GI Bill taking effect August 2009, has not received much attention but it will help bring more equity into the system and provide better opportunities for university education to those who serve in the armed forces and thus help increase mobility in the USA, with those previously unable to afford an education or restricted to small community colleges able to take advantage of the best opportunties they can work hard for and use their potential and abilities. It makes for a more educated and effective military as young people with high school diplomas are more likely to take advantage of military service for 3 years to get a good university education. So its quite probable that more people and better and more intelligent and able recruits would join the military service at the same time that some of the military recruits who have already served three years go to colleges to take advantage of the new GI Bill. It costs the military $5.7 billion in incentives and other recruitment costs to meet the demand for service personnel over the next 5 years, but this can now be used towards the cost of the GI Bill. Also there is some fairness and equity in the idea of the GI Bill, and something that would appeal to candidates like Obama who believes that the income gaps in the country and the educational gaps in the country between the affluent and the those struggling at the lower end of the class structure has widened considerably in the last two decades. See Obama's interview with the WSJ on June 17, 2008, during his visit to Flint, Michigan, for an economic theme speech. Previously the educational assistance went upto only $39,000 and could not be passed onto a spouse or child, something that candidate MCain added to the bill. It also includes a monthly stipend for living expenses in addition to the tution, so its fair and generous program for GI's, and may bring some of the benefits in bringing mobility between the classes and new infusion of energy through a more equitable system for young people who may otherwise be left out of opportunities for a better education and better job opportunities even after risking their lives for service. Getting in the brighter more motivated for education people who otherwise might not opt for the military who then pursue higher education will help the miltary improve quality of personnel and help bring more dynamism into society with their energy and enthusuasm and hard work and discipline....

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The Wall Street Journal's editorial columns have followed closely the working of Fannie Mae and Freddie Mac over the years. Especially during the last decade, when most of the excesses, missteps and failures in the operations of the two companies occurred at huge cost to the US economy and to taxpayers. The Journal quotes from the recent Treasury report on the planned winding down of the two agencies. And focusses attention on the question of what will replace Fannie and Freddie. Only the first of three options looks viable considering the goals of reducing misallocation of national resources, and winding down the federal government's role in housing, says the Journal. With this Option the federal government guarantees are limited to Federal Housing Administration (FHA) loans to low income buyers and VA assistance for veterans and farm programs- narrow segments that limits the guarantee strictly to 10-15% of the mortgage market. The Journal says that the conclusions of the Treasury report are what WSJ has been saying for 20 years: " The strength of this option is that it would minimize distortions in capital allocation across sectors, reduce moral hazard in mortgage lending and drastically reduce direct taxpayer exposure to private lender's losses." And the points about the benefits: " With less incentive to invest in housing, more capital will flow into other areas of the economy, potentially leading to more long-run economic growth and reducing the inflationary pressure on housing assets. Risk throughout the system may also be reduced, as private actors will not be as inclined to take on excessive risk without the assurance of a government guarantee behind them. And finally, direct taxpayer risk exposure to private losses in the mortgage market would be limited to the loans guaranteed by FHA and other narrowly targeted government loan programs: no longer would taxpayers be at direct risk for guarantees covering most of the nation's mortgages." This bit of wisdom is especially significant, as misallocation of capital that went on in housing for the better part of the last decade has hurt America and the American people. It makes sense to have explicit money allocated by Congress for housing help to the poor and have no housing guarantees that have hurt the economy....

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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.    ...

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The view from Germany on Trump's economic plan and the need for changes by his advisors. DW.com's Wenkel says Trump needs to understand that 80% of job losses in recent years have come from not from globalization, but automation and higher productivity, rationalization. He says higher tariffs on Mexico could backfire.

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The government's rescue of Fannie Mae and Freddie Mac has so far cost $145.9 billon. According to the Congressional Budget Office its eventual cost could reach $389 billion. The federal government has put the companies on conservatorship and has a 79.9% stake in the companies. The federal governmet also provides a guarantee that investors will be repaid. By buying loans from banks and other companies that originate loans, Fannie and Freddie were ostensibly in the business of promoting home ownership. The implicit governmet guarantee of Fannie and Freddie's activities in the housing market had the potential to create a huge government liability if the activities are not run well, and this is exactly what happened. By pushing hard for increasing home ownership to unsustainable levels - setting a target in 2001 of creating six million homeowners by 2014 for instance way beyond what was sustainable for the finances of prospective homeowners- it only fueled speculation, easy money and a bubble in housing in the U.S. As investors get paid with the government guarantee, it is Fannie and Freddie that is ending up with ownership of foreclosed homes- one every 90 seconds in the the first quarter of 2010, according to an estimate. The two companies owned 168,000 homes in March 2010....

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Bolton warns that the policy of negotiating with Iran has failed. He points to the dangers of nuclear proliferation in the Middle East, with Saudi Arabia's intention to acquire a nuclear weapon in the rivalry between Shiite Iran and the Sunni led coalition led by the Saudis.