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Fed chairman Jerome Powell gets Biden's support for another term as chairman of America's central bank. Powell is utterly different from previous Fed governors under previous administrations because of his concentration and clarity of mind that let him focus on the job of renewing America, after the missteps of previous governors and administrations. The WSJ says he is viewed by president Biden and by markets as a steady hand whose extensive, personal outreach helped restore bipartisan support for the central bank one decade after its reputation was badly hurt by the 2008 financial crisis.  People from both sides of the aisle in Congress and in markets see his personal outreach reflected in his understanding of the country and the needs of its people. Rep Emmanuel Cleaver, Democrat of Missouri says Powell visited  Missouri several years ago and talked to a cross section of rural Missourians and Kansas City residents. And everybody who met Powell thought he was frank, nothing partisan about him, as straight shooter. After what America went through during the financial crisis of 2008 and the utterly aloof and distant central bank governors of the last 3 decades Powell brings a needed quality for all who head America's central bank -a direct on the ground understanding of the needs of the people and the country. Senator John Kennedy, Republican of Louisiana says "You kept this thing in the middle of the road. Some days you had to do it with spit and happy thoughts but you kept this thing in the middle of the road." Powell's senior thesis at Princeton University was titled "South Africa- Forces for Change," and the years since then reflect a concern for the people, for families and working class Americans. Supporting Powell is Lael Brainard, Fed governor, who will be vice chairman. Brainard brings experience to tackle the regulation of banks that was missed under previous administrations.   ...

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Ms. Esken the new leader of the Social Democrats (SPD) party in Germany says SPD will withdraw from the coalition government of chancellor Merkel as its demands for more spending on education and transport were not met. Ms. Esken says the coalition "is crap for democracy." Both the partners in this coalition the Christian Democrats and the Social Democrats, parties that ruled in the post war years, have seen their support drop to the low twenties and thirties percent in recent elections with votes shifting to the Greens and the far right the AfD, and other parties. The disenchantment among voters with Merkel's immigration policies grows and the SPD is seen as failing to stand up for workers rights against decade long austerity policies of Merkel. Labour party in Britain faced a similar situation as it lost its focus on workers and ordinary people and is only now shifting its stand under Corbyn to workers rights and spending for education, infrastructure and health. ...

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The Christian Democrats (CDP) under Angela Merkel received only 23% of the vote in the 2011 Berlin elections. The Free Democrat party (FDP) with 2% of the vote did not reach the 5% threshhold for seats in the Berlin legislature. This was the fifth time the FDP failed to win enough votes to get seats in the regional parliaments. This endangers the CDP-FDP coalition. The FDP campaigned against Merkel's policy of financial support for Greece. The Social Democrats support the euro currency union and issuance of euro bonds, which suggests voters are not choosing parties based on opposition to bailouts of troubled European Union countries. The Social Democrats-Green coalition will have a majority in the state legislature, as the Greens won 18% of the vote. The Pirate party of internet free-speech activists and leftist voters dissatisfied with existing parties were expected to win 9% of the vote, which is a first for regional parliaments for a party of this type. Some of this vote could have increased the Greens vote....

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Lehman sale may be arranged by Treasury and the Fed but fate of Lehman is uncertain.

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This WSJ editorial says the U.S. Federal Reserve needs a chairman who is politically independent, especially since the Fed has not been politically independent since 2008. It calls Ben Bernanke a political sidekick of Timothy Geithner at Treasury since 2008. A Summers Fed would have become too much influenced by the White House, which would not serve the country well, as new policies will be needed to wind down the loose monetary and fiscal policies, says the editorial.

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After elections this week in Germany the CDU may be faced with forming a government with the BSW socialist party an unlikely pair. Germany's political leader Sarah Wagenknecht considers the policy of letting migrants in to be "highly problematic", and making it difficult to focus on help for workers and families. Wagenknect says - "Not because people don't deserve a better life, but because our country is simply overburdened as a result."  She pursues a social policy that follows common sense on behalf of the working class and unions, and follows socialist policies for better incomes and benefits for workers. This is new to Germany says DW.com, yet it is not true for the EU. Neighboring Denmark for example has prime minister Mette Hendriksen who has said the same thing about migrants, opposing entry because it leaves the workers worse off than before and presents both a burden and a huge distraction from the many issues the working class face today. The Democrats in the US also are coming to the same conclusion as president Biden and Harris have moved to secure the Border with Mexico and cut unlawful migrant flows to a trickle in 2024.  These shifts will affect Scholz and the SPD party in 2025, as well as the FDP and Greens as they lose popularity in the former East Germany.  ...

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A football coach, Sid Edwards, is the new Mayor of Baton Rouge, Louisiana.

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Miller says the whole thing about the super-committee, the polemics between Republicans and President Obama about deficits and billionaires, could end up being a charade with Obama hoping to squeeze by in the 2012 presidential elections and the Republicans equally intent on getting 51%. In the end Obama's poor handling of the debt ceiling, including an unwillingness to go ahead with raising the debt ceiling even if it went to court, says Miller, shows a basic failure of the Obama presidency. In the end he thinks its not that the centre-left is going to be mad at Obama, they will be mad at themselves for believing he was going to be any different.

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The Fed and FDIC issue a report on the failure to regulate SVB and Signature bank. It says the failure to regulate stems from the law passed by Congress leaving a gap for regulation of mid sized banks, and the appointment of Randall Quarles to the Fed supervisory position by then president Trump in 2019. The result was a 40% decline in hours spent by supervisory regulators on the SVB bank even as its assets grew rapidly. Overall the supervisory hours for the Federal Reserve system as a whole declined. This led to cultural issues under Mr. Trump where less regulation the better was the prevailing attitude. Fed report in Fedspeak says- "Staff felt a shift in culture and expectations from internal discussions and observed behaviour that changed how regulation was executed." It would take a special effort by the Biden administration to bring the situation under control to keep the nation's banking system healthy and strong to support the investments the economy needs. After the 2009 crisis and the decade lost to the US economy and the American people from losses in unemployment and savings as a result of deregulated banks, another crisis was prevented. This time the Fed, FDIC, General Accountability Office are all clear about the value and role of regulation in a properly functioning economy, instead of the pushback after the 2009 crisis to regulation. Once again president Biden has shown the way.   ...

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China's COSCO taking an ownership stake in Hamburg port was opposed by the Greens and Free Democrats parties in the three party coalition government with the SPD in Germany. Scholz of the SPD went ahead over their opposition saying this will preserve jobs in Hamburg port. In the compromise reached the ownership is capped at 24.99% so that no foreign country owns a majority stake. At one point Germany's cyber security agency BSI classified the Hamburg port as critical infrastructure.

China is Germany's largest trading partner  for 7 years with trade reaching a record $320 billion.

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The US central bank, the Fed, signals smaller rate increases in the future after another rate increase of 0.75% in November 2022. "It is very premature to be thinking of pausing. We have a ways to go," says Fed chairman Jerome Powell. He added that - "the question of when to moderate the pace of rate  increases is now less important than the question of how high to raise interest rates and how long to keep monetary policy restrictive." The move raises rates in the US to between 3.75% and 4.0%. Rates could go up to 5% in 2023.

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The CSU wins 36.4% of the vote in Bavaria and the populist Free Voters gains ground with 15.3%. Both will continue the government in Bavaria. The AfD advanced in Bavaria to 16%. The CDU wins 34.5% of the vote in Hesse, with the city of Frankfurt in Hesse. CDU will continue to form a government in Hesse. The AfD won 18% of the vote in Hesse. The FDP got less than 5% threshhold for representation and the Social Democrats went from 19% to 15% in Hesse. The economy and immigration played a part in the losses of the Social Democrats and FDP.

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FR24 looks at the SPD's Olaf Scholz in German elections and the future leadership for the European Union with new leaders expected in Germany and France.

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Wooden delivery in interviews, number crunching or scientific approach, and hesitant decision making, did not hurt Merkel. Germany's SPD is now seeing a former mayor of Hamburg known for number crunching as "brave in crisis."  He is finance minister in Merkel's government and helped convince Merkel of the need to have the $390 billion nonrepayable aid given as part of the European Union Recovery Fund. This and his work during the pandemic has convinced SPD's different factions to support Scolz in an effort to provide continuity after Merkel, as no effective Christian Democrat leader has emerged so far. Once the party of Willy Brandt, a respected leader in the period of the post war West Germany known as the Federal Republic, the Social Democrats have languished in the period Merkel was chancellor of Germany.

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The U.S. Federal Reserve chairman Yellen tells a Boston Fed conference on economic opportunity and inequality: "The extent and continuing increase in inequality in the U.S. greatly concern me. I think it is appropriate to ask whether this trend is compatible with values rooted in our nation's history, among them the high value Americans have traditionally placed on equality of opportunity." Yellen pointed out that the high inequality impedes economoic mobility which impairs the recovery. Income disparities of this type reduce the country's economic potential, said Yellen. Recent housing gains have helped restore losses of housing wealth with more gains at the bottom. Yellen emphasized the need to invest in education and opportunities for business ownership as ways to improve economic mobility. Low inflation or deflationary trends with lower oil and food prices, give the Fed more flexibility to reduce the numbers of the long term unemployed or part time employed for lack of full time work, a critical goal for the Yellen Fed....

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Transcripts released for the U.S. Federal Reserve's Federal Open Market Committee (FOMC) 2006 meetings show Fed chairman Bernanke and then New York Fed president Geithner ignored the risks of a hard landing from the mortgage and housing bubble. Geithner even went so far as to say about retiring chairman Greenspan, who also ignored the risks from the bubble and set the tone during his long period as chairman at the Fed: "I'd like the record to show that I think you're pretty terrific, too...And thinking about the probabilities, I think the risk that we decide in the future that you're even better than we think is higher than the alternative." In evaluating the risks facing the U.S. economy in December 2006, at the height of the bubble, Geithner stated: "The current weakness in the economy still seems principally to stem from the direct effects of the slowdown in housing on construction activity... The softer than expected recent numbers don't argue in our view, for a substantial reassessment of the risks in the outlook." The Fed chairman, Ben Bernanke, said at the first meeting in March 2006: " Strong fundamentals support a relatively soft landing in housing... I think we are unlikely to see growth being derailed by the housing market." When a Fed economist gave a presentation in March 2006 on the risks in Iceland, Bernanke said- "We'd like a full report on the Icelandic," at which point the rest of the group erupted with laughter. Iceland defaulted on its debts in 2008. Warnings about housing by Fed Governor Susan Bies were ignored by Bernanke and Geithner. Two highly leveraged Wall Street investment banks collapsed in 2008- Bear Stearns in March and Lehman in September- from the impact of the bursting of the bubble in housing and mortgages. When they collapsed these banks were leveraged at about 30 to 1, as most of the warning signs had been ignored by regulators including the Federal Reserve....

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The ECB is set on a policy course of  much higher rate increases when the US Fed is tapering down its rate increases with declines in inflation. 

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The U.S. Federal Reserve's role as backup lender increased with the pandemic. The U.S. central bank lent half a trillion dollars to counterparts overseas representing most of the emergency lending at the time in 2020. It eased a dollar shortage globally, helped stop a market selloff, and continues to support global markets in 2020. The Fed is now the global source of dollar funding, which builds the role of the U.S. currency a the dominant currency. Countries that benefit from the Fed are Australia, Singapore, South Korea, Britain, Japan and European Union countries. On March 31 the Fed launched a program that let 170 central banks around the world borrow dollars against their holdings of U.S. Treasurys adding confidence.  To understand the dollar's dominant role about 88% of 6.6 trillion dollars in currency trades taking place daily involve dollars according to BIS. By end of 2019 U.S. dollar denominated debt securities and cross border loans reached about $27 trillion up from about $17 trillion in 2010. All the talk of having another reserve currency by other central banks has not happened. ...