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What Peter Bernstein, 90, remembers about the Great Depression. He says one was conscious of it evertime you walked outside on the stree, and people looked so threadbare. A mass of policy errors made the situation worse. And life was different then, more like a developing country as the USA went through the throes of urbanization and industrialization. Food took up about a quarter of disposable income compared to one tenth today. About 20% of the jobs were in agriculture in 1930, compared to 2% today. Less than half of the jobs were in service industries in 1930 compared to 75% today. And there were no food stamps, no unemployment insurance, no social security, no medicaid and medicare, none of the automatic income things that maintain income in the USA today for people out of work. Economist Robert Solow, 90, remembers growing up in Brooklyn, New York, and how his parents constantly worried about the next month's money. Paul Samuelson, another economist, 93, remembers attending classes at the University of Chicago during the depression years. And he says the economics lecures were on laissez-faire principles, which stopped making sense when he looked out the windows and from what he saw and heard on the street. Showing how out of touch policies were in the early years when the depression's worst chartacteristics took shape. However we are in the early stages of this, and it can still be very painful as people make it through the storms ahead. What will things look like as the nations unemployment rate hits 10% by 2010,? Which means things are much much worse in parts of the country like the midwest, where industries like the automobile industry depend on sales of vehicles which have seen sales go down from 15 million vehicles down to 9 million annualized in 2009, and may see further declines in 2010....

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The annual report on China by the IMF points to a diminishing margin of safety and higher risks for delays in needed economic changes from earlier infrastructure and construction focussed policies which neglected Chinese consumers and savers. The IMF pointed to risks from the shadow banking system and the real estate bubble that need to be addressed.

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Jurgen Kroger, is the chief negotiator for the European Commission, and Poul Thomsen, heads the IMF negotiating team, for the 78 billion euros in loans extended to Portugal under a bailout agreement. Kroger offered his views on the agreement in Lisbon. Kroger said he was convinced that the program gives Portugal the means to boost growth and jobs, as it builds a sustainable and competitive economy. Two thirds of the loans come from the EU at an interest rate that is yet to be set. The yield on Portugal's 10 year bonds keeps rising and is now at 10.20%. The IMF will provide one third of the funds. The IMF's Thomsen said the issue of interest rates was addressed by arranging for two thirds of the loan package money coming in the first of the three years of the program. What this does is to take Portugal out of the markets for medium and long term debt for a "little over two years" he said and gives Portugal the "breathing space" it needs to restore credibility before going to the financial markets. The fear expressed by analysts is that the tough austerity measures in the programs of the EU and IMF can cause the economies of these countries to worsen, making it even harder to repay the much larger debts when the loan package money is added to the original debt. The IMF and the EU negotiators had to create a credible program for recovery in the light of these facts. Already Portugal's finance minister is predicting a contraction in the Portuguese economy of 2% in 2011, and 2% in 2012. The negotiators appear to have taken this into account in setting interest rates. Portugal will pay the IMF an interest rate of 3.25% for the first 3 years, with the rate going to 4.25 in the fourth year. By comparison Greece's loans are for seven years with an average interest rate of 4.2%. Ireland's seven year loans carry an interest rate of 5.8%, which it is working to renegotiate. To give Portugal more breathing space the terms of the loans set a slower reduction in the budget deficit than originally planned. Portugal gets to cut its budget deficit to 5.9% of GDP in 2011, and 4.5% of GDP in 2012. The 3% target is set for 2013, one year later. Economists such as Carl Weinberg of High Frequency Economics, say the loan package will only increase Portugal's debt and lead to a larger default later on when the debt amount owed is larger. The debt restructuring solution is being actively debated in the EU, including the risks that European banks would take large hits. Negotiators are also mindful of keeping any negative impact on Spain as low as possible. As Portugal's financing costs have risen, Spain's have risen also. Spain offered higher rates to sell 3.4 billion euros of five year bonds on May 5, with the average yield on Spain's bond sale rising to 4.55%, up from 4.39% on March 3. ...

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Indian finance minister Sitharaman discusses Gati Shakti master plan for India's infrastructure development with CEO's of American companies including IBM's Arvind Krishna, and the head of Fedex, after discussions at the IMF, World Bank meetings in the US.

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Spain's National Court is looking into the problems at Bankia and the leadership of Rodrigo Rato, a former head of the IMF and Economy minister in the government of Mara Aznar of the Partido Popular. The current prime minister Rajoy was deputy prime minister in the Aznar government which lost the election in 2004.

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Without creditor agreement to release bailout funds Greece will not be able to make the $763 million payment to the IMF on May 12, 2015. Financial markets face uncertainty about the outcome of negotiations. In this report Landon Thomas Jr. describes meetings between debt lawyer Bucheit and the Greece finance minister Varoufakis, who are handling the negotiations with the EU and the IMF.

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After 2 years of the pandemic's devastating effects on health, governments around the world decided to protect ordinary people from the effects of higher prices for staples and food with the increase in inflation. This WSJ report takes a detailed look at different countries and how they after coping with the effects on total debt and debt servicing needs of moves such as subsidies and tax cuts. The situation is exacerbated by the Ukraine war which affects wheat exports from Ukraine and Russia, and the high oil prices as a result of the war. The effects shown by country are- China- consumers are protected from high oil prices by regulated retail gasoline prices. As oil prices keep going up state owned refineries will bear a disproportionate share of the burden of high prices. India- The government has set aside $40 billion in aid as subsidies for oil and fertilizer. This will support farmers and consumers for fiscal year to March 2023. It will make it harder to cut the budget deficit from 6.9% of GDP to 6.4%. Pakistan - A subsidy of $1.5 billion was given for diesel, gasoline and electricity by the Imran Khan government. This did not have IMF approval and talks are taking place on the IMF program between the government and IMF for it to continue. Rampant inflation has led to reduced popularity of the Imran Khan government. Argentina- A new program to refinance $44 billion in debt with IMF assistance is being affected by the subsidies for oil and electricity. About 800,000 tons of grain are being diverted to the domestic market from exports. Agricultural producers such as Argentina have better protection from higher food prices. In Argentina 40% of the people are living below poverty and the country has 50% inflation.  Malaysia and Indonesia- Both countries are exporters of commodities and higher prices could provide additional revenues to meet higher import prices, says the WSJ. Egypt- higher prices for wheat imported from Ukraine and Russia where Egypt gets 70% of its wheat needs have increased cost of subsidies by $1 billion. Kenya- Fuel subsidy costs will increase by $500 million over 2 years. Europe- In France 400 million euros relief package and in Spain 500 million euros relief package for energy price increases. In Germany cash payments to taxpayers, heavily discounted transportation tickets, and price caps on gasoline and diesel.   ...

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The situation in Guangdong province in 2012, with older factories unable to compete with the rising wages, stricter environmental enforcement, and lower export demand. Many Taiwanese manufacturers are closing factories. The growth in Dongguan, a manufacturing hub in Guangdong, is estimated at 3.5% for the first three quarters of 2012, half the overall rate for Guangdong province. A researcher in a Chinese think tank says China's manufacturers are in a kind of "sandwich trap" with competition from Vietnam and India in lower wage production and competition from Germany and the U.S. in higher wage technology intensive products. This is especially true in 2012-2013, now that U.S. and German manufacturers have reduced costs and increased competitiveness.

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Bolivia's economy showed 6.5% growth in 2013 and the portion of the people in extreme poverty has dropped from 38% in 2005 to 24% in 2013. Policies of president Morales are winning praise for being prudent from the IMF and the World Bank. A greater share of the revenues from natural gas production and high natural gas prices, Bolivia's main export products, has enabled the government to build international reserves to $14 billion. This is half the country's GDP, and the highest ratio of reserves to GDP in the world. Morales has adopted socialist policies and at the same time provided fiscally responsible management, showing the two are not inconsistent and can be adapted to local conditions to build a middle class and improve living conditions.

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Pakistan is seeking a bailout from the International Monetary Fund. As part of the negotiations the IMF is asking for a cut in fuel and other subsidies. This week the new government of Pakistan under Mr. Sharif increased fuel prices by 17% after removing some of the subsidies. Economic mismanagement has led to a lack of funds to support the economy and import needs. Political instability is making finding solutions difficult.

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Immigration rulings on questioning by ICE- Kavanuagh ruling and Sotomayor dissent plus later apology. Kavanaugh supported ICE questioning for illegal immigrants in the Supreme Court decision. Sotomayor dissented and said Kavanugh would not understand as his parents never worked by the hour. Kavanugh wrote the Opinion of the Court saying that the questioning was temporary short and if legal the immigrant was free to go about his work.

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A whole range of issues can be seen in the debt crises in developing countries. The margin for error shrinks with poor governance, lack of honest assessment and transparency for finances, wars and conflicts within or outside the countries, living beyond their means, lack of focus on development, infrastructure that is unproductive or unaffordable including some Belt and Road Initiative infrastructure at higher interest rates. Countries that are dependent on overseas remittances, tourism, that were hit hard by the pandemic have seen their finances further weakened reducing the margin for error even more to the point that the smallest tipping point can lead to huge crises. Once the finances are weak all it takes is an external tipping point that creates serious crisis. The war in Ukraine with shortages of wheat, fertilizer and skyrocketing oil prices acted as that tipping point. Because this was a major blow the crises have a level of magnitude that is more than a payments crisis. One sees this in South Asia in Sri Lanka and Pakistan, and in the Middle East for countries such as Egypt and Tunisia shown in this WSJ report. It is now not simply a crisis but a crisis of great magnitude because in the case of Sri Lanka and Pakistan this WSJ report says that both countries foreign exchange reserves have dwindled to the point where they can pay for only one or two months of imports according to central bank data, analysts and IMF. This crisis has affected countries that were seeing steady foreign investment such as Turkey for decades, then a sharp falloff in foreign investment with a change in the climate for foreign investment. The crisis has taken the form of high inflation, significant depreciation of currency that makes imports costlier so that shrinking revenues from loss of remittances, tourism, or other sources will now have less value in supporting import needs. Lack of a credible path can delay setting a path out of the crisis. The $1.5 billion fuel and electricity subsidy made by the prime minister of Pakistan in late February was done without IMF approval leading to the IMF program having to be renegotiated. Lack of national political and cultural consensus on a solution simply makes it that much more difficult to find the way through it. In this regard South Korea was able to tackle the 1997 financial payments crisis effectively because of a national consensus. The situation in Egypt- Egypt has borrowed $20 billion from the IMF since 2016., placing it second to Argentina in aid from IMF since 1980's.  In 2020 and 2021 Egypt' government spent more than 40% of its revenue servicing its debt, and is forecast to do the same in 2022. The situation in Tunisia- A shortage of sugar, flour, and other critical supplies, and government delaying wage payments to civil servants. The government got $400 million in financing last month from the World Bank and hopes to secure a lifeline from the IMF. Compared to the period between the 2 World Wars the two bright spots are China and India where lessons of the past of civil wars, religious or political conflict, and poor governance, lack of knowledge of how the western countries industrialized and modernized, was replaced with the conviction that drives patient effort, courage in the face of adversity, honesty, and humility to learn including from western countries that have forged their own path through the same difficult road. The most difficult experiences have offered lessons which were learned- for South Korea the Korean War and invasion from the north, China the civil war and Japanese invasion, for India the partition of India and million of refugees. Stagnation from stumbled efforts also taught lessons, the Great Leap Forward in China, the License Raj with corruption in India.       ...

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Foreign investors make up only 7% of Russia's domestic bond market compared to 30% for similiarly rated Mexico. Russia is rated BBB by Standard & Poor's. Moody's Investors Services rating is one notch higher. The yield on Russia's 10 year government bond is about 7%, compared to 4.35% for Italy and 1.8% for U.S. Treasurys. Russia's deputy finance minister, Alexei Moiseyev, says he hopes changes will raise the foreign holdings to about 33%. Martin Gilman, a former IMF representative to Russia in 1998, and now a professor at Moscow's Higher School of Economics, says rates will go higher because of appreciation in the ruble and large monetary easing in Europe and the U.S. The situation has changed completely from the 1998 Russian default on debt payments of $160 billion. The IMF estimate is for overall debt to be about 11% of GDP by the end of 2014.

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The Public Private Investment Program announced by Treasury Secretary Geithner finally gets underway in October 2009. Black Rock, a group led by the Wellington Company and a group led by Alliance Bernstein are private participants in the effort to get private participation to rid banks of bad loan assets. Five of nine money management firms selected by Treasury to buy toxic mortgage related securities have raised the minimum of $500 million from investors each, to qualify for matching government loans. In total the program will allow money management firms to buy up $12 billion in bad assets. THe IMF estimated last week that financial institutions around the world have still on their books $2.8 trillion in troubled mortgages and securities. Only half of that amount has been booked in losses, which leaves $1.4 trillion still to be resolved. $12 billion is less than 1% of this, which begs the question how will this make a difference? Treasury only hopes that this will restart trading in bad assets and help establish market prices for these assets. If unemployment worsens and the economy sees a sudden relapse in the near future this $1.4 trillion in bad assets will continue to create serious problems for financial instituions and the international financial system....

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India's Foreign Minister S. Jaishankar visits the local subsidiary of Indian Oil Corporation in Colombo to get some idea of the fuel supply situation in Sri Lanka. Facing a shortage of foreign exchange reserves and payment due for its debt in 2022 Sri Lanka has cut imports, including oil imports. India has offered a $1 billion line of credit and other assistance to Sri Lanka. Sri Lanka is also getting financial help from the IMF.

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The young people in Venezuela increasingly question continued support for president Chavez. About 7.5 million Venezuelans ages 18-30 make up 40% of the electorate. Chavez has won elections since 1998, and has setup a network of youth support. Yet there is now voter fatigue after Chavez's 14 years in power, and this election is being vigorously contested by opposition leader, Henrique Capriles. Voters are increasingly looking for an alternative, and an economy that creates jobs and new opportunities beyond the social welfare state supported by oil earnings offered by Chavez, especially the 42% of the working population in the informal sector. One voter puts it succintly saying what Chavez has to give has already been given, and Venezuela's future lies in a different direction. A new direction would better integrate Venezuela with the global economy bringing in new technology and foreign investment. In addition it would include efforts to enlarge the middle class and improve conditions for the working class, as Brazil has done....

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Having missed the housing bubble how likely is it that the Fed will catch a bubble in the stock market in the future?

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US president DJT in his State of the Union made immigration a major issue saying Democrats could not be trusted with Borders after the disasters of recent years. The president told Congress in his State of the Union address 2026-

“If you agree with this statement, then stand up and show your support: The first duty of the American government is to protect American citizens—not illegal aliens."

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The Brexit timetable for votes in the British parliament are now as follows- March 12, Tuesday - parliament will vote on Mrs. May's deal negotiated with the EU Likely result is rejection say experts March 13, Wednesday- parliament will vote on no-deal Brexit, meaning leave the European Union without a negotiated deal on future relations Likely result is rejection say experts. Across party lines everyone except a small minority of right wing MP's fear this option. March 14, Thursday - parliament votes on asking for an extension of the deadline of March 29 Likely result yes vote say experts. Why all the votes one may ask. It is designed to please various factions in the Conservative party and its allies who favor different and contrary positions, something that Mrs. May has undertaken to do even though there appears to be no likely resolution except to turn back to voters in a general election or a second referendum. It has only accomplished one thing if one looks at the commentary in the BBC and The Times, The Guardian- make Mrs. May more unpopular than before. ...

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How crude oil flows are affected by the narrow waterway Straits of Hormuz if blocked, Kuwait's lack of storage, Iraqi production going from 4.3 million barrels a day to 1.3 million. China could use more coal, it has 300 days of oil inventory, US is self sufficient. Asia will have problems- India, Japan and South Korea.  Europe also faces a shortage of oil supplies. How will this be tackled? 

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Martin Feldstein says the eurozone summit of Dec. 9, 2011, was a failure because the plan for closer economic integration and financial discipline does not address the immediate problems of increasing bond yields for Italy and Spain. The summit concluded with decisions to set up a constitutional rule for each euro-zone country to balance its budget, take corrective action if the "structural" deficit exceeds 0.5% of GDP, and impose penalties if the actual deficit is larger than 3% of GDP. German chancellor Merkel wanted to have these rules put in a revised version of the EU Treaty, enforceable by the European Commission through the European Court of Justice. With Britain not agreeing to accept the plan without safeguards it requested, the new rules apply to the eurozone only, are not part of a revised Treaty and are not enforceable by EU institutions. Feldstein says it is wrong to have a common solution for Italy and Greece. For Greece the best option is to go back to the drachma, because of its shrinking economy and high debt load, and the need for a competitive currency. Italy, he says has a good chance of convincing investors to lower yields by taking strong steps. Italy's fiscal deficit is 4% of GDP, and the IMF projected Italy would have a balanced budget in 2013. How should Italy plan for the 300 billion euros of Italian bonds that need to be sold in the next 12 months? Feldstein says only 40 billion euros are needed to finance the projected budget deficit and for the rest is for existing bonds to be rolled over when they are due. Italy can repay the maturing debt with new bonds and not cash. And Italy can get the help of the IMF for some of the funds needed. On the issue of the ECB engaging in large scale buying of Italian and Spanish government bonds, Feldstein says Mario Draghi is doing the right thing by rejecting French proposals to do this, because this would be against ECB rules in the Maastricht Treaty to bailout governments and would reduce the incentive to make changes in Italy and Spain for lower deficits. ...