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For opportunistic politics the Evan Newmark Mean Street USA Meanie awards go to Obama, Budget director Orszag who joined Citigroup, Rep. Charlie Rangel, Michael Bloomberg. For the stuff that is going on in Wall Street Goldman Sachs, Steve Rattner in the pay to play pension scandal, high frequency traders on Wall Street in the May 6 Flash Crash, Blackstone CEO Steve Schwarzman and private equity's benefitting from tax loopholes. For Main Street Meanies the awards go to Bowles -Simpson and their leaving out cuts in Medicare benefits as they show extraordinary concern for the deficit, bond investors who will blame Wall Street and Obama for losses in bond funds in 2011, and the Americans living rent free in foreclosed homes as the robo-signing problems continue.

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In his comments at the Congressional Institute DJT says his tariffs plan resulted in China cancelling building the largest automobile plant in the world just across the US border in Mexico to export these cars to the US. That plant was planned for a capacity of 1 million cars a year which would have hit the US auto industry hard. DJT's  tells this story of how his tariffs are making a difference in not letting other countries take advantage of the US and destroy America's industry and communities, and jobs. "In Mexico they are going to build the largest auto plant in the world. It was during my campaign. And a great gentleman who builds auto plants was building this factory and I asked how is it going? I want to take a look at one of your factories you are building. One of the good ones. Are you ready? This was 8 months ago. I said you will have to go to Mexico. What about the US? He said  we are putting up a couple but they are small. In Mexico they are building massive automobile factories. I said you mean they are doing it? Who is the owner. He said mostly China. One in particular is massive. So they are going to build cars and send them to the US, for no tax or little tax, and destroy whats left of Detroit." "Mexico has taken 32% of business over 30 years. The other is Canada. They send us millions of cars. We don't need them for that. I said to hime when is this going to open. A couple of months. It will openin 1.5 years. I said I am not happy about that. And I said in my next speech I'm going to charge them. No cars coming ino the United States from Mexico without a massive tariff. I said it 3 or 4 times and what happened is about 2 months later I saw the same gentleman in the audience and I said I want to see you backstage. I said let me ask you what happened to that plant. Where is it now? He said China has canceled it. Why? Because they think you are going to be elected and charge tariffs on the cars coming in and it doesn't work."  "So Detroit will breathe and we are going to do the opposite. Companies can build plants if they want but they are going to have to build it in the United States."   ...

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John Harwood's interview with Govenor Rick Perry. Harwood asks Perry tough questions about his 20% flat tax, spending cuts and the deficit (response: the only way to get the country working again is to reduce the tax burden across the board and create the incentives to invest), raising the retirement age for Social Security (response: will discuss this one with Congress), views on regulation (response: regulators did not do their job, nothing wrong with the old regulatory system). Perry saying that this is the way America has always worked- by creating the incentives to invest. Perry say he is for a bold plan not something that will trim things at the edges as Romney would do.

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There was some question about the accelerated depreciation tax break for new investment that is part of the business side to the stimulus package. It lets business take 50% of the depreciation upfront and the 10% thats allowed for a straight 10 year depreciation. A study at the University of Michigan and other expert opinion showed that this tax break had minimal effect when it was introduced in 2002. But other experts say that it was because there was not much taxable income after the meltdown and the bursting of the tech bubble at that time. This time there is a good deal of taxable income and it might have some effect.

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Consumption at 88 retailers in Japan from shoes to glasses increased by 20.5% in March 2014 and decreased 1.8% in April, according to brokerage firm CLSA. This suggests the Japanese economy can ride out the effects of an increase in the consumption tax and stay on the growth track in 2014-2015.

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Greece's new Syriza government plans to put a bill through parliament on the minimum wage as one of its first steps. It will reverse plans to sell the government's 67% stake in the port of Piraeus, and a planned sale of the state controlled utility will be held back. Sigmar Gabriel, the Social Democratic leader in the coalition government in Germany says Germany is ready to show solidarity with the Greek people, and says the new government has the opportunity to take better action against corruption and tax evasion in Greece than previous governments. Previous governments including governments of the Pasok and New Democracy parties which make up the ruling political elite in Greece failed to make the serious changes in tax collection needed in Greece whereby the upper class in Greece pay the fair amount of taxes due. The IMF's Lagarde also emphasized the tax collection, and separated it from austerity issues where most of European and American opinion believes growth oriented policies are the right path....

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Reports of ATM's running out of cash in India in 8 states. The government says this is a result of a spurt in demand and will ease in a few days. The government's policies are to increase the number of debit card and digital transactions to shift more of the transactions in an underground economy into the formal economy so that tax revenues to fund infrastructure can be generated. As a result fewer currency notes of Rs. 2000 or about $30 are being printed. This is aggravated by black market hoarders of 2000 rupee notes. Public confidence in the banks was shaken by some high profile scandals leading to people keeping extra cash at home increasing the demand. The government plans a bailout of $32 billion for bad loans at banks.

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The U.S. government sold its last remaining shares in auto company GM booking a loss of $10.5 billion- a recovery of $39 billion dollars of the $49.5 billon dollars given to GM. The Center for Automotive Research in Ann Arbor, Mich., points out that the cost of bailing out GM and Chrysler was about $13.7 billion. The benefits were 1.2 million jobs protected in 2009 during the depths of the financial crisis. It also preserved $39.4 billion in personal and social insurance tax collections in 2009 and 2010. The Treasury Department estimate of the cost is about $15 billon, including money invested in GM's former finance arm Ally Financial Inc. President Obama says the effort helped create 372,000 new jobs in five years. Treasury Secretary Lew summed it up by saying "it helped stabilize the auto industry and prevent another Great Depression." Other intangible but larger benefits in the long run were building up the companies anew with new pay structures the auto companies could support in a globalized economy, bringing in new management and discarding of old mindsets and culture, new relationships with unions and customers, committment to achieving fuel efficiency targets with new technologies in cooperation with the U.S. government guidelines, and renewed confidence of millions of employees in the U.S. auto sector. It is also the one area in which the Obama administration scores a clear win, and in which president Obama took the greatest interest as senator. That the public did not fully appreciate the significance of the step is more a reflecion of public frustration with how the companies were run by the old management, and a continual reminder of the importance of good management for the U.S. industry and economy....

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Many important changes in the health care bill do not come till 2013 or 2014. Its only in 2014 that government will hand out tax credits to low and middle incoem Americans to offset the cost of buying insurance and expand Medicaid federal-state programs to help expand insurance for the poorer sections of society.

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On the surface Turkey's implementation of an IMF program to reduce its deficit in 2001 has lessons for Greece, but looked at closely the situation has some serious differences. Turkish tax collection was weak and this was corrected by the incoming Erdogan administration, salaries were capped and spending was reduced, taxes raised and state assets sold to improve the deficit. But as Tim Ash an economist at RBS bank points out, achieving GDP growth will be very difficult for Greece. For one thing Turkey's lira fell 54% against the dollar in 2001, spurring exports and increasing growth. Greece is part of the euro currency system and this won't be part of the solution. Also Turkey's debt approached 80% of GDP in 2001 (down to 46% of GDP now), compared to 115% for Greece in 2010, so Greece is in a much worse position than Turkey in 2001. Ash sees a restructuring of debt as the best way to restore growth in Greece.

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The Wall Street Journal in a recent editorial called the European Union's June 2011 plan for Greece "the French Deception," because it favored French and German banks but made Greece's debt burden even less manageable. The Economist views the European Union actions with disdain and says they are sure to fail. It is skeptical whether the spending cuts will work because Greece's politicians are not likely to address the problems of poor tax and other payments collection, and is too interconnected with favored groups and lobbies to be able to take the needed actions. And spending cuts will fall hard on ordinary Greeks. Even with job cuts the sense is that it will fall not on full time civil servants with permanent contracts but people with temporary contracts. The Economist cites the example of items such as the overgenerous markup allowed for pharmacists that adds another 1.5 billion euros to the budget which will remain untouched as an example of many such items where the cuts will not fall because of strong lobbies and favored interests. The privatization scheme is deemed unrealistic because it expects to raise 51 billion euros in a crash sale of assets, which only makes it more likely that assets could fall into the hands of cronies with the right connections. The current efforts only make ordinary Greeks worse off with spending cuts and new taxes. The negative impact on economic growth of the austerity cuts creates the prospect for a deeper recession, political turmoil, and a debt default....

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Wilbur Ross talks about the need for an industrial policy in energy and other sectors to keep the US from falling behind other countries like China. He sees the need for tax cuts for the middle class for incomes below 250,000. He would like to see more spending on universities and on research and development to rebuild America.

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This editorial in the Economist says Britain's economic recovery will not be complete until interest rates are well above zero and productivity growth is established. Without productivity growth and growth in wages, both lacking in the economic recovery since 2009, tax revenues will not be enough to reduce the deficit, requiring more spending cuts. That means the Bank of England will not raise interest rates, keeping a situation of no rate changes prevailing since March 2009 when the central bank cut rates by 0.5%. In the current situation the Bank of England is not expected to raise rates till 2016, only after the U.S. Federal Reserve increases rates to avoid appreciation in the pound and further deflationary pressure, according to Goldman Sachs. With inflation currently at zero, following the drop in oil prices, and 10% appreciation in the pound since mid 2013 making imports cheaper, there is little pressure to increase interest rates. In 2011 inflation with rising food and energy prices reached 5.2% , but the Bank of England did not raise rates because of the eurozone economic crisis affecting growth. Only since 2013 has economic growth picked up with 1.2 million jobs created since the beginning of 2013, bringing unemployment down from a high of 8.5% in 2011 to 5.6% in May 2015. Throughout the recovery productivity growth is falling behind- 2014 productivity measured by output per hour worked was 1.3% lower than in 2011, and 14% below the pre-crisis trend, according to the Economist....

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This WSJ editorial points out that the biggest thing in Mr Renzi's favor is the desire for change in Italy, and the public frustration that favors "haste and boldness." Renzi's changes to the tax code are needed as many middle class Italians take less than half of their pay after taxes. Business will get relief from high payroll taxes to boost employment and create new jobs. The current payroll taxes of between 28% to 30% for employers and another 9% for employees are too high.The lower taxes should also reduce the part of the economy that is underground and increase tax revenues. One opinion survey show 48% of Italians favor leaving Italy because of the economic stagnation, another reason to move with speed on the changes.

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It comes as a shock to central banks and is pressuring governments- the food price explosion that won't go away even as energy prices are moderating. OECD graphs in this WSJ report show food prices up in 2023 over the prior year by 15-20% in France, Germany and Britain, compared to 5-10% in the US, Canada and Japan. In France households have cut food purchases by 10%, and in Germany by 10.4% over prior year in the largest drop since records were being kept in 1994. In Britain the statistics agency shows that 40% of the poorest 20% of people are cutting back on food purchases. Ludovic Subran who worked at the UN World Food Program says it is an "access problem." Food production has not dropped, people just can't afford to pay the prices. In Britain The Resolution Foundation says higher food prices since 2020 means the British public by summer 2023 will have to pay more in food bills $35 billion more than the 25 billion pounds for energy bills. Policymakers call higher profit margins by retailers as a possible cause as in world commodity markets food prices are falling since April 2022. Andrew Baileyof the Bank of England says it is the "fourth shock to inflation" after the supply chain bottlenecks, the energy price increases from the war in Ukraine, the tight labor markets. In Italy, Spain and Portugal governments have offered sale tax relief, in France and the UK government is leaning on retailers to curb price increases. ...

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The facts that guide one's understanding of what is happening in Greece relate to the size of the public sector for a small country like Greece, and the failure of people from all classes of society from cab drivers and civil servants to small business and the shipping industry, to pay taxes. These two twin facts and a splurge of spending during and after the 2004 Olympics without proper and correct account keeping, has brought Greece to its present situation. One estimate is that every Greek person would owe 27,000 dollars, that is how much the national debt has swollen to- a massive 300 billion euros debt for a small country. This is 115% of its GDP. And the public sector spending simply went unchecked by different governments trying to win votes. Estimates are that the public sector makes up 40% of Greece's GDP, and government workers are 15% of the active workforce. Not paying taxes has become a societal trait in Greece, as a result the government does not collect an estimated 25 billion euros a year in taxes each year. And this does not include the taxes that would be paid if owners in the Greek shipping industry were to not take advantage of an exemption from paying taxes granted by the government. The result- Greece's socialist government of Prime Minister Papandreou has accepted a $110 billion euro bailout from the European Union and the IMF which comes with cuts in public spending and austerity measures designed to reduce the deficit form 13.6% of GDP to 3% in 3 years. Its important to understand what is happening in Greece, because from Prime Minister Cameron in Britain (with his cuts in government department spending of 25% over 5 years), to Prime Minister Naoto Kan of Japan (with a planned doubling of the sales tax), the mood in Europe and Japan is shifting to austerity measures that would correct excessive government spending. In Greece Papandreou and his ministers are making serious efforts to change a culture of not paying taxes. See the groups and links for Papandreou and Greece....

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Pakistan's economic delegation meets Christine Lagarde, head of the IMF, at the IMF and World Bank Annual meeting in Bali, Indonesia. Lagarde calls for transparency in accounting and complete understanding of Pakistan's debt. IMF delegation will visit Islamabad to discuss terms for a loan. The previous government of Mr. Sharif came under criticism for not providing transparency on Pakistan's total debt. There is concern about debt trap diplomacy in loans from China, as loans may exceed the country's ability to repay and the interest rate terms are not seen as favorable to Pakistan. The Sharif government is criticized for not negotiating better terms for loans from China. Pakistan faces $8 billion debt load in 2018, with first payments to China under Belt and Road Initiative of $1 billion due in 2019. Pakistan's total foreign exchange reserves fell to a low of $8.4 billion, according to the central bank. Pakistan is seeking $12 billion in IMF assistance, but experts say more will be needed to bridge the financial gap. The Pakistan rupee dropped by 10% during this week in October 2018, down to 137 rupees for a U.S. dollar. The new government of prime minister Imran Khan took office in August 2018 after election promises to bring transparency to Pakistan's debt situation. Promises were also made to improve low income housing and meet needs of poor and low income public. Imran Khan opened a public housing project to build 5 million new homes. IMF terms could restrict the money available for badly needed housing and other social projects.  Pakistan's small tax base with a small percentage of the population paying taxes, also restricts the ability of the government to fund social welfare projects and infrastructure. It makes the country more dependent on outside assistance and loans. India has moved to expand its tax base, and is implementing GST tax reforms to increase the tax revenues available to fund infrastructure, health, education and housing. The war in Yemen has complicated other sources of funding traditionally accessed by Pakistan from Saudi Arabia and the UAE. The financing gap is estimated by experts to be $20 billion, with the IMF assistance sought of $12 billion falling short of the financial needs. ...

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US president Biden proposes to reduce the US deficit by $2 trillion by increasing taxes on American households worth more than $100 million that would apply to their earned income, and their unrealized gains on liquid assets like stocks. Biden also plans quadrupling the tax on stock buybacks by companies, a tax approved in the Inflation Reduction Act of 2021. The deficit in 2023 will be about $1.4 trillion and rise to about $2 trillion, so that Biden's plan is to practically eliminate the  large deficit if the Republicans come on board. Republicans prefer cuts in spending. US companies have engaged in a dramatic increase in stock buybacks in recent years leading to calls for increasing the tax on stock buybacks. Biden says even high income households will not see an increase in their taxes, only the wealthiest households with over $100 million who have benefited vastly through the Reagan type policies of the last two decades. These households with over $100 million in assets will not be affected in the same way as students, workers, and middle income households are affected in shouldering a large part of the burden of these Reagan type policies that did not adequately fund education, healthcare, and manufacturing in communities across America. This was a period when Democrats in Congress awed by Reagan type policies failed to vigorously oppose policy that increased the US deficit and burden on households for health costs by not allowing Medicare to negotiate prices with pharmaceutical companies. A senior AARP official says that when we talk about the Biden Inflation Reduction Act of 2021 the key component is the Medicare price negotiation with companies that is now law. Why Republicans and Democrats before Mr. Biden allowed such a gross distortion for two decades since 2001 that burdened ordinary  working Americans while neglecting American manufacturing, till Mr. Biden assumed the presidency, says much about the policies of the last two decades and how it has affected ordinary working families. Shriveling factory towns and creating much distress in these communities with these distortions that are a legacy of Reagan type laissez faire policies that government should do little. The result of these policies is that manufacturing is concentrated in only one country for the whole supply chain something that would never have happened with a thoughtful policy planning process. India and Vietnam are only today seen as alternatives for the supply chain in 2023 when policies were in place in these countries since 2014 for the supply chain to be distributed in a way that would be a win-win situation for all countries, avoiding the national security threats of today with overconcentration of manufacturing in China. This has not benefited China or the US because of the rancor and tension it has created. It was the fall of the Berlin Wall that created some of this awe for Reagan, when looking at it objectively it was nothing more than a course correction in Europe after the Hungarian revolution suppressed in 1956, Czech in 1968. It had little to do with what policies the US should pursue for workers and families, just as the war in Ukraine today remains another course correction in a different direction in Europe, and does not affect domestic policy in the US to build a better society for workers and families that Mr. Biden is doing. ...

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Emmanuel Macron graduated from Sciences Po University in 2004 with a degree in public affairs. He joins the Finance Ministry as an inspector and then buys himself out of government service contract by 2008 to join a private bank. He arranges an acquisition from Nestle and other business deals during this period. In 2012 he is appointed as deputy secretary general for the president's office after Francois Hollande a socialist is elected to the presidency. In 2014 he is offered the position of Minister of Industry and Digital Affairs in the second Manuel Valls government. He makes some changes to French government but opposes the wealth tax or tax on business, and is generally pro-business, though he acts as a member of the Socialist party.  He uses this period to build momentum for his own run for the presidency as support for Hollande falters having lost support from his working class base with Macron and Valls inspired changes.  Macron finally announces he will run for the presidency forming his own En Marche movement which he finances with his own fund raising. Throughout this period right up to the election in 2017 Macron has not run for public office. When he wins the presidency in that year he lacks the experience needed as the youngest president in French history at the age of 39. Like another young president Obama he handles his public image with the media for his En Marche movement promising to unblock France. This public image and his lack of experience makes him impervious to the social changes going on in France that lead to the yellow vest protests in 2018. This is a period when there are changes in the midwest as workers in Michigan and other midwestern states turn away from Hillary Clinton and Obama.  French workers are in the position of workers in the US with the decline of manufacturing, much of it shifted with the supply chain to China and Japan, and the gap opening between rural and urban tech educated areas. Macron follows Obama's quick rise from Senator to run for president yet lacks experience, and lacks sufficient grasp of the social changes with loss of manufacturing, the wide gaps between rural and urban tech educated people, conditions in the rural and farming areas. Macron survives this period, is reelected in 2022 with the help of socialist Melenchon voters. He says he will govern differently, less distant from average Frenchmen, but his instincts are to push for pension reform. At a time of cost of living crisis, and when the French budget office says the change in pension from 62 to 64 was not critical at the present time when inflation was hitting the public after the pandemic. Macron does this by Article 49 in the way he has done under the Manuel Valls government, by executive action alone. This time he faces a no confidence motion in parliament in March 2023 following some of the largest protests France has seen in years, with two thirds of the French according to FR24 opposing the change in pension law. Women see this as coming at a time when age discrimination hurts their chances of earning a living after 50 years of age.  Age discrimination is widespread in France, in a way it is not in Germany, say reports in the NYT. And with the cost of living crisis acts as a major hurdle for the average French person, if pensions are delayed without addressing these cultural issues in France. The result is that the protests have substance and Macron is seen as not sensitive to this at a time when he lacks a majority in parliament. ...

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Japanese prime minister, Yoshihiko Noda, of the Democratic Party of Japan, is pressing forward with a plan to increase Japan's 5% consumption tax to 10% by 2015. Noda told reporters in Tokyo: "There is no waiting in responding to this question" of how to strengthen the social security system. Adding that Japan is "faced with an aging society and a declining birthrate unprecedented in the history of humankind and we cannot sidestep the challenge." In theory the Liberal Democratic party supports this, but in reality the LDP sees a chance to force a new election. Japan has a lower consumption tax rate compared to other OECD countries. It was last increased in 1997. Polls show both parties are deeply unpopular- the LDP has 17% support from voters, the DPJ has 16%, and over 50% support no party. An increase in the consumption tax comes with its own risks for the Japanese economy, as Japanese exporters have been hit hard by the yen's rapid rise in the last year. At 76-77 yen to the dollar Japanese automakers find making compact cars in Japan unprofitable. A chip maker Elpida recently filed for bankruptcy, with its CEO saying he never imagined the yen at this level. Another difficulty maybe the size of the increase in the consumption tax, effectively doubling it at a time when European markets for Japanese exports are showing a marked slowdown....

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Even with the growth strategies of the Abe administration in 2014, projections of the IMF show growth rate for Japan are at 1.0% for 2015, compared to 3% for the U.S., 2.5% for UK, and 1.6% for Germany. The Third Arrow in prime minister Abe's Three Arrows program now follows the implementation of the other two Arrows- monetary easing and public works spending. Abe is faced with the task of convincing foreign and domestic investors that he can implement a winning growth strategy for Japan. The plan announced in June 2014 is an effort to overcome barriers to growth with a strategy that will work. The core of the plan is to cut the corporate tax rate from 35.64% to below 30% in the next couple of years. The corporations are expected to do their part to improve corporate governance and return on equity, so that shareholders, domestic and foreign investors, have more incentives to invest in the Japanese stock market. Analysts and economists say this plan has attractive features. It asks Japanese companies to increase ROE and ROI to global levels through a Tokyo Stock Exchange corporate governance code. Companies listed on TSE and not following the code will have to come up with reasons why they are failing to do so. Some analysts say this would increase the value of companies. Companies are more likely to make investments with cash that is not being invested. The plan includes measures for bringing more women into the workforce, which is seen as a serious committment to women. In addition to increasing the number of child care centers, this plan includes tax revisions that benefit women joining the workforce. Increased representation for women at the executive level is also part of this plan. Hiroshige Seko, a top adviser to Abe, says importance was given to execution for results, so that a score of 80 with definite results was preferred to an uncertain attempt to get a 100. To do this some compromises were made. The plan for special economic zones is still in the drafting stage as discussion is just beginning. A shakeup of the Central Union of Agricultural Cooperatives and more flexible medical care will be taken up gradually. The efforts to increase ROI, ROE, and improve corporate governance were initiated from the time of the Koizumi administration, and the latest plan may bring results after over a decade of effort in this direction....

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Risks in AMR's financial situation include net debt of $12 billion and a market capitalization of $1.1 billion. The stock is down 60% so far in 2011 and is now at $3.13 on Sept 30, 2011. Analysts at J.P. Morgan Chase say AMR should have $3.5 billion in liquidity by the end of 2011, or 15% of annual revenue. About $1.8 billion of debt matures in 2012. The demand for airline debt is still healthy. The airline industry is also better able to handle another recession because of cuts in capacity, and the effect of the merger between United and Delta, keeping flights full and prices up. A recession would also cut fuel costs, with fuel taking up 35% of revenue dollars, according to analysts. The problem is low margins and high labor costs, as a result of not filing for bankruptcy and cutting legacy costs. Credit Sights estimates AMR's margin as 6% before interest, tax, depreciation, amortization, and aircraft leasing costs, with the estimate for Delta at 12% and United at 18%.

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The Tory plan to abolish the Financial Services Authority will not go through under the new Liberal-Conservative coalition. The plan now is to give the Bank of England responsibility for banks and financial institutions that are big enough to create systemic risk and to oversee financial regulation. The coalition partners support a levy on banks to act as a buffer in future crises, and favor restricting bank bonuses. The Conservatives would tax bank size, and the Liberals would tax bank profits, but both share the goal of raising 1 billion pounds in this way. Vince Cable, Liberal Democrat party's Treasury person will now be business secretary at Treasury, and he favors breaking up the biggest banks, shrinking banks and separating retail and investment banking activities. This could happen under the new coalition, but it is likely to be preceded with some commission asked to look into it. The Liberals like to see less focus on London for the markets and banks owned by their customers as far as possible....