LyrArc Article Gist
The Dodd-Frank financial overhaul bill passed in July 2010 has a requirement that issuers of mortgage securities hold onto 5% of the risk of mortgages packaged into securities. Regulators were required to to write the rules for certain exempted loans called "qualified residential mortgages" for which the rules do not apply. Kenneth Rosen of the University of California, Berkeley, says the requirement aims at avoiding the catastrophic risk-taking epidemic that caused the financial crisis of 2008. Federal regulators have till December 2010 to write the new rules. But financial trade groups and firms are already pressing their views on what they would like to see exempted from this crucial 5% requirement.

LyrArc Article Gist
A letter to the Editors of the Wall Street Journal refers to German Finance Minister Schauble's comment: "The USA lived off credit for too long, inflated its financial sector massively and neglected its industrial base." He also cites President Barrack Obama's former head of the Council of Economic Advisors, Christina Romer's comment: "Germany's reliance on exports rather than domestic demand ... is very hard on its trading partners." And laments that we are reduced to a long-shot prayer of begging countries like Germany to cut their current-account surpluses. He says, how about trading "our economic advisors for theirs."

LyrArc Article Gist
Miles White, CEO of Abbott Labs, describes the approach based on 4 P's- people, product, presence and perseverance- that will work best for emerging markets. The idea is to become a citizen of that country or region, with the right mix of local people, product customized for regional preferences, local infrastructure, and perseverance for the long haul. The stakes are huge, as emerging markets are growing rapidly. The pharmaceutical market in India is expected to quadruple from $12 billion today to $50 billion by 2020.

LyrArc Article Gist
Seib points out that Deficit Commisssion chairmen, Bowles and Simpson, have jolted the Republicans and Democrats with their carefully prepared recommendations. The other members of the 14 member commission cannot now dodge easily the responsibility of taking up the unpopular steps. And Republicans and Democrats have to wake up to the need for taking bold steps. No longer is it easy to postpone deficit issues by making glib talk and not taking action.

LyrArc Article Gist
Robert Lighthizer, was deputy trade representative for the Reagan administration. He says, trade is one area in which the establishment has simply got it wrong. In this area there is little difference between George Bush, Bill Clinton, Obama and Republican politicians. It is one area, he says, where the feeling that elites are thwarting the will of the voters resonates most. He says the talk about America's decline, and the idea that the 21st century belongs to China, leaves voters unconvinced that our trade policy is working for America. For voters who are unconvinced, it makes sense to have a nationalist trade policy that takes on foreign abuses and fights for American interests. He cites 2 statistics that worry these voters. One is the huge trade imbalances that require the USA to sell hundreds of billions of dollars in assets each year. The value of foreign investments in the USA exceeds the value of American investments abroad by $2.74 trillion, and China by itself has $2.5 trillion in foreign currency reserves, mostly in dollars. The other fact is that while the trade deficit for the last decade was about $4.3 trillion for the last decade, America also lost 5.6 millon jobs. And its becoming increasingly clear that as with managed currencies such as the Chinese yuan, and other trade practices, the rest of the world is stacking the free-trade deck against us. ...

LyrArc Article Gist
From the 1950's to the 1980''s profits earned by financial firms excluding insurance and real estate accounted for 10% of total US profits. This grew to 22% by the 1990's and jumped to 34% from 2001 to 2005. A financial sector of this size becomes a danger for the US economy, especially with overleveraging, high-frequency trading, excessive risk-taking and other practices common before the crisis of 2008. It also does not add to the productive strength of the US economy, and diverts human and capital resources that can be productively used elsewhere in the US economy. A large sector also creates its own self-perpetuation mechanisms such as efforts to dilute or reduce the regulation needed for it to function safely and productively. By diminishing the power of the legislative and executive branches of the US government to regulate this sector, it also reduces public confidence in government.