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This Buttonwood column in the Economist after the British 2015 general election says the election results show serious dissatisfaction with the political class. Labor was never forgiven for the 2007-2009 financial and economic crisis, and the "lost decade" in terms of decline in real wages and no improvements in the standard of living since then. The SNP because it is not tainted by these actions did better as a fresh face and authentic voice in Scotland. The Liberal Democrats suffered from their participation in the coalition government and the austerity years. The Conservatives benefitted from the problems and the crisis of confidence faced by the other major parties. The column asks the question about whether austerity can ever be a vote winning strategy. And it points out that the Conservative party won 37% of the vote compared to 36% in 2010. Labor went from 29% in one of the worst results ever in 2010 to 31%. UK Independence Party gained 13% vote share with increase in English nationalism. Behind all this it says is the general disillusion with the political class in Europe. And the Conservatives should take care lest the dissensions in the party with the EU referendum lead to a divided party. ...

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American journalist Bob Schieffer spent 46 years with CBS. He was host of the news show on CBS "Face the Nation" for 24 years. Schieffer says he made the biggest impression on the American public only in the last 12 years since turning 65. During these 12 years he moderated several presidential debates, put CBS at the highest level of viewership as other leading journalists retired, and published a best selling memoir, "This Just In." Things were not expected to turn out this way. In 2003 Mr. Schieffer found out he had bladder cancer, and he says ever since he saw things differently- everything appeared as a temporary assignment. In 2005 he announced he would retire in 2007, when he was 70. Each year after that CBS persuaded him to stay. He replaced Dan Rather for "CBS Evening News" in 2005, and gave it solid ratings till he stepped down in 2007. Schieffer is the same person he was many years ago for people who remember him from CBS since 1982, as the chief Washington correspondent. It is this power of experience, of being always there, that attracts viewers who want to hear about what Bob Schieffer finds important, with an authentic voice asking the right questions....

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Portugal's foreign minister, Paulo Portas, resigns in protest against continuity of austerity measures signalled by the selection of Ms. Albuquerque as the new finance minister. Portas's party is part of the coalition of centre right parties in the administration of prime minister, Pedro Passos Coelho. Cuts in public employee pay and spending on health and education, income and sales tax increases, have cut the deficit to 6.4% of GDP by 2013 from about 10% in 2010. The cost of this is an economy that is shrinking more than expected- by 4.8% in 2011 and 2012, and an additional 2.3% in 2013. Unemployment exceeds 17% in 2013. The loan terms negotiated for the 78 billion euro bailout with the IMF and E.U. in 2010, were renegotiated so that the 3% of GDP target for the deficit for 2013 was relaxed to 5.5%. Portas's party and other leaders are calling for a further renegotiation to take into account the economic conditions in Portugal and boost growth. Portas's party opposed the effort to cut labor costs of companies with a large increase in worker social security contributions, a measure seen as counterproductive even by business leaders that was later dropped. In financial markets the 10 year Portugal bond yield increased 0.22% to 6.615%....

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A call to U.S. and European leaders to uphold civilized values after the repeated use of chemical weapons and poison gases in Syria by Bashir Assad. Roberts quotes the poet Wilfrid Owen who fought on the Western Front in World War I and witnessed the horror of gas attacks at the time. The poem is "Dulce et Decorum Est." It describes a chlorine gas attack at that time. The Geneva Protocol for the Prohibition of the Use in War of Aphyxiating, Poisonous and other Gases, banned their use in 1925. The hesitant response of president Obama to the use of chemical weapons in Syria by Assad compares very unfavorably with the Sarkozy-Cameron action in Libya and president Clinton's response in Kosovo after attacks on civilian populations. It also fails to uphold civilization values. This is true also of the government of Hollande in France, Merkel in Germany, which have failed to respond. The focus on domestic issues and the eurozone crisis does not make any less the responsibility of western leaders on this issue. Russia under Putin and China under Jinping have not grasped the importance of standing up for civilization and values to be credible in world affairs....

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JP Morgan Chase bank's tentative deal with the U.S. Justice Department includes agreement that the bank will not face penalties for the problems at Washington Mutual and Bear Stearns, financial companies acquired during the 2008-2009 financial crisis. The failing firms were acquired at the urging of federal regulators and management at JP Morgan sees holding the bank responsible for the culture and behaviour of management at Washington Mutual and Bear Stearns as not a fair response of regulators. What the deal does do is include provisions for covering losses of investors. Of the $13 billion legal settlement JP Morgan will provide about $3 billion for institutional investor losses on mortgage bonds issued by JP Morgan, Washington Mutual and Bear Stearns. $4 billion goes to the Federal Housing Finance Agency, for misleading the regulator about quality of mortgages sold to Fannie Mae and Freddie Mac. Another $4 billion goes to homeowners for losses suffered. $2 billion relates to penalties for JP Morgan's own behaviour during the years leading to the financial crisis. Attorney General Eric Holder and the Justie Department see the settlement with JP Morgan Chase as a template for action against other banks for behaviour leading to large investor and homeowner losses following the 2008 mortgage financial crisis....

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The NYT report that provides details on what Iran agreed to in the deal reached in Geneva on November 23, 2013 with western nations and the P5+1 that includes Russia and China. It provides a 6 month period in which additional steps to secure that Iran's program is limited to peaceful uses can be achieved. It also slows the Iranian nuclear weapons program by about one month according to this report, and gives additional warning if Iran moves in that direction. Not enough to dismantle Iran's nuclear enrichment program which is what Israel, Saudi Arabia want to see. France has called for tougher steps to limit the nuclear program in prior negotiating sessions. U.S. president Obama has looked for a compromise which would provide the opportunity to do this at a later stage, possibly through a series of smaller agreements. The sticking point is Iran's insistence that it has the right to develop nuclear energy for peaceful purposes like other signatories to the UN Nuclear Non-Proliferation treaty. This may be the only agreement that could be reached at this time, leaving tougher negotiations for a later stage when more trust and credibility is achieved, without the risk of jeopardizing a future agreement that goes further and seriously tackles the problem....

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ICBC's strong performance is largely because of the leadership of Jiang Jiangqing. Jinagqing was reluctant to engage in the large scale lending encouraged by the government during the 2008-2009 financial crisis. For this reason he is not popular with the leadership in the government and the Communist party. This could change considering the large number of loans from that period which are expected to go sour in coming years. The U.S., Spain, U.K. and other countries suffered from the effects of bad loans in the banking system and experts say China is not likely to be an exception. Especially considering the excessive lending during that period and slowing growth in China. When this happens Jianqing's banking skills and conservative approach is likely to gain increasing respect within China. Jiangqing has expressed the view that the last thing China needed was to go back to the situation in 2000 when China's banking system was weighed down with bad debt. One has only to look at the change in Spain where once respected senior IMF officials like Rodrigo Rato are now looked at very differently. Jianging's push for expansion overseas- so that ICBC does not end up being a regional bank- is not viewed favorably by the government, which looks for a domestic focus. ...

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The new Jinping-Keqiang administration is making the initial changes in China by restructuring cabinet ministries. The Railways Ministry is being merged with the Transportation Ministry, separating the operation of the rail system from its regulation. The National Population and Family Planning Commission is being merged with the Health Ministry, in a gradual phase-out of the one-child policy after considering the demographic changes underway in China. The State Administration of Food and Drug is being given new powers to fight contamination of food and drugs. The two agencies that manage the media, the General Administration of Press and Publication and the State Administration of Radio, Film and Television are to be merged. The National Energy Administration is to be reorganized to change the way the energy industry regulation takes place. The ministries fall under China's cabinet, the State Council. Mai Kai, secretary general of the State Council, said the ministries remain overly focussed on micro issues. The changes are based on a look at overall development in China and correcting some of the glaring shortcomings in pollution, managing of the rail system, changing demographics, contamination of food and drugs, and other issues that affect the Chinese people in the new industrial and urbanized society....

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Mastercard estimates that sales of electronics goods fell by 26% year over year from the beggining of November to December 24, 2008. Inventories of televisions, personal computers, cell phones, and other products are pilig up. Market research firm iSuppli estimates industrywide chip inventories to jump to $10.2 billion at December 2008 end from $3.8 billion in September 2008. Sandisk will half production at 2 Japanese plants for 2 weeks, and this affects Micron and Hynix as well. iSuppli estimates that the television industry has about 8 weeks of inventory. although 4-5 weeks is more normal, and sales of popular LCD sets will decline in 2009. In personal computers desktops and noteboks sales are slowing as consumers are buying the new netbooks which are smaller and cheaper selling for $300. One analyst says anything with a ticket price over $250 is slowing down in sales. What this does is create situation for price cuts and lower profits for manufacturers. And in electronics products sitting in inventory can get obsolete quickly leading to large writedowns. Generally manufacturers would prefer to stop production rather than put clearance prices for unsold inventory. Hewlett Packard shut down production for an extended period over the holidays. ...

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Even after receiving 5000 complaints over ayear and half about aggressive short selling that amounted to market manipulation, the SEC did not bring any enforcement cases, according to areport by the SEC's inspector general. Of the 5000 complaints between Jan 2007 and Jne 2008 only 123 were investigated, and no cases were brought.12.5% of emails alleging insider trading prompted an investigation. About 1.38 million emails were handled by 4 staffers, showing horrendous understaffing. In a written response SEC enforcement staff played down the likelihood of naked short selling abuses. It noted that alarge number of cases settle over time. The SEC staff said that the agency needed to "intelligently leverage" its resources and alarge number of complaints provide "no support for the allegations". Morgan Stanley, Citigroup and other frims came under extreme pressure from short selling, and short selling has led to near collapse of many firms during the crisis since the middle of 2008, so its strange that the SEC takes this position. But it is not surprising as in recent years enfocement has been lax, regulation has been neglected almost by design, and resources and staffing are severely short of needs for the SEC's mission to be performed with some degree of confidence....

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Areas in which David Cameron shares the same thinking as Barrack Obama are generating green technology jobs, the importance of the voluntary sector and families all doing their bit so that its not just government that will be doing things. "That society should bring about change, not just government." He diagrees with Obama on the Stimulus and believes that the situation in Britain with the government borrowing 10% of national output already makes it difficult to have an extra discretionary stimulus without people losing confidence in then nation's finances. He makes some other points. Britain needs amore balanced economy so that it is not so reliant on financial services. And in Europe as awhole he says its important to deal with the huge dependence on welfare which is a drag on the economies of Europe. This has to be seen in the light of the huge emphasis placed by recent Labor governments on rebuilding the health and human serivces and infrastructure of Britain. In this crisis the social safety net provided by these services may be the reason that asmaller stimulus is needed in Europe. He talks of capitalism with a conscience, where markets are amean not an end to themselves and morality, ethics and asense of values are brough to bear at every turn. ...

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Cars that will be seen at the Frankfurt auto show show the direction the industry is taking. Fuel saving technologies, hybrid engines for cars by BMW and Porsche better know for gas guzzling high performance engines. With environmental consciousness high in Europe the pressures to reduce auto emissions are building up in Germany and the rest of the EU. BMW will show concept car that has the higher ride of a sport utility and the hybrid engine running on gasoline and electricity. BMW is trying to change its image to become more in line with the environmental friendly that the German public requires. Mercedes Benz will show its new fuel saving technology and Prorsche will show a hybrid version of its Cayenne SUV. The other focus in Europe on coming up with smaller cars for sale in Asia and elsewhere, and for light driving in Europe. VW is coming up with a city car concept that cand be sold in Asia and also in Europe, it has a rear engine similiar to the VW Beetle and would come in different body styles that can be built for regional preferences but built off a single platform which is cost efficent to turn out....

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A detailed look at how Enel is trying to penetrate the Russian power market. It is investing $6 billion in Russia. Mr. Fulvio Conti, CEO of Eni, has a clear idea how he is going to operate in Russia. He has developed close ties with Gazprom, has Gazprom as a partner in ownership of former Yukos gas assets which supply power plants it is acquiring ownership of (OGK-5's constellation of power plants in western Russia.) Eni uses Gazproms pipeline network to get the gas to its plants. In this way Eni feels it has a winning model to convert gas into electricity with low risk. Eni can then wait for what it expects will be gradual progress towards liberalization of electricity markets in Russia, so that prices will be higher and give Eni good margins. It will also put Eni ahead of German and other European competitors. Russia's electricity market is expected to grow rapidly as its economy grows. It needs $120 billion in investment to build further its electricity infrastructure and foreign investment is needed in this area. Eni has also offered Gazprom reciprocal ownership of power plant assets in Italy in its negotiations, to build a win-win situation....

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An interview with Sir Howard Stringer, December 2007 at the 92nd Street Y in Manhattan. Note the reply to the learning Japanese question, direct and saying what it is and has to be in this situation. Its better if the senior Japanese learned English or talked in English because Sony is a copanythats huge in international markets. And it wasn't going to work for Sir Howard because he was'nt going to be conversational better to accept that fact and go on to getting Sony back on its feet as a pioneer which is how it started out under Morita in the sixties. The other response is to the question about closing factories and unprofitable businesses - he asked the senior Japanese staff to look at the numbers, to take a good hard look at the numbers, what did they have to do in all honesty in the light of their situation. Interesting not much else was needed. Refreshing direct and honest approach to the issues. Best is the response to the question about his job, he wonders if he will survive this intact, will he survive this in one piece, which would be a real miracle. An Englishman who is an American in England, an Englishman in America, and a westerner in Japan. ...

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Kenneth Lewis got Bank of America out of the business of subprime lending in 2001. He is the CEO of Bank of America. What is his insight into what is going on today. He sees default risks not depending on credit scores but on other factors such as how much equity homeowners have in their homes. Eveni if its an expensive home over $500,000 there are home owners who have refinanced it and obtained mortgages for much larger amounts in one case upto $800,000, and with hardly any equity in the home. For such a homeowner its easy to walk away from the property and let the lender take the home. Such homeowners would first payoff and be current on credit cards and auto loans and still default and walk away from the home in the current situation. This is what Bank of America is observing. There is a change in social attitudes where its OK to walk away from a home when you don't have much equity in it, and financially it may make sense to get ones finances back in shape. So the old idea about home ownership don't hold good anymore even for people with better credit scores. With this happening banks are likely to tighen credit standards for credit worthy borrowers. ...

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Something bolder like California's at 35.7 miles per gallon target by 2016 compared to the Bush Administration's 31.6 miles per gallon fuel efficiency standard by 2015 would really have a better chance at bringing oil prices down by effective conservation. In fact the gas prices behind the studies at the Transportation department used a price of $2.86 for the years 2011 to 2015 to calculate the rule's costs and benefits when prices are already at $3.50 per gallon today, so the analysis itself is behind the curve and not upto date. This is not likely to stand the test of time as the whole issue of fuel economy is likely to change as time passes. For instance all the three remaining presidential candidates have expressed support for California's efforts to curb gasoline consumption even with resistance from EPA, and the 2 democratic candidates support fuel efficiency above 35 mpg over time. So its realistic to expect that something similar to the California standards will carry the day as time passes and as fuel economy becomes a real big issue as prices continue to escalate and environmental and other considerations also call for better management of fuel supplies through conservation in transportation not just in the USA but around the world....

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Key members of Congress like Barney Frank, Treasury Secretary Paulson and key officials at the Fed had discussions over the weekend in advance of a critical auction of debt by Freddie that could affect confidence in the company and unsettle financial markets. As part of the confidence building process Treasury announced that it plans to seek approval from Congress for a temporary increase in a longstanding Treasury line of credit for Freddie Mac and Fannie Mae. Treasury also said that it would seek temporary authority to buy equity in either company to ensure that both companies have sufficient capital. The plan also has a provision giving the Fed a "consultative role" in the process of setting capital requirement for the two companies and other "prudential standards". Meantime the Fed's Board of Governors met Sunday in Washington and voted to grant the New York Fed authority to lend to Fannie and Freddie. This effectively gives the two companies access to the Fed's discount window if there were to be a short term funding crisis at the two companies. In this process Treasury's plan is to expand the Fed's authority and supervisory role in the financial markets to prevent any future financial crisis in which the Fed would have to intervene. ...

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As automakers rettol their plants all three GM Ford and Chrysler look for ways to win support at the party conventions in Denver and Minneapolis and in Congress for a bipartisan support to get the $3.75 billion Congress has to appropriate for insurance and other costs to get the $25 billion loan program signed by President Bush in 2007. Debbie Stabenow, a Senator from Michigan backs an increase of this loan program to $50 billion and its presented as a way to help the country become more fuel efficient and develop alternative sources of energy. This loan program could make a critical difference to the cash strapped American companies when credit is hard to get in financial markets or the cost is too high. Note the importance of the states in the midwest like Michigan, Ohio and Indiana to both Presidential candidates make it increasingly likely that both will favor fully funding the automobile companies retooling plants and funding new technologies. These states could decide the election and the weak economy and high unemployment in the midwestern states means the candidates and the political parties will have to support the auto industry's efforts to remake the companies and America's energy future....

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After OPEC says in a joint decision that it will stick to strictly followin quotas set earlier this year which would mean a modest drop in production, Saudi officials spread the word that they will continue to pump out as much oil as the world needs. So what is the end result? The Saudis are saying they went along yet they will continue to pump oil like before. Part of the reason is the Saudi belief in their own argument that with high prices the world economy would be further affected resuklting in a possible collapse of demand and of prices something it seeks to avoid and is in everybody's interest. This makes sense if one looks at the deep financial crisis facing the US and which has ripples around the world, most recently in financial mmarkets the collapse of Fannie Mae and Freddie and the possible collapse or sale of Lehman Brothers. And as U.S. elections are up in a few weeks the Saudis do not want to anything that can be interpreted one way or the other, and also a wait and see attitude because a lot of information about the US and world economy is not yet in....

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Land reforms in China to improve rural incomes and increase agricultural production with larger farms to keep food price inflation down two key goals in today's China. And both long neglected in the headlong rush to industrialize and urban centred modernization which left a huge gap which now must be fixed that gap in incomes for the rural 700 million peopr in the countryside who have seen their incomes stagnat and the rural -urban gap widen with farmer protest against corrupt officials seizing land for factories exacerbating the situation for years. Only the 10-12% a year growth has kept the situation under some control as rural folk could depend on income from migrant labor or the young women who left the countryside to work in cities where factories for exports turned out goods for western markets. With this market in serious trouble in debt burdened western societies China may be looking at growth of half the previous rate down to 6%,and so this is move to change the focus to building a bigger domestic market through raising rural incomes as well as urban incomes and shift China's focus to the domestic and Asian markets like India and other Asian countries....

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The prices of soyabeans have fallen by half since July and corn prices dropped from $7.54 a bushel in July in central Iowa to $3.81 a bushel Oct 21. But fertilizer and seed costs could go up 40% for next spring's plantings. This year net US farm incomes will hit $95.7 billion up 10% from $86 billion in 2007 and nearly double the $58 billion of 2006, according to the Agriculture Department. In the boom years farmland prices shot up where prices jumped by double digits percentages for 4 years, now Purdue University economist predicts declining prices moderately for next 5 years. The farmers are being squeezed on both sides. Declining farmland prices reduces borrowing power. With the commodities boom prices of everything from fertilizer to harvesting combines went up. Prices of fertilizer are not coming down even as the price of oil has come down. So farmers are reducing the amount of plantings they will make this coming year which should lead to reduced farm production and lower agricultural exports. In the boom years swelling middle class in places like China increased demand for US agricultural products. But with the global crisis and reduced demand from other countries prices are coming down. ...

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The strategy to reach Catholics and other Christians was crafted by Mara Vanderslice and Alexia Kelley two Democratic advisers who were avangelical Christian and Catholic respectively. In a white paper they circulated they blamed Kerry's loss among religious voters on his unwillingness to talk about their faith and address their moral concerns.They suggested talking about their faith, going on Christian radio, granting interviews to reporters for Catholic media and discussing issues that Republicans were not addressing, namely poverty, immigration and the environment. In a 2006 speech "A Call to Renewal" Obama addressed these issues and his faith, and this was mailed to 40,000 pastors by his staff. Obama strategy was to grasp this aspect of the culture of life and to minimize the abortion issue by putting in the Democratic platform measures and aid programs to reduce the one million operations that occur annually. In the end Obama carried Catholic voters by 54% to 45%, and eroded but not much of evangelicals support for Republicans from 78% to 74%, and eroded Republican share of regular churchgoers to 55% from 61%. Ofcourse some of that Catholic vote was also from voters anxious about the economy and possibly some anxious about Palin's inexperience at such a criticial juncture with the financial crisis....

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Big about face from Paulson, Treasury will no longer buy troubled assets. And any funds from Teasury will be given to borrowers only after the borrowing institution has gone out and raised private capital. The World Bank announced yesterday a new initiative for developing country banks, in which it will put $1 for every $2 the banks raise from others. Douglas Elmendorf of the Brookings Institution and a part of Obama's transition team agrees, and says it has the virtue of getting the private sector's judgement on the viability and management of these financial firms. Treasury will instead of buying troubled assets continue to inject capital into financial institutions. When $50 billion of distressed assets were purchased from AIG it was done by the Fed, again to conserve the capital needed by Treasury, as most of the $350 billion in the first tranche approved by Congress has already been committed. The new economic team of Obama, including chairman Volcker and others may also have conveyed their views to Treasury in discussions, and this may have been decided to be the best course considering the need for funds not just in the financial sector but other industries like the auto industry....

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With gas prices at $1.98 a gallon and crude at $55 a barrel in November and falling further are Americans going to need some special incentives or a gas tax not to go back to low fuel efficency or large vehicles? With about $1 trillion dollars of consumer debt in credit cards, auto and other loans and student loans, zero savings rate, and heavily in debt, and millions under water on their mortgages, the incentive is in the need to use the savings from lower gasoline bills to paydown debt. There is also the shift to parttime workers in the workforce a long term structural change similar to Japan after the economy became stagnant there. Parttime work means lower incomes and uncertain future and need to spend carefully. All these things will likely make the shift to higher fuel economy permanent, including legislative mandates, and new management at the automakers committed to serious conservation and the environment if government aid money brings new management at GM. And public habits are changing in how much and where they drive in pickups and SUV's, many using smaller cars and letting the SUV sit on the driveway for 2 or 3 car families....