LyrArc Article Gist
George Osborne, Britain's Chancellor of the Exchequer, says he supports giving regulators powers to take action to split banks that do not ring fence their risky operations and separate deposit taking from risk taking activities. He says this as parliament considers legislation on banking regulation after the LIBOR investigations and problems in British banking following the 2008 financial crisis. Osborne said: "Irresponsible behavior was rewarded, failure was bailed out, and the innocent- people who have nothing to do whatsoever with the banks- suffered." Referring to the larger role of the financial industry in the British economy, Osborne stated: "Our country has paid a higher price than any other major economy for what went so badly wrong in our banking system." This comes as Britain feels the impact of a decline in growth in 2013.

LyrArc Article Gist
China's July 2012 exports were up barely by 1%, over the same month prior year. Exports to the European Union declined by 16.2%. A big problem is cost increases for land, labor and electricity. By 2004 China's exports were growing at a peak rate of 35%. Since then prices of inputs have increased- wages by 150%, land by 70%, and electricity prices by 30%, according to Dragonomics. The yuan appreciated by 30%. Productivity is increasing by about 8% a year, according to the World Bank. As a result of the price increases of inputs the competitiveness of China, with products exported mainly on the basis of price, is deteriorating.

LyrArc Article Gist
U.S. Fed Governor Stein says he is is concerned about the costs of the accomodative stance taken by the Fed under Bernanke, even though he understands the reasons for the accomodative policies.

LyrArc Article Gist
With the strong positions taken by Clinton and Trump on China in the 2016 election campaign, U.S. relations with China enter a new phase. The strident tone in the campaign on China on trade deficit, women's issues, human rights, comes with the issues relating to China's role in the South China Sea and cyber espionage already in the background.

LyrArc Article Gist
The head of Italy's statistics agency Istat, Enrico Giovannini, says Italy's manufacturing sector has performed quite well, and the problem is with the services sector, in lagging sectors such as transport, communications, tourism, retail and social services. The manufacturing sector is only one sixth of the economy. He says productivity is poor and there is lack of investment in human capital and information technology for the services sector. IT's contribution to growth in Italy's labor productivity is the lowest in Europe, according to the European Investment Bank. Italy's total efficiency gains declined one half percentage point from 1995-2005. Retail and tourism sectors lack the needed productivity gains. This means actions taken by prime minister Monti to change labor laws and related changes will not be enough to generate confidence in the economy and economic growth. Giovannini says investment in human capital and productivity is badly needed, and shifting education and training to where there are new job opportunities....

LyrArc Article Gist
Yale Prof. Fair says that evidence from his model shows the yuan appreciation having a positive effect on American jobs looks better than it really is. Two negative effects are in play. The first is that Chinese output decreases will have an effect on Chinese imports that will affect US exports. And the other effect that will come into play is the increase in US prices. His conclusion is that it unlikely we will see a large increase in American jobs from the appreciation of China's currency.

LyrArc Article Gist
Much of what is written here about Xi Jinping pursuing Chinese socialist vision was known since he became president in 2013 when China's Communist party was losing its appeal, and efforts were made to seize power within the communist party by a leader in the western province of Chongqing. Bo Xi Lai attempted to take advantage of the situation with appeals to the working class and without any genuine commitment beyond a power grab. It was well known that Xi Jinping is a son of one of the veterans of the Communist party under Mao, Xi Zhongxun, unlike leaders who followed premier Deng Xiaoping such as Jiang Zemin. Zemin was a relatively unknown figure who was in university during the crucial period of 1947-49 when Mao came to power in mainland China. It would not be correct to say that little was known about Xi's own ideas about socialism as the long term answer to China's problems. Xi also came in as president at a time when the Communist party was losing its appeal to working class people after three administrations that followed premier Den Xiaoping. These three administrations followed a form of state capitalism that allowed companies to pollute the environment, compete without any regulations, and allowed to operate without any controls as long as they pursued growth aggressively and expanded the economy.There was an effort by Communist party regional leader in western Chinese province of Chongqing, Bo Xi Lai, to use this as an opportunity to grab power in China. During his first year as president Xi had to resolve this issue by having a court trial after revelations of corruption and misuse of power by Bo Xi Lai.  Xi's father Zhongxun's role in the revolutionary movement offers clues to Xi's own convictions and faith in the party. Zhongxun was a communist soldier who set up the revolutionary base areas in Shanxi-Gansu northwest border region of China that provided a refuge for Mao's army following the Long March. Other clues come from Zhongxun's role as head of propaganda during the period after 1944 and in 1952. Xi's family background particularly on his mother's side shows a fervent commitment to Chinese socialist vision during the chaotic years when the Japanese invaded China and Chiang Kai-Shek's nationalist forces failed to defend China's sovereignty. One reason Xi has been less understood is that little attention is paid to Xi's mother, Qi Xin who was highly educated and fervently believed in Chinese socialism and nationalist spirit during the Japanese invasion in 1938. In fact Qi Xin had to leave middle school after the Japanese took over Beijing. She joined the Counter Japanese Political and Military University to continue education and in 1941 attended the Central Party school. She met Xi's father Zhongxun in 1944. In 1953 she enrolled in the Marx School of Communism, and it was her position at the school that offered her husband added protection during the Cultural Revolution that affected Deng Xiaoping and others. With such a history in the 1930's, 1940's, and 1950's it is likely that Xi was profoundly influenced by his father's role in the revolutionary movement, and his mother's faith in socialism with national spirit as the way to protect against the foreign invasions. It would now appear that by the time Xi joined the Politburo in 2003 there was no question about the future course China would take given the role of his parents, and the events of 1938 the fall of Beijing, his mother having to flee, and the events that followed. Xi showed resilience during the period of the Great Proletarian Revolution when he was sent to the villages at a time when he would be studying in school and college. He was sent to an agricultural commune in largely rural Shanxi province where he worked as a manual laborer alongside other people and developed a relationship with the local farmers. Unlike other leaders during that period which could even be said about premier Deng Xiaoping in 1989, Xi took a different lesson from this experience largely because his father and mother were committed to the socialist vision for the long run. His father was still not fully rehabilitated by premier Chou en-lai when Xi was allowed to enter Beijing's Tsinghua University in 1975. He studied chemical engineering at Tsinghua graduating in 1979. Upon graduation he worked as a assistant for 3 years to a vice premier who was minister of defense. He then left Beijing for Hebei province to work as a deputy secretary of the provincial CCP. He was made Mayor of Xiamen, then governor of Fujian province in 1999 where he tackled environmental conservation before moving to Zheziang province. His father passed away in 2002 and it would appear that he was carefully trained in different provinces instead of staying in Beijing, for a position of national leadership. Xi got his break in 2007 when the upper leadership of Shanghai city was tainted in a wide ranging pension fund scheme. He was made party secretary for Shanghai. This was the position Jiang Zemin had held before he succeeded premier Deng Xiaoping. In only a few months in October 2007 Xi was made one of the 8 Politburo members, ready to succeed Hu Jintao as president. Xi's perception of being sent to the villages and making it to university education was that it was part of the long run socialist struggle, with pain that his father had also endured as simply a phase in which things would be right in the end. Xi's mother comes across as a resilient figure and one who had herself gone through the struggles of the 1930's and aided her husband on one occasion. Some of this resilience could have been passed on to the son. Xi's wife is a zealous participant in Chinese dance and music performances that created enthusiasm for the Chinese socialist revolution from the 1930's period. In his conversations  with colleagues in the party, in culture and temperament, Xi has been forthright about this background and his style of work.  Xi is unlike premier Deng and the presidents who succeeded him such as Hu Jintao mentored by a former mayor of Shanghai Jiang Zemin who came to power in 1989. Xi is more in line with the leaders around Mao like his father in his outlook and thinking, with a cautious temperament that comes from years going through ups and downs of political struggles. He is once said to have responded with dismay about being in a top position in the government knowing how precarious this had been for his father. The education at Tsinghua, his engineering background, and his easy familiarity with farmers in the provinces, mean that he understands China and its history well enough to have the confidence to shape Chinese policies in a way that none of his predecessors had except Mao, premier Chou-en-lai, Liu Shao Chi and a few veterans from that time in the 1930's. That Xi waited patiently for so long to gradually assert his ideas about socialist vision for China may be the surprising part of his behaviour till 2021.  It may be that he wanted to make the changes only after he could persuade party leaders and colleagues of his vision and long run goals. And because the Chinese economy had grown so large that it would take time to steer the ship in a different direction for the long term. In most of the negotiations with president Trump he cautiously let trade negotiators handle the situation, all the time learning about how to tackle problems of China's relationship with US and Europe. US president Biden also has a vision that is veering towards a socialist perspective in terms of bringing gains of progress to workers and families. So does Mr. Trump, Mr. Boris Johnson in UK, and Social Democrat's Scholz in Germany. It is both economic and political as Mr. Xi is quoted as saying in this WSJ report. The necessities of such action are both economic, social and politically driven as capitalism has veered way off course.  In this report it is mentioned that Soho China 40% stake was taken by a large capital markets firm in New York in the hope of large gains, as Soho China developer was a tycoon who wanted to leave China. Seeing it as not favorable to his company following events in Hong Kong. This behaviour of capital markets groups in New York and tech companies in Silicon Valley, driven by profits and not aware of the social and economic problems of working class American families is a problem in the US and in Europe. It is also what has driven so many large tech companies to expand manufacturing operations in China, that hurt US manufacturing capabilities and American workers jobs- an issue raised by president Trump and taken up by president Biden. Biden has already moved to make Intel Corporation change its plans and invest in American manufacturing technologies in a quietly implemented U turn. US president Biden is left with the unenviable job of solving this huge problem during the pandemic. He has also committed to a somewhat socialistic vision with a $3.5 trillion plan for workers and families, as has vice chancellor Scholz in Germany with his own version of programs, after the failures of unregulated forms of capitalism. Scholz goes so far as to say his mission is to show that there is really no such thing as a self-made man, that it is help from society, his fellow citizens, and government, that makes it possible for him to do his work. In a sense the world is shifting away from Reagan forms of capitalism without regulation after seeing disastrous results during the pandemic. Not just China. Some form of government guidance and regulations are now seen as essential in China, the US, UK, Germany and India for a better society and a better, healthier life, and for opportunity for all in each country.   ...

LyrArc Article Gist
Herbert cites figures from the Center for Labor Market Studies at Northeastern University in Boston which divides households into 10 groups based on annual household income at looks at unemployment levels in eachfot 4th quarter 2009. The highest group with incomes of larger than $150,000 had unemployment of 3.2%, the next group at $100,000 to $149,999 at 4%, households earning $60,000 to $75,000 had jobless rate of 6.4%, with $50,000 to $59,000 a 7.8% jobless rate. Its only when you get $40,000 to $49,000 that you see jobless rates of 9%, that is close to the national average. The worst pain is in the lower middle class groups with the 7.8% and 9% unemployment and in the income groups of $12,500 to $20,000 which have 19.1% unemployment. For workers at the bottom the unemployment rate is 31%! The workers in service industries, such as food preparers, building cleaners, less educated, high school dropouts, blue collar workers, workers in the construction industry, many blacks and Hispanics, are all hard hit. This also gives some idea why the jobless situation does not cause the same anguish in the media coverage as most of it is concentrated among young people, immigrants, illegal immigrants, Hispanics, minorities, and in service and construction industry type occupations. This creates a fragile situation from a social cohesion perspective especially as the lower middle class is also in the same situation and this combined with the working class blue collar and service and construction workers is a large segmet of society....

LyrArc Article Gist
Two weeks after his election Donald Trump says the U.S. will not join the Trans Pacific Trade Agreement during his term in office. Barack Obama took seven years to negotiate the trade agreement which was opposed by trade unions, the auto industry and was unpopular in the midwestern U.S. because of the impact of trade in hollowing out the manufacturing sector. Here Frank Sieren of the DW.com points out that the agreement was not really about trade, as most of the gains of trade had already been realized according to experts. It was part of the "pivot to Asia" to maintain American dominance in the region, says Sieren. After China pulled together some Asian and European countries into its trade agreement, the Regional Comprehensive Economic Partnership (RCEP), the U.S. pushed for TPP as a counterweight to the China sponsored trade zone. China says it will try to integrate the countries in TPP into the trade zone it has sponsored. President Trump has said that the U.S. is better off negotiating agreements with each country and not getting into multilateral trade agreements. He fought the election campaign on the basis of the opposition to TPP and trade agreements that unfairly hurt American workers. This could have provided the 110,000 margin of victory in the states suffering from the hollowing out in manufacturing such as Michigan, Wisconsin, Ohio and Pennsylvania. A similar hollowing out in Ontario favored Justin Trudeau's Liberals against the Conservatives in Canada's election. ...

LyrArc Article Gist
The skills to navigate different personalities and work patiently on the issues surrounding changes to the U.S. tax system of Rep. Dave Camp (MI), chairman of the U.S House of Representatives Ways and Means Committee, will be immensely useful in the effort to make changes to the U.S. tax system. Camp works well with fellow House Republican leaders Boehner, Ryan, Cantor, and his Democratic counterpart in the U.S. Senate Max Baucus. Camp is a good listener, refuses to engage in partisan criticism, and has the patience to work through difficult issues of achieving savings and keeping fairness in the the tax changes. Earlier efforts to achieve consensus in late 2011 failed, making it even more important to have leadership which can create productive debate and bridge the differences. The tax changes are part of the overall effort for U.S. economic recovery by reducing the deficit.

LyrArc Article Gist
Air pollution concerns are leading China's National Development Reform Commission to set a higher goal for cleaner energy. The NDRC plans a 52 gigawatt increase in installed capacity for green energy in 2013, an increase from 36 gigawatts in 2012. This includes 10 gigawatts for solar energy. Clean energy will take up 57% of additions to installed capacity in 2013, compared to 35% in 2010, according to Tian Miao, an energy anayst at NSBO.

LyrArc Article Gist
Mark Gilbert, a visiting associate professsor of European History at the John Hopkins School for Advanced International Studies in Bologna, describes the crisis of the political culture in Italy that goes deeper than the economic crisis and has lasted for most of the post war period. Gilbert says the political parties have avoided implementing financial discipline and opening up the economy for most of the last two decades, except for brief periods, and did not take the opportunity of joining the eurozone to make serious changes. Italy has many parties with the Democratic Party having 25-30% support in the polls and Berluconi's People of Liberty (PdL) having the support of 20-25% of voters. There is also the Northern League, the Third Pole of centrist Catholic parties, the Italy of Values party, and the Ecology Freedom party. Italy lacks a national consensus on making the changes. The risk is that Monti will not have enough time to make the changes, as new elections may be held by April 2013. His government was formed as a government of technocrats led by former EU commissioner Mario Monti, after President Napolitano forced the PdL, the PD, and the Third Pole to work together to support the new government. Changes are needed in the legal system, local government, the health sector, and in the university system. One factor favoring Monti is that 90% of Italians voters are dissatisfied with the political parties, according to Italian think tank ISPI. For Italy the EU crisis has in this sense a positive aspect as it has forced Italy to come to grips with economic and cultural changes under a leadership from outside the political system....

LyrArc Article Gist
This Reagon Memo from 1980 was written by his advisors George Shultz, Milton Friedman, Paul McCracken and others before his first inauguration in 1980. It provides the new president with prudent advice on policy and methods to deal with soaring inflation and a stagnant economy. Its relevance today lies in the emphasis on charting out a long term plan for growth by encouraging private investment in the economy and providing a sure framework for the private sector to generate expansion.

LyrArc Article Gist
Women executives at a panel discussion sponsored by Columbia Universiy in New York, in Dec. 2014, provide ideas for getting more women in Tech fields. Ideas include, mentoring, with early education exposure to technology careers- as early as middle school. One executive says she takes in 150 female high school students to Washington D.C. for leadership training. Other ideas are to turn maternity leave into a positive feature of women's lives by letting women who do well keep their duties by delegating them to others while they are away, and making a smooth pathway back to work full time. The suggestion is to allow a gradual transition to ramp back up to full time work, and allow flexible hours, working from home. In daily work women are encouraged to look for partnerships with other areas of the organization for getting results, and being sensitive to which areas of the organization they need to build support in.

LyrArc Article Gist
There will be continued pressure on the euro which is trading at $1.26 against the dollar. There is renewed pressure from Western European bank's involvement in the economies of Eastern European countries. Austria is most affected with about 50% exposure to Eastern European countries, Italy has about 27% of total bank claims with focus on Poland and Croatia, and the Scandinavian banks are heavily involved in the Baltic countries. The Hungarian forint, the Czech koruna and the Polish zloty are all currencis in steep decline. The IMF has rescue packages for Ukraine and Hungary.

LyrArc Article Gist
This analysis of coal use using graphs shows a clear move away from coal in the world, except for two growth markets China and India which account for 60% of the increase in coal use since 2008. India has gone black in its shift to increasing use of coal. China has begun the shift away from coal to address the smog over large urban areas, poor air quality and health impact of coal use. Because China used five times the coal used by India in 2017, the overall impact in China and India is showing a shift away from coal to hydropower, other renewables including solar energy. It is likely that India will make the shift following China's example in the future. 

The trend is clear when one looks at the incremental terawatt hour and where it comes from. The shift is clear to renewables, hydropower, and non fossil uses in the rest of the World and China which account for most of the coal use in the world.

 

LyrArc Article Gist
Rep. Dave Camp, House Ways and Means Committee chairman, representing northern Michigan, says every deduction in the tax code is there because of a reason, and powerful lobbies will oppose any changes. The best he can do is work himself out of this job as he will have to tackle the Democrats on entitlements, the business lobbies on tax loopholes, and other lobbies protecting their preferences in the tax code. He plans to achieve a simpler tax code with lowered rates of 25% for business and earners above six figures, and 10% for everyone else. The approach he is taking is to be revenue neutral when tackling tax reform, in the belief that the economic growth generated from a simpler tax code and lower rates would generate revenues of 18 to 19% of GDP, up from about 16% today. He says the economc cost of not getting this done to get the economy rolling again is so high that he is upbeat that both sides can come together after the election no matter who wins. He is also looking at a repatriation tax of 5% on profits kept by American companies overseas, which would boost revenues for business which could be reinvested in stead of sitting idle. Today the much steeper tax rate on repatriation makes businesses reluctant to bring it back....