LyrArc Article Gist
Wall Street Journal reporters Walker in Berlin, Forelle in Brussels, and Meichtry in Rome, reconstruct the events during critical days after the indecision and failure to reach agreement during the July summit of eurozone countries. This took the form of intervews with leading players and over 25 policy makers. What emerges are accounts of how Germany's Angela Merkel, daughter of a Lutheran pastor, and protege of Eurozone founder, former German chancellor Helmut Kohl, handled the crisis. Merkel was widely criticized in the media for indecision. What emerges is an account of a leader who took decisive action at key moments in the crisis- leading to the formation of new governments in Greece and Italy taking action to improve finances, and negotiations with banks represented by the International Finance Corporation leading to acceptance by banks of a 50% loss on loans to Greece to reduce Greece's unsustainable debt burden. Merkel also worked with the European Central Bank's departing president Frenchman Claude Trichet and new president Italian Mario Draghi to resist French president Sarkozy's efforts to have the ECB assume responsibility for the crisis through large scale buying of Italian and Spanish bonds; which was opposed by German public opinion as a backdoor way of having German taxpayers assume responsibility for European debt. Shown are three critical moments when Merkel intervened. In October 2011, after Italian prime minister Berlusconi reneged on promises to make pension and other reforms to improve Italian finances because of political resistance. He survived a parliamentary no-confidence vote by one vote. Merkel took the lead on October 20, by directly calling Italian President Georgio Napolitano on the phone, to urge him to take action for forming a new government in Italy. The result was Napolitano talking with all political parties to form a new government, leading to the formation of a government by a non-political figure respected in Italy, former EU commissioner Mario Monti. A day earlier, on October 19, French President Sarkozy met ECB president, Trichet, at an event honoring him as departing ECB president in Frankfurt's Alte Oper concert hall. Trichet, Merkel and Sarkozy met in a side room. Sarkozy asked for decisive help from the ECB for large scale buying of Italian and Spanish bonds to lower yields, which had reached 7% on Italian bonds. Trichet responded that the ECB's charter did not allow it to finance governments, with the meeting ending in a shouting match between the two leaders. On October 21, EU and IMF inspectors warned that Greece's debt was reaching unsustainable proportions and austerity measures alone would not work, unless the bondholders, the European banks, took losses of 60% on their excessive lending to Greece. At this point France agreed to the German position arguing for this level of bondholder haircuts or losses, fearing the prospect of large future bailouts that would jeopardize France's triple AAA credit rating. The July 2011 summit accord had only provided for 10% in losses for bondholders. On October 27, at a meeting that went past midnight, Merkel and Sarkozy called IIF head Charles Dallara, who headed negotiating for the banks, to EU headquarters in Brussels. Merkel handed Dallara an agreement containing the 50% bondholder loss demand, and told Dallara- "This is the last offer." Merkel was saying banks would be left with nothing if they rejected it and Greece defaulted. Dallara called bankers and the IIF accepted Merkel's agreement. The final moment that October came on October 31, when Greece's prime minister Papandreou said he would call a referendum on the bailout provisions and austerity measures demanded by the IMF, the EU and the ECB. Bond markets reacted negatively to the announcement fearing a rejection and a Greek default. The Group of 20 leaders was meeting in Cannes, France on Nov. 2, 2011. Papandreou was asked to come to Cannes for a pre-summit meeting. Here Merkel told Papandreou- "the real question" for the referendum was, "Do you want to be in the euro, or not?" Days later Papandreou, lacking support in Greece from political parties and opposition inside his party, submitted his resignation. A non-political figure respected in Greece, former ECB vice president, Lucas Papademos, was appointed prime minister to head a Unity government. Polls after the appointment showed three fourths of Greeks said that this was "a positive step for Greece," with Papandreou's party getting only 11% support and the opposition led by Samaras about 20%. The criticism leveled at Merkel is that Germany should take responsibility for debt throughout the euro area through the issuance of eurozone bonds or the ECB buying large amount of bonds of Spain and Italy. Merkel faced strong opposition inside Germany and from the Bundesbank to this idea. The other criticism was based on austerity measures worsening the finances of Greece because of a lack of growth in the economy, which is true; yet Germany may see the situation in Greece as taking a long time to be resolved in any event because of excessive and faulty financial management. For Italy and Spain putting finances in order was a necessity, and austerity measures should lead to short term sacrifice but improve prospects for the long term by returning the economies to growth. Another criticism is the installation of governments that lack popular or electoral support. As the polls in Greece showed the Unity government there has far greater support and public opinion blames the politicians for the huge mess. In Italy, Berlusconi was widely seen as losing popular support when he resigned. And in Spain Mariano Rajoy, the newly elected prime minister, was elected with a huge majority in parliament following winning in local government elections. Merkel also held her own party, the Chrisitian Democrats together at the recent Leipzig convention. Mario Draghi, was elected with German support to head the European Central Bank. He has long argued for better management of Italian finances as head of Italy's central bank. Draghi was able to support Merkel with carefully planned and managed actions. First to reduce interest rates to support economic growth in a slowing eurozone. Following this with the ECB's Long Term Financing Operation in late December 2011, to provide unlimited loans to European banks at 1% interest for three years in exchange for a broadened list of collateral deposited at the ECB. In a final twist in this drama, Charles Dallara, who was a key negotiator for the U.S. Treasury in setting up the Brady Bonds- that converted bad Latin American government debt owed to U.S. banks in the 1980's into long term debt with large reductions in principal owed and lower interest rates. This was in exchange for guaranteed repayment with 30 year U.S. zero coupon bonds. Dallara was now a negotiator for the banks to reduce the chance of the very same bondholder haircuts that he had negotiated in an earlier period to solve the Latin American debt crisis. Other players in the drama were Axel Weber, head of the Bundesbank, Germany's central bank, who resigned after strong and outspoken opposition to the ECB's large scale purchase of bonds of Greece, Italy and Spain. Jens Weidmann, his protege, who replaced him. And Jurgen Stark, German representative at the ECB, who also resigned in opposition to Germany assuming responsibility for eurozone debt. ...

LyrArc Article Gist
Cohn and Monkovic of the NYT show how the shift of blacks, hispanics, and white collar professionals is doing to the demographics in the eastern, coastal and southern states, and how this will impact 2016 and future presidential elections in the U.S. This includes North and South Carolina, Georgia, Florida, Virginia, and Florida. It means the electoral map may have changed by 2016 and 2020, as the less educated voters in rural areas are balanced by a growing minority and white collar vote in the suburbs and major cities of the South.

LyrArc Article Gist
Gates experience one rainy night in March, at Dover Air Force Base in Delaware, welcoming 4 dead soldiers who lost their lives to a roadside bomb on a rutted road near Jalalabad, Afghanistan, provides an insight into what he sees as important for the US military. One is to address the realities of the war that is facing the US in the now, not some theoretical conventional war as the Pentagon is overly focused on. This war is fought in insurgencies in Iraq and in the Pakistan-Afghanistan area. And even the takeover of nuclear weapons by Taliban, is not ruled out with the collapse of the government in Pakistan. So he sees reason for doing things quickly. At Dover that night, Gates expressed his anger to his staff, "find out why they had'nt gotten their goddamn MRAP's yet (Mine Resistant Ambush Protected Vehicles). Gates went into the 747 carrying the draped coffins, and knelt alone and prayed for 5 minutes. Gates was President of Texas A&M University, before he took the assignment at Defense during the last 2 years of the Bush administration. He knows the ways of the bureaucracy, and is a persistent and effective when faced with lack of cooperation and delays. When the field commanders in Afghanistan said they needed 40 Predator combat air patrols instead of the 12 they had, Gates went around the bureaucratic delays and had his task force set up and and doing problem solving down to details. They went about getting more flying time, and pilots, and control stations in the air force to support this. He keeps presentations limited to 45 minutes, and inists all slides be turned in the day before, for him to look over carefully. And he is decisive in making changes. The Army Secretary was asked to come to Washington immediately, and fired on the spot, not Gates says for the appalling conditions at Walter Reed Army Hospital, but for not acknowledging that problems existed and taking quick action to fix them. And Gates is using the 2010 Defense budget to steer away from large scale conventional weapons programs, and get more money for the immediate needs of the field commanders in the wars being fought today. He makes it clear in talking with lawmakers, that "listening to our troops and commanders, unvarnished and unscripted, has from the moment I took the job been the greatest single source of ideas on what the department needs to do." In doing this he has to face up to the bureaucracy and set ways of doing things at the Defense Department, things that were never questioned under his predecessor Rumsfeld. In 2008 the generals who run the Army, Navy, Air Force, and Marine Corps formally "non-concurred" with the classified version of Gates's National Defense Strategy, which said it was necessary "to take additional acceptable risk" in the area of conventional war so that the military could improve its ability to fight irregular wars. Gates met with all the defense chiefs to listen to their objections, and decided to draw his own conclusion after thinking it over, that the reasons given "were non-compelling," considering the grave dangers that the military was facing in existing wars. Gates is convinced that its his job to give the troops in the field the equipment and resources they need, and he is not letting the military brass or officials block the way. He does not let the criticism affect him. Gates is very quiet when he listens to arguments presented on the other side that he does not share, responding in a thoughtful and controlled manner. Last week, Jaffe of the WPost says, Gates flew to Afghnistan to ask for the resignation of Gen McKiernan the field commander there, a man he had chosen 11 months earlier, but now felt was the wrong man for the job. During this trip he visited a new base being built in southern Afghanistan, and met four marines whose MRAP vehicle took the blast from a roadside bomb, all survived with minor scratches and injuries, and one broken arm. Gates was mightily pleased. ...

LyrArc Article Gist
Israel looks to the future imagining a future without Netanyahu as his rivals gain a big lead in the polls following the announcement of corruption charges against Netanyahu by the Attorney General. Benny Gantz the rival is heading a new party that brings together people in the middle of Israeli politics including Mr. Lapid. 

Gantz is focussing on pocketbook issues even though his credentials as former head of the armed forces makes him a suitable choice for Israelis concerned about security issues. He promises to end economic inequality, build new roads and affordable housing, overhaul the education system and end consumer price gouging. Gantz also brings to Israelis worried about Netanyau's politics of division something different- a sense of openness and a fresh start after the Netanyahu years.

LyrArc Article Gist
Mossberg says look for 500 gigabytes of storage, 4 gigabytes of memory, an i3 to i5 or i7 Intel processor, in buying a PC or laptop. He suggests waiting till fall 2012 for the new Windows 8, and summer 2012 for the newer PC's designed to use Windows 8. This will be a big change from before, because Windows 8 is designed to use the touch feature of tablets. Ultrabooks are a bit pricier, making PC's and laptops the lower cost option. Laptop makers are trying to increase margins on the machines. Mac's also will get a newer operating system called Mountain Lion by the fall.

LyrArc Article Gist
Apple maintains its grip on the tablet market with its iPad at $499. Experts at Wharton and the Stern School of Business say Apple has found the strategically right price to maintain a dominant share of a rapidly growing market. So rapidly growing that some estimates show tablet computers surpassing PC sales by 2013. Apple CEO Tim Cook, has the logistical expertise that helped him work out the right price. The Kindle at $199 is hardly profitable by some estimates. Samsung has a smaller tablet at $499. In 2011 Apple saw its tablet market share decline from 87% to 68%, according to IDC Research, but still able to get a dominant share of sales. Apple uses the same approach to pricing for the iPhone. The profits generated on large sales and higher margins helps Apple invest in new products.

LyrArc Article Gist
White House counselor Steve Ricchetti says with the pace and activity and hours at the White House, Biden is outworking people around him. The special counsel Robert Hur's report on Biden's retention of classified documents has part of it on the president not remembering the date his son Beau Biden had died in 2015. The president was furious that special counsel Hur had raised that question, saying it was none of his damn business. The special counsel's report also says Biden had kept a memo in 2013 that he had handwritten and sent to then president Obama outlining his opposition to the surge of troops in Afghanistan. It was something Biden had kept with him as he understood the flaws of the Bush-Obama policies in Afghanistan. Where Republicans and some Democrats have seen a hasty withdrawal  from Afghanistan under Biden the nation sees the need to rededicate its resources to building a strong economy that meets the needs and aspirations of the American people. Even the British Empire in India for 200 years had wisely stayed away from Afghanistan for 200 years. It is the wisdom and experience, the ability to work with colleagues in Congress in the way Lyndon Johnson was able to do to pass his Great Society and Medicare initiatives, that benefits the nation, something that comes with age. It is this wisdom, composure and determination that has created the strongest American economy not seen in decades and a path to an even stronger economy in the future. ...

LyrArc Article Gist
John T. Chambers has some very useful guidance on questions to ask and what to look for in hiring. Fairly simple but a lot of attention needed to get the right answers and make sure the hiring is done right. Here he talks to NYT's Adam Bryant. How did Chambers respond to dyslexia as a child? See it as a curve ball said a teacher,once you see it and observe that it comes a certain way, then you can handle it. He reads right to left. And he learned about near death experiences with Cisco in 2001. And he learnt from Jack Welch why they are very powerful and useful. He learnt from his parent, an obstetrician, that you are best being calm when there is an accident happening and people are not. People express emotions at such times and this says little about what's really going on, said his dad. Chambers admits his virtue and fault about being a command and control person, possibly from his early training at IBM. But he is open to changing when pushed, he says. He says his wife of 35 years keeps him from becoming too self-conscious. Questions he asks new people interviewed about joining the company. Tell me about your results. Tell me about your mistakes and failures. All of us have mistakes and failures, he says, so someone who says "I can't think of one, immediately loses credibility." The ability to be candid about mistakes made, and what they would do differently this time, helps make people learners and adapters as they go into different things. He says that he learns more from these two questions than from anything else. He also asks who are the best people you recruited and developed, and where are they today. He does this one gently , which is to figure out if they are oriented towards the customer or merely see the customer as someone who gets in the way. And then he looks for communications skills, and the key part of that is listening. He likes to see how they listen, how they interpret, and are they willing to challenge you. And then he looks for their knowledge in the industry segments, and the areas he is interested in. And that kind of covers the things he has looked for in the last 20 years. For today's world he looks especially for collaboration skills, teamwork skills, and their use of technology to share information, collaborate and work as a team. As its not immediately clear whether someone who says he is a team player is actually a team player, he checks with other people who know the person. Chambers grew up in a individualist world. So he is candid about this. He says that when he was trained it was about me and winning as an individual. The future, he adds, is about how do groups think and work together collaboratively. And how can one add discipline to that through practice and capability, and being able to use the necessary technologies. ...

LyrArc Article Gist
Paul Volcker was Fed Chairman from 1979-1987 and is now 81 years old. He is best known for taming the runaway inflation of that period. He is now the senior economic advisor closest to Obama and they have a developed a sense of rapport and trust through frequent discussions and meetings in which Obama has sought Volcker's advice, especially at critical junctures of the present crisis. So close is the association that Volcker now keeps a cellphone with him at all times and he has gotten used to Obama's messages at all times. And this week he is due to appear on the campaign trail with Obama for the first time. At a round table discussion with voters in Lake Worth, Florida, he will give his view on the state of the economy and the credit markets. This puts the 81 year old Volcker on the campaign stump for the first time. In his debate with McCain at Hofstra University Obama said "let me tell you who I associate with. On economic policy I associate with Warren Buffett and former Fed chairman Paul Volcker, who have shaped my ideas and who will be surrounding me in the White House." Obama is increasingly relying on Volcker. His staff now routinely reviews policy proposals and speeches wit Mr. Volcker. And conference calls and face to face meetings of economic adviers are increasingly organized to accomodate Mr Volcker's schedule. When there is a discussion of the financial crisis Jason Furman the campaign's economic policy director says the most important question for Obama is "what does Paul Volcker think?" It all started when Obama sought advice from Volcker through his economic adviser Austan Goolsbee, a 39 year old University of Chicago Professor. The bond between the two started with a dinner invitation in June 2007, when Obama was still a long shot candidate, setup by Mark Gallogly, cofounder of Centerbridge partners, a New York private investment firm. He invited a number of financial executives like Gary Cohn of Goldman and Fleming of Merrill and Mr. Volcker. At a private dining room in a Capitol Hill restaurant Volcker was seated directly opposite Obama. That night on a return flight to New York Volcker told the group that he "was genuinely impressed" by the Senator from Illinois. When this was passed on to Goolsbee his reaction was- "Volcker is a legend.. we want to pick his brain." Since late summer 2007 Goolsbee had regular discussions with Mr. Volcker. Some of them were about including Volcker's ideas that the housing downturn would snowball into a larger financial crisis into Senator Obama's policy positions. A September 2007 speech by Obama to Nasdaq stated that the oversight lapses and abusive practices would cause the markets to "be ravaged by a crisis in confidence." Since then at almost every turn of the crisis after Bear Stearns collapse, Obama and Volcker have consulted together....

LyrArc Article Gist
Jean-Philippe Courtois, president of Microsoft International talks about Windows based smart phones and Nokia's smartphone based on Windows 8.

LyrArc Article Gist
James Stewart of the NYT describes the remarkable turnaround at Best Buy executed by Hubert Joly, a graduate of the French Etudes de Politiques in Paris and former CEO of Swedish hotel and travel company Carlson. He did this by carefully analyzing the areas where Best Buy was falling short and not delivering for customers a winning proposition. Statistics showed Best Buy had fallen behind on price. One survey showed only 23% of respondents found Best Buy prices were lowest, compared to 71% for Wal-Mart, 56% for Amazon, and 38% for Target. That Wal-Mart and Target are able to hold their own- in the case of Target with 38% along with some other advantages of customer targeting- against showrooming and internet retailers such as Amazon, and the 56% for Amazon which showed Amazon was itself not a price leader, gave Jolly insights into the strategy to pursue. Jolly took out costs elsewhere and made Best Buy the place where the shopper would get the lowest price and much more in terms of convenience, service and advice. The strategy has worked but Jolly is not complacent saying that in this business your success is only as good as your last call. Best Buy's stock is up 240% and is one of the best three stocks of 2013....

LyrArc Article Gist
Raghuram Rajan warns about the difficulty of central bankers worldwide to escape from the scenario of ultra low interest rates.

LyrArc Article Gist
Millions of people who are first time users for whom affordability is an issue in countries from Nigeria, Ivory Coast to India, Indonesia, are connecting to the internet. This time not with smartphones made by Samsung or cheaper Chinese smartphones made by Xiaomi or Huawei, but by using a new smart feature phone that cuts down the price such as the Jio phone by Reliance Jio in India. This costs only about $25 compared to $100 to about $300 for lower cost smartphones These phones provide basic features, some apps, messaging, internet access at low cost. About 3.4 billion people without the money to buy costlier smartphones are turning to this just like people did 20 years ago with lowcost Nokia basic phones until smartphones appeared. Monthly cost for mobile data access to internet is $2.50 a month for all the mobile data he needs or Rs. 1750. Batteries last for days in countries where electricity is unreliable. A fruit vendor in New Delhi makes $80 a month or  Rs 5600. A Jio phone fo him costs Rs 1400 compared to paying Rs 7000 or $100 for a Chinese smartphone. Reliance partnered with Hong Kong's KaiOS Technologies Inc. which makes the most widely used operating system powering smart feature phones. Jio sold 60 million Jio phones and 370 million such smart feature basic phones are forecast to be sold in 3 years by 2022. Reliance Jio is being imitated by others. Orange SA of France has launched an inexpensive smart feature phone bundled with inexpensive mobile data plans in Ivory Coast, Burkina Fso and Cameroon and plans to put this in other former French colonies in Africa and Arab countries. WizPhone plans to introduce a $7 phone in Indonesia. KaiOS is working with Brazilian manufacturers to roll out cheap phones there.  In advanced countries Nokia is offering revamped versions of its candy bar shaped phones with added web access to enthusiasts. These cost $100. A whole new group of people who could not afford a smart phone are now being connected after Jio's pioneering effort in India. ...

LyrArc Article Gist
During a public dialogue during the federal government's open day German Chancellor Scholz takes time to go over the origins of the war in Europe as he understands it. Of Russia acting "clearly with the intention of conquering its neighboring country," in an imperialist manner. Here is what he said- On Nato During talks before the war started in February when he met Putin in Moscow Scholz assured Putin that Ukraine would not join NATO "in the next 30 years." NATO was never a threat to Russia even though Putin says NATO's increasing eastward expansion was to the detriment of Russia's interests. On the origins of the war in Europe- Scholz says Putin launched the war for "completely absurd reasons." During his talks with Putin for example he says Putin told him that Belarus and Ukraine should not be independent states. "This is a war that Putin, Russia, started, clearly with the intention of conquering its neighboring country. I think that was the original goal." "Putin actually had the idea of swiping a felt-tip pen across the European landscape and then saying, 'This is mine and this is yours.' " Something Germany could not accept. Scholz condemns Putin's imperialism. He compares Russia's actions to the early days of imperialism. Scholz was reported to be reading Cambridge historian Brendan Simms book Europe- The Struggle for Supremacy in Europe from 1453 to the Present, before the war started. Simms shows a Europe that fought intermittent wars for supremacy between European powers Spain, Britain, Dutch, French, Germany, Austria- Hungary, Russia, Sweden over most of the period 1450 to 1950. The last part of the period was marked from 1850 to 1900 by an openly imperialist land grab for territory in Africa and Asia between Britain, France, Japan and Germany.  The period 1950 to 2000 marked by the Cold War between the US and the Soviet Union and China.    On planning for the war in advance- DW.com reports that Olaf Scholz is convinced that Putin planned this war long before the Russian invasion of Ukraine on Feb. 24. On the future of the war- Scholz says he will not end the dialogue with Putin. Scholz and Germany, Biden and the US want to show that the imperialist type of expansion into neighboring states is no longer accepted, not for Russia or China. Scholz says Russia is currently engaged in gaining territory in eastern Ukraine, but it is not certain that it will stay that way, so giving in is not a sensible strategy.  Ukraine needs the Black Sea ports and the area around Kherson on the Dnieper river to maintain its economy through exports of foodgrains. There is international consensus that these exports are essential to most of Africa and other parts of the world. The war in the remaining part of 2022 into the winter is being fought in this area. Another area of international consensus is that of the refugees mostly women and children in other parts of eastern Europe, and the displaced people within Ukraine moving from the east and south to the west. For the first time the US and Germany are providing Ukraine with the air defense systems that it needs to protect refugees, something that was missing for the many early months of the war leading to millions of refugees inside and outside Ukraine.       ...

LyrArc Article Gist
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. ...

LyrArc Article Gist
Argentine effort at Price Controls through price constraints, jawboning and controls using an Internal commerce Minister who works out price increases allowed for different products. The aim is to control inflation. The government wants to keep the peso where it is and not let it get stronger in relation to the dollar as agricultural exports are denominated in dollars and with the idea of keeping exports high to generalt a surplus and build Argentina's foreign reserves. Unemployment is down to 8% from 18% according to statistics cited here and Argentina is making a significant recovery. All this happening in the background of the Argentine election in which Mr. Kirchner's wife Christina is running against Mr. Kirchner's former Finance Minister Roberto Lavagna, and is expected to win handily because of the success of the Kirchner years in improving the economy. .

LyrArc Article Gist
Hong Kong's new chief executive, Leung Chun-ying, is intervewed by the WSJ's Te-Ping Chen, Jeffrey Ng, and Robert Thomson. He was elected by 1200 business and political leaders in 2012. The term ends in 2017, by which time China says it will hold direct elections with universal suffrage in Hong Kong. Leung plans pro-growth policies and says Hong Kong's growth rate of about 4% for the last two decades lags too far behind Singapore's over 6% growth rate. No action is planned to reduce property prices by providing new land supply. He sees more room for growth in maritime insurance and ship financing services to complement Hong Kong's development as a global shipping center, citing London as an example. To improve the problem of cramped housing space and small apartments he is looking at ways to build new towns in the New Territories, which are on the border with mainland China. Leung will not change Hong Kong's flat tax structure, and is not going to follow Singapore's example in granting tax holidays. Growth in China will be about 7% in 2012, and future growth will depend on how fast China shifts from export led growth to domestic consumption....

LyrArc Article Gist
Mr Greenspan's libertarian views influenced by a novelist of all people, who is frail just like all of us however intelligent her views may seem, when taken as dogma. Taking his cue from Ayn Rand, who presented collective power as evil force set against the enlightened self-interest of individuals, he proceeded to let this enlightened self-interest run free in an ambitious American experiment devoid of all restraints and common sense. He came in in the days of Reagan and "the evil empire " and the philosophy of Milton Friedman of minimal government intervention in markets, and the view presented by Europeans like Hayek about the economy and freedom. But views become dogma and then defeat common sense. Buffett used common sense and always considered human beings and their frailties as part of the problem as well as the opportunity. Greenspan let these views of his defeat plain common sense and excluded the role of human beings and their weaknesses, in any scheme of things. This undid him and his reputation in the end as far as derivatives like mortgage securities are concerned. Plain common sense required as Buffett did- that as the risks of derivative contracts increased as they practically became the way risk was managed and distributed throughout the economy- to consider their opaqueness, and the way risk was distributed with the failure of one financial firm bringing down the others and the whole economy; with the way each were interdependent and tied up in the risk distribution for the capital that helped run the whole economy. Derivatives were created to soften risk or hedge against investment losses. For example some of the contracts protect debt holders against investment losses on mortgage securites. Their name comes from the fact that their value derives from underlying assets like stocks, bonds and commodities. What they allow to happen is the increase in leveraging and the taking on of more risk as for instance issuing more mortgage debt or corporate debt. As these contracts can be traded they enable companies to take on more risk by spreading the risk among more and more parties. The original issuer of this debt has the sense that somehow, as one expert put it, that by tossing this packaged as a complex derivative type security into outer space this risk would somehow disappear in that cosmos, so that more of the same could be done into infinity. Plain common sense like Buffett's would say otherwise and point to the danger when the whole scheme would get undone by the failure of some big financial firms, as the scheme becomes huge enveloping the economy, the very interdependence would bring down the whole economy. The very complexity of opaquenes of this way of dealing would make it impossible or difficult in the extreme to identify where the risk was lying, and take it out by firm governmental measures in an environment of fear. Requiring days not months for actions to work. This is what has happened. And the crucial weakness of overleveraged investment banking firms which depend on rollng over short term debt was not understood by any of the players, Congress, Greenspan, Summers, Rubin, Cox or Levitt or the quants on Wall Street with their elaborate models. All of these people worked to prevent Congress passing legislation regulating derivatives, or to silence the skeptics in Congress or government agencies as documented by Peter Goodman of the NYT. It was Chase's demand for more collateral of $5 billion to roll over short term debt of Lehman Brothers to pay for the perceived additional risk of overleveraged Lehman at 1:30 ratio of debt to capital, in an extreme risk averse environment, that led to the unraveling of that firm in a matter of days. Good common sense like Buffetts- who described dervatives like the mortgage securities as weapons of mass destruction, that were issued en masse and sent to remote corners of the world including a small town near the North Pole in Scandinavia- considered that this environment of fear of the unknown that brought down the investment banking firms in a matter of days, was also one face of the market. This had to be included in the arithmetic and understanding of the market. He also understood as plain common sense that there are no extraordinary theories and nothing extraterrestrial that will dispense with the basics and exercise of good sense That no matter what fancy name you put on it derivatives derived their strength from being less and less transparent and distribution and interdependence across a vast financial spectrum with higher and higher tight interlinking of financial firms to each other, with all their consequences in an unraveling making the ride down as painful and mass destructive as the joy ride on the way up. ...

LyrArc Article Gist
Greenspan testifes before the House Oversight Committee headed by Congressman Henry Waxman (D., California). Congressmen read back quotations from Greenspan where he talked about the resilience and efficiency of American free markets and defended derivatives and complex financial instruments. Some referred to the comments he made saying that housing markets would not collapse and the worst may well be over. Almost by 10 to 1 the readers responding to a WSJ poll say Greenspan was responsible for easy money for most of the decade and his lack of the most elementary safeguards for the economy instead defending derivatives and complex financial instruments, and considering the bubble in house prices as not the Fed's concern. Many used expletives deleted or the words "clowns" or "illiterates" for Greenspan and associates at Treasury. A congresswoman from Minnesota asked pointed questions about state effforts to stop predatory lending that were nixed by the federal authorites under Greenspan and Treasury's watch. She thensuggested that they the stewards of the economy try pragmatism and commonsense for policy decisions. Describing the present crisis he seemed so out of touch that when asked about rising foreclosures and need to stabilize home prices, he still was trapped in his libertarian ideology and impulses. He said transfer payments should be tried instead as modifying the mortgages would not be good in the long run when markets return to normal. He said this crisis has still some months to go. In these observations he showed that he has still not grasped the full extent of the crisis, as a realistic assessment of the economy suggests that the economic downturn has not really hit in terms of unemployment and drops in consumption, which will hit in 2009 and 2010 and years beyond. He looked old and worn out showing every bit of his 81 years, which begs the question how could he have been chairman for 17 years till he was nearly 80, as he was still Fed chairman just 2 years ago. There are term limits for mayors, and for President, how is it that there are no term limits for Fed chairman? Should'nt the Clinton administration or the Bush administration have made a new appointment to get fresh blood, fresh thinking, just as corporations do. Wells Fargo chairman Kovacevich is supposed to retire, even though he has good skills for accomplishing the merger of Wachovia having done this for Norwest. Bloomberg is fighting the term limits to stay on for another term and will need a special vote. Doesn't senility hit the best of us, and isn't there an age when people should have to retire from these positions, long before they get close to 80. An assessment of Greenspan watching him over the years would show that he loved data and data analysis, and trusted data as almost carrying infallible weight. As most of the data he looked at was for the postwar expansion of the USA economy, he saw as he himself testified this week data that showed the economy with small setbacks to be sure but on a constant upward trend. The way down he said in response to a question the data looks completely different, with fear and lack of trust and other things making this pattern have no relationship whatsoever with the way up. Greenspan and the nation's misfortune maybe that for too long the country's political leaders trusted over two decades a man who did not have the healthy skepticism of data even when it appeared to reflect certainty, and did not have the healthy impulses for safety and safeguards that surpass all ideological thinking, and a respect for basic ethics and common sense that goes beyond everything and puts it above everything else. This is a misfortune because these are qualities required for good leadership especially leadership entrusted with such huge responsibilities which can never be taken lightly. ...

LyrArc Article Gist
The economic effects of US and German-French sanctions on Russia ar shown here in this Guardian article by Jim O'Neill, who helped coin the term BRICS that include Russia. The sanctions are likely to make the Russian economy even less significant than its current role in the world economy.  Renewable energy development and alternative use of LNG through new super terminals will likely be speeded up with new investments in Germany and the US. The result could be even faster depreciation of oil based assets for economies dependent on oil and gas exports. This would also contribute to the COP26 pledges for accelerated response to global warming. Western oil companies will also be put in a situation where an accelerated shift to renewables is seen as connected to less dependence on outside sources and so enhancing energy security. Productivity gains and gains in technology are also dependent on good relations with the economies of Europe and the US, Japan, for the rest of the world. This leaves economies that are left out in some form or other failing to grow up to their potential, a situation that accelerates over time and could be seen clearly in the next 5-10 years. This would impact growth rates and economic development in these countries and reverse years of gains in the last two decades.     ...