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Cook and Olson look at how U.S. shale oil firms have handled the slump in oil prices. Their report in WSJ says the shale firms have weathered the oil slump well, with production declines in 2016 of only 535,000 barrels a day compared to 2015. The Saudi decision to not cut production and let oil prices drop has affected mostly higher cost less flexible production for mega projects such as deep water projects and oil sands in Canada. Oil shale firms are expected to snap back, according to experts, as demand increases. U.S. production is expected to increase by about 700,000 barrels a day by end of of 2017, say experts.

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Krauthammer says it has become a cliche for people to say "politics is broken" in the U.S. John Beers, head of the Standard & Poors sovereign ratings committtee, also cited a broken political system in his rationale for the U.S. credit downgrade to AA+. This happened even as S&P repeatedly emphasized the triple A rating for France during this weeks (early August 2011) tumult in the markets over French credit risks. But in reality when you look closely and have a sense about the serious changes being discussed, says Krauthammer, something exceptional has happened, and the system is working. For the U.S. Congress and the government to come to grips with an ever expanding debt -with 39 cents of every dollar spent being borrowed as Alan Simpson of the Simpson-Bowles Commission never tires of pointing out- when both branches of government have ignored or shunted off the question with a "deficits are ok" attitude for decades- is a significant achievement. When one looks closely contrary to what S&P's and other opinion says there is actually a political process that is working in the U.S. compared to the process in Europe. In difficult situations when strong opinions are bare knuckling it with each other this process can be boisterous, but it only suggests an effort to wrap ones hands around the problems in a serious way. This is actually one of the strengths of the U.S. system with its checks and balances and its spirited dialogue. In business management Intel's Andy Grove called it "constructive confrontation," and he described this as positive and essential for business institutions to survive and grow....

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It makes for good political rhetoric, but in reality the flow of money goes both ways. A lot of investments are made by American companies overseas. This time the flow of oil money because of high oil prices, from the USA and Europe to the Middle East is being recycled back to the USA in the form of investments in the US through small equity stakes in companies and more so through purchases of capital equipment and services to build Saudi infrastructure projects. The $500 billion investment plan over several years in Saudi Arabia is to build everything from new cities, aluminium plants, electricity generation plants and chemicals and plastics plants. The fears and rhetoric are overblown, as the USA also invests overseas with holdings according to the Treasury department of $6 trillion of foreign stock and debt. The acceleration of foreign investment in the US is to be seen in the numbers, as the dollar gets weaker, and its more advantageous for Canadians and Euuropeans to invest here. Last year $414 billion of foreign investors money went into buying stakes in American companies and building factories and purchasing stock, according to Thomson Financial. Thats up 90% from 2006 and represented one fourth of all announced deals. This year in just 2 weeks foreign investors poured $22.6 billion in just the first 2 weeks of January, and that represents one half of all deals. Shows how quickly the picture is changing. One way of looking at it is that Americans buy a lot of foreign goods and the money Americans use to pay for a lot of imports is now being returned to the USA in the form of foreign investments. Note that foreign investment is desirable because it brings new ideas and technology and new management methods to the host country from other countries. These foreign investors in many cases are able to make these investments overseas because they are good at what they do, having them in the host country benefits the host country and shakes up competition in the particular industry in the host country that is receiving the investment. This is why economies once relatively unfavorable to foreign investors like Japan and S. Korea are now passionately seeking foreign investment to make their economies thrive through the exchange and inflow of new ideas and ways of doing things. The same can be and is true for the USA. The other aspect is that most of the investment is still from countries like Canada, Germany, Japan, S. Korea which are big free trade partners of the USA. Manufacturing investment is heavily skewed to European and Japanese companies. Foreign multinational investment (Sony, Toyota etc) grew to $43.3 billion in 2007 from $39.2 billion in 2006 according to OCO Monitor, and will accelerate significantly as companies like VW and other German companies find it cheaper to build in the USA and shift more manufacturing here. To get an idea why the rhetoric is overblown Canada spent the most in buying American companies, $65 billion in 2007, according to Thomson Financial. Russia spent $572 million and India $3.3 billion. How will this improve the chances of the USA making it out of this recession? Five million American work for foreign companies in the USA. Of these one third are manufacturing jobs. These jobs pay about 30% more than jobs in American owned companies. Figures from Treasury Department. There will be more of these jobs as companies like VW build plants here. Roubini Economics estimates that an infusion of about $300-400 billion is needed for the USA to overcome the effects of the current mortgage and credit crisis. $414 billion was invested in the USA by foreign investors according to Thomson Financial in 2007, going up from something like $200 billion in 2006. If this pace continues becasue of some of the same underlying reasons as the weaker dollar, stronger economies overseas, then $200 billion additional investments this year would add that much to a stimulus package of $150 billion by one estimate, to provide a boost of somewhere around $350 billion. In the range of the needed boost. Companies like IBM and GE which have significant investments in India and China and investments in software or infrastructure industries that are growing rapidly or Caterpillar with growth in construction overseas, may keep growing through this downturn. This recession may hit selectively and differently, not be a complete hit to the USA economy, and could prevent it from going beyond 2009 with recovery in 2010. ...

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Governor Newsom and the LA riots as events unfold in immigration enforcement of the nation's laws under the mandate received by the president in 2025. Newsom as governor is playing to the politics of standing up to a president seeking to fulfill a mandate that has received support in most parts of the country including California, to make all immigration legal. 

California's sanctuary laws set it up in a collision course with the Nation's immigration law enforcement. This is also true of other states. No matter how it is presented, including peaceful protests, the policies under Obama and the deterioration with open borders under Obama appointed Mayorkas and Biden's egregious lack of proper oversight in 2023 with the largest flow of 2.3 million illegal migrants across the border, have created problems for the Nation that will take time and patience to correct.

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Philipp Rosler, head of the FDP party and Germany's Economy minister, says he opposes further involvement by German taxpayers or the ECB in the debt restructuring for Greece. He pointed out that the current negotiations between Greece and the bondholders (mostly French and German banks) were about private sector involvement. Tax payers of Germany and other European countries are already making a contribution he said. The IMF is pushing for the ECB to take a haircut or writedown on the $40 billion of Greek bonds it holds to supplement the haircut taken by bondholders of over 50%. Rosler said in an interview with the Journal that Athens should keep its side of the bargain by implementing reforms and not letting them just be on paper. On Germany or the EU directly taking responsibility over the Greek budget, Rosler said this should be the responsibility of the Greek parliament. At the same time he pointed out that its important to have a specific and rigorous montiroing process just to be fair to taxpayers in the EU....

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About 30 million Mexican children ages 4 to 18 years will be taking lessons on television. School has been suspended since March. With 60,000 deaths and the third highest fatality rate after Brazil and the U.S. Mexico's government has chosen to take this step. Television reaches 94% of the country compared to 80% for the internet. Radio lessons will also be broadcast. Here children are shown taking lessons on television.

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Sheila Bair leaves behind a much stronger FDIC. William Isaac, a former FDIC chairman says she has had a positive effect on the agency by raising its profile and energy level. Under the Dodd-Frank financial reform legislation FDIC now has the powers to take over large complex financial institutions that are in serious trouble. Mr Gruenberg, who succeeds Ms Bair, has worked closely with her at FDIC. Jim Wigand, heads the new Office of Complex Financial institutions at the FDIC. One of the powers given by the legislation is for FDIC to have its examiners at financial firms to go over operations, providing backup supervision to the Federal Reserve and the Office of the Comptroller of the Currency. According to FDIC officials analysts should be in place at financial firms the FDIC oversees during the next 12 months. The FDIC is also working on a rule requiring banks with assets larger than $50 billion and other large nonbank financial firms to provide a "living will," a plan that would help regulators speedily and cleanly wind down a firm in a future financial crisis. In March 2011 the FDIC approved a draft rule requiring firms to submit these plans, along with regular updates and reports on the firms' current credit exposure. Ms. Bair says the proposal will be completed in August. Bair has also put in place FDIC managers with considerable experience who can continue the work of strengthening the regulatory system she started in 2006. In her work at FDIC Bair has performed a remarkable public service at a difficult time in the nation's history....

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Former senior directors in the National Security Council in the Bush administration who talk about a a complete change in policy towards Iran- changing policies pursued all the way back to President Carter and Reagan and the Ayatollah Khomeini government. New policy would be implemented through hard work on diplomatic negotiations to bring Iran and the U.S. closer by tackling many of the differences. The U.S. recognizing the Iran government and its interests in the region and Iran cooperating on the nuclear isssue to safeguard against nuclear proliferation. What this means is that the portion of oil price increases that are a result of political volatility, with Iran as one of the sources of the political volatility, will be affected as the political volatility from this source is reduced significantly. Also note recent news about Petrochina signing an agreement with Iran to develop large Iranian oil fields. This was a different aspect of the oil price increase as the lack of modernization and investment to develop oil fields in countries like Iran, Venezuela and Mexico was a problem on the supply side. In the case of Iran there was a squeeze as demand was growing inside these countries at the same time as there wasn't enough investment in the oil fields. Chinese participation means that this problem is being addressed differently from that if the western oil majors were involved, but still being addressed. Over time this should be part of contributing factors that are becoming evident for less price pressures. However it should also be noted that these changes will take some time to work their way. ...

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China to introduce local-content requirements for alternative fuel and hybrid cars to qualify for expected subsidies. This is aimed at Toyota which imports parts from japan for the Prius and assembles it in China. National Development and Reform Commission is drafting new rules for the automobile sector. GM's solution to keeping its own technology within the company is to establish its own research center in China. Previously it had a setup research center with its partner Shanghai Automotive Industry Corporation which has 1300 employees. The new research center in Shanghai will be devoted to hybrid and other advanced technologies. The way the Chinese market is growing and becoming a key part of GM's global market GM now sees this as a good investment especially in the light of the new local content rules and the fact that with its own research center the technology will not be able to be copied. Note that Honda, Ford and VW also have announced plans for their own research centers....

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After all the media talk about tariffs inflation- inflation is at 2.4% in May 2025. Tariffs was part of the toolbox of strategies under Lighthizer and Jamieson on getting fair world trade, and not like Congressman Hawley in the 1920's who understood little about the workings of the US economy. This fact the official media such as the WSJ and NYT, Wash Post, BBC need to get it right about the Hawley Tariffs. Hawley was born in rural Oregon in 1864 went to country schools, and was president of Willamette University in Salem, when it's population was 4258. As House Ways and Means Committee chairman he wrote the failed tariffs bill Hoover signed in 1930. DJT's US Trade Representative Lighthizer in 2016 led the successful negotiations with Japan under Reagan, Scott Bessent who leads negotiations on tariffs with China with USTR Jamieson, has a deep understanding and grasp of today's financial markets. Tariffs is one of the tools in the US toolbox to get Japan, China, South Korea to even the playing field for US companies and bring back manufacturing to the US. Without it China would not budge from its unfair advantage and would not negotiate in fairness. This is proven in the way Japan in the 1980s and China today are responding to the US position preparing their economies for not relying on sudden surges in exports putting whole industries and workers in America and Europe out of work and out of jobs. DJT says- "No we are not going to accept that," the EU is catching on and adopting a similar position, China knows that.  The media is irresponsible in presenting tariffs in a negative way, irresponsible to American workers the 10 million put out of work since 2000, and to American families and the Nation.   ...

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Electricity rates in France have been lower for years. As France generates 80% of its electricity using nuclear power which is less costly than using natural gas or oil, and as rates are set by the government , the rates rates have been lower. Now the French government has authorized rate increases of 8% to large users and 6% to midsize users in business. Rates will go up to roughly $57 a megawatt hour excluding transmission costs. The estimated cost per megawatt hour at the new nuclear plant in Flamanville, France, is $46.

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Election expert, Karl Rove, says following the win in the New York primary Trump has 845 delegates according to Associated Press, yet there are 950 delegates on the opposite side, putting the gap at 105 with the others. Trump has won 47% of the delegates upto this point, and needs to win 58% to get to the needed 1237 delegates for a majority. Rove, says Trump's threat to run as an Independent is an empty threat because of the filing date for running as an Independent for 12 states is well before the convention on July 18, 2016. By that date 12 states with 166 electoral votes will have already seen deadlines passed for registering as an Independent. The states include Illinois, Indiana, Florida, Texas. Michigan's date is during the convention. Registering as an Independent before the convention and some of the primaries would alienate his own voter base, says Rove. Another factor is that Trump would have to raise a significant number of signatures under the rules which is doable, but would create the impression of being in a spoiler role than a serious candidate....

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A new Nuclear Fuel Bank has private funding of $50 million from Warren Buffett, and additional funding from Kuwait, US, the EU, Norway, and the UAE. The total funding so far is $157 million. With this initial funding the International Atomic Agency has setup a global nuclear fuel bank that countries can turn to for developing nuclear power. At this time more countries are turning to nuclear power as a source of energy supplies. The development of nuclear supplies and purifying uranium also lends itself to the making of nuclear weapons. By providing an independent source the IAE agency provides a way to remove the ambiguity present in the development of nuclear energy. As the idea of atomic fuel banks is gaining hold Rusia also has set up a bank. When enriched at lower levels uranium can be used for nuclear energy. When enriched at higher levels this becomes a fuel for making atomic bombs. Which is why nuclear experts want to see the uranium turned into fuel rods as quickly as possible, because it is hard to turn the rods into weapons. This money will be enough to buy 80 tons of fuel- enough for refueling one reactor....

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The European Stabilization Mechanism, setup this week will bailout member states but also enforce strict conditionality. This conditionality means coming in and telling a country what it must do in taxes, spending and economic policy as a price for being rescued. This is amajor adjustment to the system setup originally for the euro, which had the European central bank for price stability and the individual states handling their own finances with no bailout provision. With bailouts made part of the system, each country gurantees the others debts in the eurozone. And this comes with strict conditionality. The agreement last week makes a big change to the original Lisbon Treaty, which had no provision for a bailout. Lagarde says it was wishful thinking to think that the euro would work without something more coercive and stronger discipline. Jolis and Carney quote a former German central bank chief Tietmeyer in describing the challenge facing the euro:"it requires the degree of solidarity characteristic of a nation." They cite the violence and protests in countries from Greece to France when austerity policies are implemented on the basis of such discipline....

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Britain's campaign finance laws limit each party to spending $29.5 million for the year before the election. British elections are determined by the results in 650 local constituencies, under a parliamentary system, making campaigning local. There too the laws are strict. Candidates for a parliamentary constituency have a limit of $60,000 for spending for the 5 months before the election, plus additional amounts depending on the number of voters and if it is rural or urban. Britain bans election advertising on commercial television and radio. Parties are provided pre-election broadcasts shown on commercial television and by the British Broadcasting Corporation. This stands in obvious contrast to the U.S. where an estimated $10 billion will be spent on the 2016 presidential election. Candidates spend as much time raising money as they do getting across their election message in the U.S. Britain also disproves the popular idea that election campaign spending inevitably moves in an upward trajectory. British researchers estimate the cost of the 1880 campaign to be 100 million pounds in 2002 prices, and the election spending in the 2010 British general election of 45.5 million pounds coming to less than half that....

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France's unemployment rate for youth 15-24 is over 25%. France's president Hollande has a plan to get companies to hire young workers on a permanent contract. The "generation contract" gives small business 4000 euros a year for three years to hire a young person on a permanent contract a the same time committing to keep an employee over 57 years in age. Companies with over 300 employees are required to set targets for hiring younger workers and keeping older workers or face sanctions. The program would cost France $1 billion a year and the government estimate is to generate 500,000 jobs in 5 years. A think tank OFCE sees this as generating about 100,000 jobs, because many companies would have hired anyway. The German approach is focussed on state sponsored apprenticeships and vocational training, which some French companies says is the right direction for France. German youth unemployment is 8.1%, with 2.6 million students at vocational schools, and 1.46 million apprentices. Beginning Jan 2013, Germany will support youth from other eurozone countries with language courses and travel costs to work in these programs in areas of Germany with shortages of workers....

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Questions raised by Nicholas Kristof of the NYT on Russian hacking during the 2016 U.S. presidential election. Kristof says the implausible or far fetched idea of foreign interference in U.S. elections is not as implausible as it may appear.

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Lower volatility in oil prices as a result of a new stream of shale oil supplies at competitive prices is good for oil producers and for consumers. This report in the WSJ shows that volatility and swings in oil prices have gone down with the ability of shale producers to respond to price signals or geopolitical situations and increase supplies. Shale producers can increase supplies in months compared to the years it would take for oil producers in offshore drilling. The new technologies in shale rigs have tripled production since 2011 for the same number of rigs operating in the U.S. Permian Basin from West Texas to New Mexico. The core producers can now supply and be profitable at $40 a barrel.  Supply cuts from OPEC and Russia as currently the policy of both countries mean inventories do not rise too high. And geopolitical problems such as Yemeni attacks on Saudi oil facilities, the reinstated sanctions on Iran by the Trump administration that reduce oil supplies, Venezuela's problems, can be met by increased supplies from the U.S. shale industry in a short time to prevent inventories from dropping too much.      ...