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Hillary Clinton attacks Trump's policies in an address in Warren, Michigan, saying this was another version of failed trickle down economics. She called Trump's idea of taxing pass through entities such as small business reporting business income on individual tax returns at 15%, as a "Trump loophole." On trade policy Hillary Clinton said she would oppose the TPP or Trans- Pacific Partnership Trade Agreement that president Obama has supported. She put it flatly- " I oppose it now. I'll oppose it after the election, and I'll oppose it as president." And pointed out that too many companies have moved jobs overseas and "moved operations overseas and sold back into the U.S." after pushing for trade deals. The answer she said 'is not to rant and rave- or to cut us off from the world," in reference to protectionist policies Trump has supported. 

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As expected Iran boycotts the talks in Doha of 16 major oil producers seeking to stabilize oil prices. Saudi Arabia, Russia, Qatar and Venezuela sought to stabilize oil production at January levels to support oil prices. Wth the Saudia and Russia producing all out, Iran seeks to do the same, effectively closing the door on any agreement to freeze production levels.

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The Trump administration's early proposal for NAFTA moves away from campaign pledges to completely renegotiate the treaty, instead taking the approach of working to improve the U.S. trade position in relation to Mexico and Canada. It includes seven objectives for tougher rules for labor and the environment favored by Democrats in Congress, and it also has support from Republicans with its effort to update NAFTA for changes in technology and in other areas since the accord was signed during the Clinton administration. The area in which U.S. and Mexican business are wary is one in which the Trump administration still seeks to keep the option of imposing protective tariffs, and a border-adjusted tax to level playing field for differences in taxes, as well as other measures to protect American jobs and interests. Because any renegotiated NAFTA also has to pass both houses of Congress this proposal took into account the different constituencies and interests for this issue. Robert Lighthizer, trade representative under president Reagan is likely to become the next U.S. Trade Representative and lead negotiator. We first profiled Lighthizer in a group in Lyrarc for pointing to the need for a level playing field in trade. As early as 2010 Lighthizer argued in op-ed articles that globalization and trade practices should ensure a level playing field for the U.S., and was covered in Lyrarc. ...

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Fuller cites the WSJ about the 40% of the 1.4 million jobs created in the first half of 2014 being in the lower wage retail, food service and temporary help sectors. The 6.1% unemployment rate does not count the people who are too discouraged to look for work, these people dropping out of the statistic just as much as the people who have found work. The U-6 which includes those who work part time because they cannot find full time work and people discouraged and stopped looking for work is at 12.6% in March 2014, giving a more accurate reading of the unemployment situation in the U.S. for 2014.

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Labor conditions in Chinese factories that supply Walmart, Disney, Dell and other companies and in China's manufacturing in general.

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U.S. President Obama's 2013 State of the Union address focussed on the problems facing the U.S. middle class, calling it "our generation's task" to tackle this problem. Economic changes have changed the patterns of economic growth and jobs, growth, income growth, that prevailed from the end of the Second World War to about 1989. But he offered few solutions beyond increasing the minimum wage to $9.00 from $7.25 to reduce poverty.

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The high risk of failure as the U.S. withdraws from Afghanistan in 2012-2013. The U.S. is handing over to an Afghan Army that faces a high desertion rate, high turnover, and uncertain loyalties. The turnover is so high that the Afghan Army has to replace a third of the 195,000 army every year. The problems from the corruption in the Karzai government, the flawed elections, and other issues have not been resolved, leaving a fragile government and a fragile army and police force as the U.S. withdraws. A decade of sacrifices in resources, lives and wounded, is at risk. A negotiated settlement in talks with the Taliban has not moved forward to create a post U.S. withdrawal Afghan government that brings in all parties. The untimely death of American diplomat Holbrooke who set up the accord that made peace in the Balkans, and the failure to get results at the talks only leaves the whole U.S. project at risk.

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Krugman points to the need for action on revaluation of the yuan, and sees the vote in the House of Representatives sponsored by Sander Levin as a necessary step to get China to act. He sees China as dragging its feet on this issue for many years, and the need to keep the heat on US policy makers, who have acted very passively on this issue. He describes the US policymakers as being infuriatingly, incredibly passive in the light of the Chinese inaction and stalling on currency appreciation. China he says denies manipulating the exchange rate, even as $2.4 trillion foreign currency was purchased by China. Krugman says China is not letting what is a natural process to unfold that would help the world economy as a whole to recover. Its manipulation of the exchange rate, is in effect subsidizing its exports at the expense of other countries like the US. See the link to Roubini, who shows how this is bad for China. Roubini says China will see a growth collapse in 2-3 years, if it does not change direction and let the yuan appreciate. He says it is in effect a large transfer of income from Chinese households to Chinese state owned companies which is dangerous because of increasing misallocation of resources and real estate speculation. See David Barboza for information on the real estate speculation of these Chinese state owned companies. When all this information is added up, it shows China's serious need to act. This would make possible a transition to a new model of development that relies on domestic consumption, and bettter allocation of resources and investment. ...

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Rapidly increasing credit to GDP ratios between 2008 and 2012 in Hong Kong, Singapore, Malaysia, Thailand, and Taiwan.

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The commodities boom allowed Brazil under president Lula to commit to heavy state spending, subisidies, protection of favored sectors with large tariffs, that led to inefficiency and high debt. The policies continued under president Rousseff. Corruption scandals in the latter part of the Lula administration led to more populist policies for the Workers Party to stay in power, says Porter. Compared to Mexico and Chile, Brazil and Argentina under presidents Lula and Kirchner moved in the direction to closing up their economies to trade and foreign investment that would make corporate sectors more competitive and less dependent on the state for subsidies and favors. Mexico's economy other than the automobile sector is struggling, as mismanagement also plays a part as with the handling of Pemex and huge capital injections needed. Mindfulness and thoughtfulness is needed in setting policy direction, aware of the risks free of illusions about rosy scenarios, knowing that ideology plays less of a part than exercizing good judgement....

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A small tax on the $800 trillion foreign exchange industry of 0.005%- with the tax on currencies where the leaders of these countries approve like Merkel of Germany and Sarkozy of France- would generate much needed money to help the word's poorest, says Philippe Jouste-Blazy, a former foreign minister of France. For instance he says tuberculosis killed nearly 1.8 million people in 2007, and caused the GNP of some countries to fall as much as 7 %. THis would bring serious gains to economic growth in the poorest countries. Look at the $1 to $5 tax imposed on airline tickets in France and 10 other countries since 2005.It has raised $700 million and financed three quarters of the AIDS treatment now being received by the world's HIV positive children. Unitaid, is an organization Blazy leads. It manages the money from the airline tax, and has negotiated 50 to 60% reductions in the price of pediatric anti-retroviral drugs in low income countries. The reason why the banking community should support this tax. One it is tiny, 0.005% on a foreign exchange transaction, and should not affect the flow of transactions. It is done automatically by computer systems. The currency trading system right now is untaxed. More importantly the bankers says Blazy have been benficiaries of taxpayer money. Isn't it time to give back to those worst affected by the global crisis the bankers helped create? Does'nt it create more credibility for the global financial, monetary and trading systems? He says the tax money could be managed by the Global FUnd to fight AIDs Tuberculosis and Malaria, with upholds programs in 100 countries to high performance standards....

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The WSJ's Spencer Jakab points out the role of politics- with Saudi Arabia in a standoff with Iran and Russia in Middle Eastern conflicts- and Saudi policy of full output with no cuts unlikely to change, ensuring lower prices for 2016-2017.

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The Saudi government announced sharp cuts in spending and subsidies to cut the deficit in 2016. The deficit in 2015 was about $98 billion or 367 billion riyals , according to Al Arabiya Saudi news channel. In 2016 the budget is designed to cut the deficit to $87 billion or 326 billion riyals. The 2016 budget is for 840 billion riyals, compared to 975 billion riyals in 2015. Saudi Arabia's foreign exchange reserves of $640 billion could be exhausted at this rate by 2020, experts say. Actions being taken by the government include increasing the price of some grades of gasoline sold domestically by 50%, as subsidies are being cut. The drop in oil prices to about $35-$40 is hurting Russia, Saudis and Venezuela. The Saudis have increased defense spending for conflicts in Yemen, and in other areas, as they oppose Iran and Russia in the Iraq- Syria conflict.

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Unemployment is over 25% on Chicago's South Side black neighborhoods. Conditions have deteriorated with the higher unemployment since the economic crisis. Residents see little improvement since the days of Obama as a community activist in this part of the city.

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Caterpillar is asking workers at its Canadian plant to accept a large cut in wages and benefits. Wages and benefits at Caterpillar's rail equipment plant in LaGrange, Illinois, are less than 50% of the costs at the Caterpillar locomotive assembly plant in London, Ontario. According to the U.S. Bureau of Labor Statistics U.S. manufacturing labor costs per unit of output were 13% lower in 2010 than in 2000. This compares with an increase of 2.3% in Germany, increase of 18% in Canada, and increase of 15% in South Korea. Caterpillar is also asking for more flexible work rules at the Canadian plant. The flip side of this is that U.S. workers are earning significantly less in manufacturing, especially considering inflation, and the middle class is shrinking in the U.S. At the same time wages in the U.S. that are more competitive with wages in Mexico and China with flexible work rules and use of automation and technology, is helping to reverse the shrinking of the manufacturing sector in the U.S....

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O'Malley, Sanders, and Clinton emphasize the issue of wages, income disparities, rising inequality, and a shrinking middle class in the first Democratic debate of the U.S. 2016 presidential election. Clinton points out that "at the center of my campaign is how we're going to raise wages." Sanders says that "the middle class of this country for the last 40 years has been disappearing." Clinton points out her opposition to the Trans Pacific Partnership trade agreement because it does not help raise American wages. Clinton calls herself a progressive, but "a progressive who gets things done," and a moderate when it comes to getting things done. Sanders points to the "deep injustice, an economic injustice that threatens to tear our country apart, and it will not solve itself." Sanders points to the wealth concentration in the U.S. "with the top one tenth of 1 percent owning about as much as the bottom 90 percent, and 57% of all new income going to the top 1 percent." Clinton comes to Sanders defense on the issue saying "it's our job to rein in the excesses of capitalism so that it doesn't run amok and doesn't cause the kind of inequities we're seeing in our economic system."...

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Ian Talley provides this excellent account of how this drop in oil prices is likely to add to economic growth in major world economies, removing any ambiguity about the positive effect on the global economy. West Texas Intermediate crude dropped to about $65 from $105 between June and December 2014. The IMF estimates growth in 2015 will increase from 3.1% to 3.5% largely because of the lowering in energy costs. JP Morgan Chase economists see an addition of 0.7% points in global growth in the first half of 2015. ECB president Draghi sees the lower oil prices as an unambiguous positive. Estimates from Rhodium Group show major oil importing countries seeing import bills cut by $500 billion if prices remain low for 6-8 months, with $90 billion going into the U.S. economy. IMF estimate is that only 20% of the drop in oil prices is from lower demand, about 80% from higher fuel efficiency, increased supply using new technologies, decisions by OPEC to lower oil price, increases in supply. Based on estimates by the Rhodium Group, IEA and the IMF, the extra money flowing into the economies of the U.S., Asia and Western Europe from reduced oil import bills, as measured in percentage of GDP is: the U.S. 0.5%, Germany 0.8%, Japan 1.2%, China 0.8%, India 1.8%, South Korea 2.4%. Italy and France and other oil importing countries benefit. The impact comes at a time when Japan, China, India and eurozone economies badly needed a boost after significant slowdown in growth in 2014. It could not have come at a better time and because it is technologically driven as in the case of highly fuel efficient automobiles and new oil exploration technologies, a self sustaining process. The corresponding impact for oil exporters is: Russia -4.7%, Nigeria -5.4%, Venezuela -10.2%....

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The Editorial Board of the Washington Post draws attention to the speculative bubble in housing in China, the policies for sale of land by local governments that fuel the bubble, the corrupt local officials, and GDP growth that reflects overinvestment in housing creating serious imbalances in the economy. The structure of the economic and political system which promote this overinvestment in real estate has also reduced the role of the Chinese consumer in GDP growth, and is preventing a rebalancing of the world economy.