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Harvard professor, Benjamin Friedman, reviews journalist Timothy Noah's book "The Great Divergences: America's Growing Inequality Crisis and What We Can Do About It." Friedman says, Karl Marx got it wrong when he predicted greater inequality based on the situation he saw in Europe and the U.S. in the late nineteenth century. Inequality actually decreased in the U.S. and Europe with industrialization, technological progress, higher educational and income levels by the early part of the twentieth century. Similiarly Simon Kuznets, Nobel Laureate, also got it wrong when he extrapolated from what he saw in the early postwar period, assuming greater equality and better opportunities in future decades. The approach Noah and Friedman advise is to look at individual factors that promote or discourage less divergence in income levels, opportunities and upward mobility. And based on this shape policy and action agenda for better outcomes. A whole range of issues fall in this range- promoting manufacturing and higher wage jobs, immigration policy, investments in education to upgrade skills, better educational opportunities, vocational training, upgrading education to keep up with new technology, and investments in research and new technologies for new industries that would create better opportunities. Because inequality is increasing worldwide, and countries are focussing on improving competitiveness as well as preserving the social fabric in a global economy, this is an issue facing all countries that seek a better future....

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Germany holds the presidency of the G-20 in 2017. This provides chancellor Merkel an opportunity to provide German leadership on many issues. The ministerial conferences will lead to the summit in Hamburg in July 2017. Concern about the incoming Trump administration views on trade in international circles gives Germany and China a larger role in the meetings for 2017. Germany plans to put more focus on the real causes of migration and flight from poor countries and war zones.

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In an essay published on March 16, 2012, in Seeking Truth, the Communist party's main ideological publication, Xi Jinping cited the importance of consensus decisionmaking in the Chinese leadership now and in the future. "All decisions on major undertakings must adhere to the Party's principle of democratic centralism... They can't be decided by an individual or a small group of people... but should be decided according to collective wisdom and strict procedure." The efforts of Bo Xilai, the Communist leader in Chongqing, were seen as "playing to the crowd." By reviving Mao theory and advocating policies which would mean more participation by the state in the economy, Xilai was moving in the opposite direction of a World Bank-DRC Report on the Chinese economy- supported by the next premier Li Keqiang- that calls for less dominantt role of the state owned companies in the economy. Bo Xilai recently resigned as party head in that province. The essay is based on a speech on March 1 by Xi Jinping at the Central Party School, the Communist party's leading think tank. Xi said "if you crave to be ostentatious, to play to the crowd, and seek personal gains and high office, and if you don't aim for higher goals, it is not only difficult to push forward the work of the Party and the people, but also damages the Party's image, lets people down, and makes them lose faith in us." This sets the tone for consensus leadership in China, based on collective wisdom and careful thinking, into the next generation....

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To give time for the fragile banking system to adjust, and for consumers not to feel the impact of a sharp and sudden devaluation, the government of Russia has used up one third of its reserves shoring up the ruble. Now with currency traders and others testing the limits of the new band in which the ruble is trading, a lower limit of 41 rubles against a basket of euros and dollars is eroding. Last week the rate was at a low of 36 rubles to a dollar. Foreign exchange reserves have dropped from a high of $600 billion to $385 billion. See the link to the sudden erosion of sovereign wealth funds around the world including the Gulf countries. Raising rates aggressively and tightening liquidity too much would hurt the economy, so there is a testing game between currency dealers hoping to profit from the ruble's fall and the Russian government and central bank. Memories of the 1998 collapse of the ruble are still fresh in people's minds, and the government wants to prevent anything like that happening. This has almost become a raison de etre of the Putin government, to prevent the poverty and humiliation after the collapse of the economy during that early post-Soviet period. Most of the money that the government is spending to boost the banking system and the economy is flowing into the currency market instead. Says an economist at Alfa Bank in Moscow, all the rubles out there have been converted into dollars....

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The European Union's trade relations with China, and the trade and industry relationship between Germany and China built during the Merkel years is a part of the overall trade setup of the Free World that is likely to be questioned by Habeck, Baerbock of the Greens and chancellor Scholz after Mr. Biden's launch of the IPEF economic alliance for Asia. During her period in office Merkel also built the German trade relationship with Russia leading to Germany being dependent on Russia for 51% of its oil and natural gas supplies. The German dependence on Russia for energy is now being reversed by the efforts of Economy Minister Habeck of the Greens party in the Scholz coalition. The supply chain renewal and redesign by president Biden is likely to be followed by Germany and France and the EU. With it more investments will be shifted back to the US and the EU and allies in Asia such as India that offer a large pool of well trained workers similar to China's. In this sense the IPEF arrangement will be repeated in European Union's new relationships with Asia under the Greens SPD German coalition's leadership. ...

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Senior Republicans Wicker and McConnell both push for the putting pieces of the defense puzzle in place so that American can offer leadership to the world in the 21st century. Biden has put pieces of the puzzle on the economic front, these are the pieces in defense and security. On D-Day 80 senior Republican leader Mitch McConnell cautions against the lethargy of so called left parties and the isolationist tendencies of so called right parties. He says America should put preparedness first, that the better part of valor is to build credible defenses before they are necessary so that American leadership is not doubted further as it has been before. He commends the plan put forward by Roger Wicker in the US Congress Senate Armed Services Committee. The plan calls for raising defense spending to about 5% from 2.9% now over 5-7 years, with $55 billion more in 2025. Wicker says the military has a backlog of $180 billion just for maintenance. For the Navy 357 new ships by 2035, for the Air Force 340 additional fighters. This in light of China's additions and in light of the Russian economy being put into a position for a long term conflict with NATO over Ukraine.  ...

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The message is clear from Paris - anybody can do AI at the profligate overspending and cost of people like OpenAI, and Microsoft. After DeepSeek in China proved it can be done at a tenth of the cost, there is the tremendous potential of the largest pool of young engineers and scientists in India to do it for a fraction of the cost in China.This is why this Action Summit in Paris is being done by sharing the cost keeping at  13 million euros, and having India under PM Modi as co sponsor with France's Macron. Modi called it and extension of similar efforts working with France on solar and renewable energy. Here is how the French did it- the Ministries each pitched in. The Economy ministry 3 million euros to attract foreign investors, the Foreign Ministry 2 million euros to welcome world leaders Vance and Modi, the armed forces 1.5 million euros, the Culture Ministry 1 million euros and staff to coordinate the summit. The buildings used were familiar ones- the Summit at the Grand Palais build for the Pais Exposition of 1900, the Institut Polytechnique for science themed events, and the Bibiliotheque Nationale France for the cultural weekend Feb 8-9. ...

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This report in DW.com presents a situation where supply of oil runs out as demand way exceeds supply as shale oils in US are depleted, and no new reserves are found. A story in WSJ last week reports that the salty water from shale oil extraction is injected back into reservoirs at a rate that creates serious problems in the Permian Basian of the US including East Texas. The IEA forecast in 2026 shows about 97 million b/d of production and demand slightly exceeding this in both 2030 and 2050 which would suggest defossilization has not taken place. Yet the US pullout from defossilization under DJT is sure to be reversed by future governments in as short as 3 years, and the current DJT policy is simply a response to the cost of living concerns of the majority of Americans. The scenario that fossil fuels will be required forever is promoted by the oil companies and by OPEC+ including Russia. But this situation will reverse as the cost of living crisis and the low wages and incomes, loss of factory jobs, low savings, health care inflation, is tackled under the DJT administration and the US economy becomes stronger with lower inflation.  This scenario of  steady oil demand can be reversed if China and India and Europe push ahead with renewable energy and technological change as is happening today, and will not be seriously impacted when the US joins the battle with its renewable energy push in 2028. This is not just an optimistic scenario, it is a balanced one as private industry in the US will sense this and move ahead with development of new technologies for renewable energy so as not to fall behind and to pioneer on their own. That is the history of innovation in the US for the last 100 years and will not change. ...

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The Bank of Japan started investing in stocks during the financial crisis of 2009. It has increased its investments in Japan's stock market during the pandemic as a way to boost spirits in the stock market to $400 billion as of Sept. 30, 2020.  Of this $56 billion is a gain in the stock market after Japan's stock market gained 60% from a deep low during the early period of the pandemic. In March Governor Haruhiko Kuroda doubled the ceiling for BOJ to $115 billion for purchases of exchange traded funds.

The purpose of this activity is to encourage risk taking in the broader economy, and ensure prices are rising at a small but steady pace. The BOJ now owns 6% of the total value of the Tokyo stock market. The BOJ does not buy individual funds but invests in the market through exchange traded funds. The BOJ purchases were effective in easing uncertainty and promoting confidence as the pandemic surged in Japan and in the rest of the world.

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This WSJ report looks at how China is run today with attention to details by president Xi Jinping. Mr. Jinping takes interest in all matters that relate to wellbeing, reducing gaps in wealth and privilege, coronavirus pandemic, corrupt businessmen or officials, climate change, and the economy. Some decisions have to be reversed after they appear not to be working. In some situations goals conflict such as climate change action on coal requiring shutting down intensive coal dependent factories, and economy jobs goals requiring use of coal intensive factories. Leading to a complete reversal of the original decision to cut back on use of coal as happened in 2021 when factory shutdowns affected the economy.  Jinping does not see it as micromanagement. Previous leaders such as Hu Jintao had little interest and did not put in the effort to seek out areas where policies were not working for families and workers, delegating this to lower level officials. Jinping's style is hands-on and energetic to act on issues that affect how China should be run so that the quality of life of ordinary Chinese is improved. Jinping says that if he did not take action there just is'nt the level of initiative on the part of local officials. Many officials are not competent to tackle complicated issues. Jinping says that "some officials only act when the central party leadership has instructed them to do so." And that he acts as a last resort- "I issue instructions as a last line of defense." His willingness to reverse decisions or let them be implemented with local officials using their discretion if he thinks that would be wise also shows a level of flexibility and humility. Basic to his decisions is a general idea that the original vision of China of the founding leaders in 1948 was forgotten in the headlong rush to modernization of the last 20 years. This means a balance was needed to restore some measure of equality and empowering of the disadvantaged. Xi Jinping's father was one of these founding leaders under Mao and under premier Deng during the market economy founding in the 1990's. Xi Zhongxun, Jinping's father was an energetic leader who also took a keen interest on a whole range of issues for China's modernization drive, a trait now found in Mr. Jinping. The first market economy experiment was done under Xi Zhongxun with premier Deng's encouragement. Xi Zhongxun set up the Guangdong and Shenzen special economic zone in 1979, as governor of the province in an effort to liberalize the economy and slow the exodus to Hong Kong. At the time wages in Shenzen were 1/100 of wages in Hong Kong. Some of this style can be seen in India with Mr. Narendra Modi delving into details of policy and taking intitatives that local officials had neglected to do on a whole range of issues related to modernization, development and technological progress. One of the decisions made by Jinping was to tackle Covid aggressively with a zero Covid policy, which means frequent lockdowns and restrictions even with a few cases. Mr. Modi has also acted vigorously on Covid after warning in March 2020 that this could set India 20 years back, with a policy to get over a billion people fully vaccinated. In both situations the only two countries with over 1 billion population needed this kind of strong leadership with an interest in a whole range of issues that relate to lives of ordinary people during the pandemic to inspire some essential level of public confidence and build public wellbeing.     ...

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China drop in exports to US May 2025 YOY is 35%. China exports up 4.8% to World May 2025 YOY. It shows China is making up for loss of exports to the US with tariffs by increasing exports to the European Union and to South East Asia. 

China's trade surplus is still increasing, increasing from $96 billion in April to $103 billion in May 2025 with European Union and rest of the world picking up Chinese exports as domestic demand is still soft with factory gate prices dropping 3% in May 2025 YOY. China's plan was to increase exports with debt restricting stimulus for domestic economy, growth depends on exports. It now depends on the EU's taking in China's surge in exports.

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Seib of the WSJ compares the Reagan election in 1980 with Trump's bid in 2016. He finds the idea of an outsider when the public mood was for change favoring Trump, but says the comparison with Reagan falls short because Reagan had behind him 8 years as governor of the largest state in the country, and a bid for the nomination 4 years earlier. He also had personal positive approval ratings of about 70 percent compared to 27 percent for Trump.  Reagan's first trp after the convention in 1980 was to Alabama to win the support of George Wallace people in the Deep South. His focus was on reuniting all parts of the Republican Party something absent in 2016. Seib's comment about Trump being stronger on the economy is not clear. With the economy recovering, and slowing down as the presidential election approaches amid increasing uncertainty, it is possible that voters would not want to risk abrupt and sudden changes with an untested candidate. Working class voters could still see some of their concerns for change addressed by the Bernie Sanders part of the Democratic platform with help in college tution, addressing wage concerns, and opposing export of jobs, when Trump's program gives few specifics. Another difference between Reagan and Trump is that Reagan had put together an economic team under Shultz which was able to win credibility with an actual plan to implement in the first 100 days. ...

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A copy of the letter Mr. Trump sent to Mr. Erdogan of Turkey telling him " don't be a tough guy... don't be a fool," to invade the Kurdish zone in Syria. He says history will judge him, that he should "not let the world down." 

Turkey sent forces into the Kurdish zone even after the letter from Mr. Trump. Mr. Trump said that it was a bad idea getting involved in the Middle East that trillions of dollars had been wasted. He made exceptions for keeping the Straits of Hormuz open and flow of oil from a commercial standpoint in providing assistance to Saudi Arabia and Aramco, something the U.S. has done since FDR administration.

It also says Mr. Trump has worked hard to help Turkey. And admonishes Erdogan saying "I don't want to be responsible for destroying the Turkish economy- and I will."

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Most of the reporting on Ukraine follows the war. Questions are asked how will this conflict end? This report in Der Spiegel is one of the rare reports that looks at the Ukrainian economy with images and reporting from the ground that answer that question. If the Ukrainian economy is surviving in 2023 then Ukraine will continue long after a peace settlement is reached. It shows for instance that supermarket shelves are well stocked. It shows energy from half a million generators keeps the lights on and companies working in Ukraine. The steel industry is mostly destroyed yet the software industry continues to grow. Unemployment is 30% even after hundreds of thousands of younger Ukrainians are at the war front. Of about $62 billion promised by US and European countries about $31 billion has actually been transferred to Ukraine. The IMF has created an exception for aid to Ukraine with offices in Kviv and Brussels. All defense needs are covered from the Ukraine budget. Before the invasion in Feb 2021 defense took up 9% of the budget, now it takes up 42% of the budget. Another 16% for public security. For social benefits 16%, and another 26% for other expenditures. By having an economy that is functioning and life even in light from generators and solar energy, with supermarkets well stocked and providing office space for workers, with aid mechanisms working. Ukraine has already emerged as part of Europe, tried, tested and come through adversity of the worst sort. It is supposed to join the European Union, yet Der Spiegel says it is already tightly integrated into the EU. Its power grid was integrated with the EU power grid before the war, and nuclear power was sent to the EU from Ukraine before Russian attacks on the nuclear plant. Then transmission lines brought energy to Ukraine from the EU. The EU takes in 80% of Ukraine agricultural exports compared to 20% before the war. Even at the risk of lower prices and hurting farmers in Poland, the Polish government has allowed large imports of agricultural products into Poland. The close links with countries of the EU that share a border with Russia have increased. The problems now are that Ukraine after this war will have severe shortage of manpower. Already with the fall of the Soviet Union Ukraine lost about 8 million people and population was 44 million before the war. About 8 million people moved to Ukraine in the one year following Russian invasion. Of this 1.5 million stayed in Poland, the rest went on to other countries in the EU or returned. The countries such as Germany, Finland, Czech Republic have labor shortages of their own and encourage refugees to stay. Rebuilding is estimated to cost $131 billion. Yet as is evident in Poland after most of the damage from the second world war in Poland it was rebuilt using modern technology. Ukraine survives, its life goes on, is the message from Der Spiegel. In this way the war's outcome is already evident. Much of it comes from the European Union having sensed that attacks made with impunity would endanger all of the European countries when made by any dominant power. This is also what Cambridge historian Brendan Simms has shown about European history for the past 500 years in History of Europe- The struggle for Supremacy 1452 to the present. No one country says Simms was able to act with impunity and pose athreat to its neighbors as all other countries in Europe rallied to prevent this. This war is no exception.   ...

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Japan's economy minister, Mr. Seko, says that with no-deal Brexit Britain will lose access to Japan's new economic partnership agreement with the European Union which last month created the world's largest free trade zone. Seko said 1000 Japanese companies have invested in the UK creating 150,000 jobs, because it served as "a gateway to the European market."

Nissan is scaling back its Sunderland factory. Sony and Panasonic are relocating their EU headquarters to Amsterdam. Honda will close its Swindon plant in 2021. Seko said "uncertainty for the consequences of Brexit is spreading in Japanese industry."

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Aaron Back says this time China is likely to feel the effects of the volatility in the stock markets. The surge in the stock markets added about half a percentage point to GDP growth in the 1st quarter of 2015, according to Capital Economics. GDP growth in the 1st quarter 2015 was 7%. Capital Economics says removing the boost from the stock market to a sluggish economy would mean a loss of 1 percentage point in GDP growth. Equity issuance was one way China hoped to reduce high debt levels at companies, and that avenue would the be that much harder to access to reduce debt levels. Margin financing is about $354 billion, or 3.5% of GDP according to Goldman Sachs, posing another source of problems and potentially affecting growth if stock losses lead to defaults. Declining investor sentiment and confidence in management of the economy would be another casualty in this situation. Only 10% of Chinese households own stocks compared to 50% in the U.S., yet Aaron Back says the effects of this are likely to be felt in lower economic growth and shaken confidence in the economy....

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Complacency from the Bush Administration reflected in the remarks of Edward Lazear the Chairman of the Council of Economic Advisors in the outgoing Bush administration. He sees no recession in the USA. "I would be very surprised if the NBER looking back at this period would date this as a recession" is what he is quoted as saying to reporters. He went on to say that the $152 billion stimulus of government checks mailed to the people, and Fed interest rate cuts should make the second half of the year a "solid growth period." What this means is that the moves by Congress to help homeowners stave off a new wave of foreclosures through a bill that just passed through Congress on May 7, 2008, is likely to be vetoed by Bush and efforts along the lines suggested by Martin Feldstein, Chairman of Council of Economic Advisors under Reagan, and Sheila Bair at FDIC, to help homeowners avoid foreclosure in her proposal may remain just that as proposals. This situation is likely to be turned over to a new President and make for an election that may revolve around economic issues, as the next wave of foreclosures lead to the start of a declining spiral in home prices leading to further loses in the credit markets and corporate bankruptcies of weaker firms and resulting losses in employment. Rising crude oil prices may result in much of the stimulus being eaten up by paying of some of the debt burden of consumers and rising costs of gasoline at the gas pump. And Feldstein has been very vocal, as have others, about the ineffectiveness of interest rate cuts in the current situation, even doing an oped piece titled "Enough of Interest Rate Cuts." In this sense the current spell of calm in the financial markets may be deceiving, giving Paulson an others in the administration a false sense of hope, and deprive the world economy of some reasonable action to prevent the wave of foreclosures and falling home prices that could set things distinctly downward in the world's largest economy and impacting the rest of the world....

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Becky Branford of BBC News gives five reasons for Emmanual Macron's win in the French presidential election. She cites experts who say Macron was lucky, had a canny ability to see the timing was right for a new party to be formed so that socialist voters had an alternative. His luck comes from the failure of Republican centre right party Fillon to mobilize right wing voters following reports that he had hired his wife and children for government jobs. Yet this is not a complete explanation. Macron had the intuition that something was happening in French politics and the courage to act on it early, the youthful energy to take up the challenge of a mass movement. The events were the declining popularity of the socialists, and the fragmentation of the left wing, the uncertain prospects of the Sarkozy effort at comeback because of his image from years in power, and the need to counter growing far right support for the National Front- to do this by offering an alternative in the centre. From that one courageous decision things from that point fell into place as the Republican party also failed to attract strong public support.  A mere 24% of the vote enabled Macron to enter the second round. Macron's grasp of the economy and conviction helped him win the final debate with Le Pen decisively. His sense of his own mission to revive the idea of Europe sustained him against attacks from the far right, including the late cyber attack on his emails in the last 24 hours.  Macron could still have prevailed over Le Pen without the strong campaign for staying on a positive message and confidence in his ability to turn France's economy around. Yet without a margin of victory of this size in the face of abstaining voters from the far left, Macron as president would not have looked the same. The next step is parliamentary elections in June, and governing France with a turnaround plan requires winning a majority in parliament of sufficient magnitude that he can implement a program which makes the French economy as competitive as Germany's. People forget that Germany was considered a economy with high unemployment and not as competitive under the Schroeder administrations that preceded Angela Merkel, this includes the French with the layers of pessimism. Emmanuel Macron deserves credit not for winning, but winning with the idea of Europe, and it has done as much for him from the French people who have put their faith in Europe when the chips are down, as he has done for Europe already. How this helps put a turnaround in the economy in place is that he will have the energy and enthusiasm of Germany behind him, as well as the energy of French industry and young people to do what Germany accomplished in the 2000-2010 period to emerge from years of high unemployment with a strong economy. ...

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Guiding the debt ceiling talks in a safe way that does not distract in any way from the stronger economy that is taking shape with large investments in every sector, and which people can see and feel in their own lives, is the goal of president Biden. It would be a win for Biden if overall spending can be kept at the level of 2023 for the next two years. How he does this is by maneouvres that concede somewhat in some areas- one example is by reducing spending on the Internal Revenue Service by $10 billion from $80 billion to $70 billion, and shift the $10 billion saved to education and other similar spending. The idea is to mitigate the effects of small cuts by shifting money from other places in the budget spending plan. These maneouvres are designed to keep the overall investment largely intact and deliver results in 2023 and 2024 in a rebuilding of America that the people can see. 

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New EU guidelines require cutting gas consumption by 15% over the next 8 months, and set priorities for which industrial sectors are required to cut back. The EU plan also includes switching from natural gas to nuclear or coal.  EU's Russian gas supplies in June are already less than 30% of what was received on average for the last 5 years. The new guidelines should ensure that Europe gets through the winter with adequate gas supplies in a complete cutoff of gas from Russia. The guidelines for 15% reduction in usage become mandatory in an emergency, and if the new guidelines are slow in being adopted they will also become binding. The safety, security and stability of society will be considered in allocating gas to sectors in the economy and to households. Industrial sectors such as glass and aluminiums would suffer damage to equipment with shutdowns, and chemical industries affecting the operations downstream through shutdowns, new factors that will have to be considered. ...

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Jennifer Harris, heads the Economy and Society Initiative of the William and Flora Foundation. Andy Grove of Intel and Bill Hewlett of Hewlett Packard are the original founders of what is called Silicon Valley in California. It was Andy Grove who offered the first protest of American policy that shifted jobs and manufacturing overseas, saying he did not want to live in a country where the people and the communities we live are being ignored under some policy that shifts everything and with it hopes and aspirations of the American people overseas to Asia. Farah Stockman of the NYT shows how Jennifer Harris and Jake Sullivan are shaping the new ideas on economic policy at the Biden administration. Jake Sullivan addressed the Brookings Foundation on Biden's economic policy saying Biden wanted different backgrounds to understand the needs of people in the US, that domestic needs for jobs and manufacturing, for infrastructure, would now drive foreign relations. That this was a key aspect of the Biden economic policy. Harris and Sullivan have worked together. ...

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Charlie Rose talks to the prime minister of Singapore about China's role in world affairs, its view of America and of its own experience, what's uppermost in the minds of the leadership, and the rise of a post cultural revolution leadership which has grown up in 30 years of post cultural revolution market economy and internet access to information.

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David Autor, an economist at the Massachusetts Institute of Technology, says he is quite worried about the steadily declining participation of men 16-64 in the labor force from 85% in the decade after World War II to less than 65% today. This is a blow to the men, their families , government revenues and the economy.

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Fuel efficiency rules require average fuel efficiency in the U.S. of 35 mpg by 2016. The debate is now on what to do for 2017 to 2025. New technology such as the P2 systems for hybrids already used in VW, Nissan and Hyundai vehicles makes a 20% increase in fuel efficiency possible. Large investments are being made to bring new technology to bear on increasing fuel efficiency significantly. Government agencies are looking at different scenarios by which the new fuel economy standards beyond 2017-2025 could be set between 47 mpg and 62 mpg. An additional factor is the reduction in greenhouse gas emissions- at 47 mpg the reduction would be 3%, at 62 mpg the reduction would be 6%. Another factor is how much the impact is on the cost of vehicles and reduced cost on gasoline. Here there is a wide range in the numbers for average mpg rules at 62 mpg- with EPA estimates at $2800-$3500 increase in vehicle cost and $5000 savings in fuel cost, Centre for Automotive Research estimates at $9790 increase in vehicle cost. The 62 mpg translates into "real world" actual efficiency of 45 mpg. In April 2011, 17 senators put out a letter of support for the 62 mpg proposal. There is a public value involved in this that is also significant- the reduced dependence on foreign oil means savings in defense expenditures in parts of the Middle East, and an economy that is less impacted by volatility in the price of oil. As this aspect of public value or benefits cannot be quantified easily even though they are significant, this may tend to be lost in the debate and the politics of fuel efficiency. For automakers there is significant marketing value in having a visible and strong presence in fuel efficient vehicles because of perception as forward looking- something that hurt Detroit carmakers in the last decade. During periods of gasoline prices at $5 a gallon this provides carmakers with an extra cushion of safety in securing car sales. Carmakers in one country such as the U.S. also have to worry about what carmakers in other countries such as Japan and Germany are doing- if the standards in the U.S. develop a gap compared to other countries developing advanced fuel efficiency technologies this poses significant risks because of the global nature of the automobile marketplace. See the group "Asleep at the Spigot" for more details on this. Many of these less quantifiable factors do not get the attention they deserve because they are significant from experience but not easily quantified. Throw into this the large unknown of what new technologies not yet developed lie ahead with a burst of effort by one country or another, which bring cost reductions at the same time - and the debate requires as much a good sense of what is the path offering the greatest advantages in years ahead than a pure exercize in numbers. ...

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Speaking at the Economc Club of Indiana, U.S. Federal Reserve chairman Bernanke, says responsibility for fiscal policy lies fully on Congress and the administration. Monetary easing through QE I,II and III, which reduces the borrowing costs of the U.S. government by keeping interest rates low, cannot be seen as taking pressure off Congress and the administration, as critics claim. He countered criticism by saying: "Suppose notwithstanding our legal mandate, the Federal Reserve were to raise interest rates for the purpose of making it more expensive for the government to borrow. Such an action would substantially increase the deficit, not only because of higher interest rates, but also because the weaker recovery that would result from premature monetary tightening would further widen the gap between spening and revenues." Lawmakers would be no more inclined to come up with a program to reduce the deficit in this situation argues Bernanke. This statement of Bernake only reaffirms that low interest rates are an important goal here in the U.S.,- just as they are for France and other countries in Europe that are faced with tackling large debt and deficits- and are part of the overall solution for the government to manage its finances....