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Stephen Moore of the WSJ interviews Grover Norquist, head of the advocacy group Americans for Tax Reform. Republicans in Congress and other Republican leaders have signed on to the "no new taxes pledge" promoted by Norquist. There is increasing pressure on Norquist as the media, White House, and executives on Wall Street call for flexible positions from both sides on taxes and spending cuts. Norquist insists that not much has changed. He says that the increase in taxes on the rich is only symbolic and has to be followed up with increasing taxes on the middle class. He cites a Rasmussen poll that shows 75% of Americans believe this. Norquist is convinced that the Democrats with their spending plans are out to take the U.S. in the direction of European economies, the tax increase on the rich would be followed up with a energy tax or a value added tax to pay for unrestrained spending. His solution is for Republicans to pass a bill that extends the current tax rates past January after roughing it through the tax cliff date. Even the sequester option is better than increasing taxes says Norquist, letting the Defense Department make the cuts where appropriate. Norquist does not favor the option of reducing tax loopholes and deductions as a way to increase taxes as proposed by Simpson Bowles commission and Ryan-Romney in the election campaign. ...

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A Wall Street Journal/NBC poll shows that 58% of people polled want the President to worry more about keeping the budget deficit down even though this may mean alonger recession and asloer recovery. Only 35% say they favoring boosting the economy. What may be vague here is what a longer recession here means, its length from 1 to 2 years or 3-4 years, and what boosting the economy means; when the stimulus package has already been passed and its impact has still to be felt as a lot of the money is not yet spent. Democrats are evenly split with 50% favoring boosting the economy, and 42% urging a deficit focus. Republicans overwhelmingly are worried about the budget deficit. Independents by 2 to 1 also are worried about the deficit. Overall 31% of those polled say job creation and economic growth should be the highest priority for the government. And 19% say deficit and government spending should be the highest priority. About 16% say they see health care as the biggest priority, and 14% said national security and terrorism should be the highest priority. This means that the Obama administration will have two conflicting concerns throughout the early years in keeping the stimulus measures in place, and at the same time paying attention to the budget deficit....

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Islamists in the Egyptian parliament write the new constitution after liberals and Coptic Christians walk out. The rushed approach to writing it to meet a deadline and dissolution by judges critical of president Morsi has prevented the careful thought and discussion needed for writing a constitution. The existing constitution under military rulers of Egypt was revised instead of writing a new constitution from the beginning. The constitution also preserves the privileges of the military and the lack of oversight over the defense budget and military afairs by the elected civilian government. It also preserves the right for people to be tried in military courts for acts considered damaging to the armed forces. Opposition leader El Baradei says this new constitution will not not survive because of the way it was drafted. The opposition to decrees granting new powers to president Morsi that are above judicial oversight and protests in the streets of Cairo also creates new uncertainty.

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Jon Stewart's farewell on "The Daily Show," on August 6, 2015- the first show appeared in 1999- ended on the day the first Republican presidential debate was put on by Fox News. A year after Jon Stewart started his show he made his mark on television by creating a new genre- comedy that informs people. "Indecision 2000" was a new show that covered the 2000 U.S. presidential election ending with the small number of paper ballots in Florida determining the election. A whole generation of young people grew up watching his show which provided some of the bold vigilance so essential for a effective democracy, including coverage of the 2009 financial crisis. It included a show in which the host of the CNBC show "Mad Money" was told boldly that it was disingenuous that the crisis caught everybody on Wall Street by surprise, when informed people knew about the bad mortgages that were being wildly securitized. This was handled with the subtle humor that continued the conversation in an intelligent way, so typical of Jon Stewart. He is also remarkable for helping so many of his colleagues make a mark, including Stephen Colbert, which amplified his influence on discourse in American society. It included questionning those who benefitted from the intelligent debate with humor that Jon Stewart engaged in- president Obama was asked why the homeowners got so little help compared to the banks involved in the faulty mortgages, as a question of fairness. Veterans from the Iraq war were welcomed to see how the show was developed and get training. Stewart defused anger and channelled it into constructive discourse in American society, during 2 wars, a global financial crisis, and 4 presidential elections- "with malice towards none, with charity for all"- he will be sorely missed....

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Turner Adair, head of Britain's Financial Regulatory Authority thinks that banks have assumed an outsize role in the British and world economy, and are coopting their regulators. He sees the need to check many of the excesses. Why not use profits to build up reserves rather than give out huge bonuses and paychecks, he asks. He sees the need to challenge the accepted thinking on Wall Street and in the City of London, where the ideology of efficient markets became embedded, as it did also in the regulatory community. He came in the week Lehman Brothers collapsed as chairman of the FSA. And he wants to shake up the existing thinking. In March, the Turner Review. a 126 page report was published. A lot of attention was paid to his suggesting atax on financial transactions, called the Tobin tax, but its designed more to get people thinking and questionning the existing way of running banking as Turner said in an interview, "we have begun to accept this idea of liquidity as the new God." Can British or American society and the financial industry in both countries work to the benefit of both? Nobel prize winning economists and other experts have advised ashift to productive investments that grow the economy using technology, science and brainpower and new ideas, as opposed to the investment in mortgages and other speculative investments. As the regulators -including former and current heads of the SEC, and other regulatory bodies in the US, Cox, Schapiro and others- once held on to the same theory of uninhibited operation of free markets as best for generating increased wealth for society as the banking community, they tended to get co-opted in letting bad practices flourish. Went to sleep on the job as it were. See the links in Intelilinks. Adair Turner's admonitions are designed to get people thinking. He says, "banks need to be willing, like the regulator, to recognize that there are some profitable activities so unlikely to have a social benefit, direct or indirect, that they should voluntarily walk away from them." Investments in science, technology and new products, as in the 60's that generated a revolution in living standards, than the mortgages and consumer lending of the last decade, is what he may be saying, as do these Nobel prize winning economists....

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More than 50% of Americans believe the government should do more to solve problems. According to a recent Wall Street Journal/NBC News poll by a margin of 53% to 42% Americans want government to "do more to solve problems". But there is lack of confidence in Congress and in companies. According to the National Opinion Research Center only a little more than 10% of the people have a great deal of confidence in Congress and only a little less than 20% have a great deal of confidence in major companies. So the regulation it is felt is better setup through expert packed commissions.

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Glenn Hubbard is Columbia University's Business School dean. He is also a former chairman of the Council of Economic Advisors. Hubbard came under criticism in "Inside Job," a 2010 documentary about the financial crisis for reported connections with financial services firms. Here he talks to the Wall Street Journal's Melissa Korn on the ways in which Columbia is changing its business school programs to ensure interdisciplinary learning. Hubbard thinks a broader education is needed, not just expertise in a particular area, for today's students turning into the business leaders of tomorrow. One of the big changes today is that a student today may have significant responsibilities and leadership position in a shorter period 5-10 years. Earlier generations of business leaders had a much longer period before they assumed such responsibilities. This makes it even more important for a business student to have a broader education and have broader perspective. In the next ten years Hubbard sees two major changes- continued globalization, and the reshaping of major industries such as financial services. This will require students to have a broader grasp of the changes that will be taking place, which cannot come from merely having expertise in a particular field. He says this kind of education will be needed for business decisionmakers to be capable of preventing a broader economic meltdown. Hubbard believes ethics courses simply marginalize the subject, when in reality ethics and doing the right thing is woven into everything that happens, decisions that take place in so many ways and places, and often over many years. For this reason Columbia seeks to cover this ground in case discussions in different subject areas across the breath of the curriculum. Some of the developments and decisions occur over 25 years as in a GM auto industry case taught at Columbia. ...

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DW.com has this exceptional story on the elections in France through the pictures drawn by cartoonists in French newspapers. As polls show Macron with over 60% of the vote, cartoonists reflected on the situation of a new president with little experience and his "en marche" movement only one year old, looking at it with skepticism. Cartoonist Antoine Chereau shows a common person reflecting on the situation, with the title Macron leads in the first round, the person says that after being deceived by the right and the left, the French are now choosing to try out deception from the centrist. Loic Secheress shows Macron at the steering wheel of a car, with the title the second round Uberized, two passengers in the back saying they do not want to go right or left, and Macron saying- then alright we are going straight into the wall. On the Socialists splitting the vote between Hamon with 6% and Melenchon with about 20%, instead of putting up one candidate and heading into the runoff,  cartoonist Plantu shows Hamon and Melenchon riding one bike in opposite directions, with the title - the losing machine. Cartoonist Soulcie drawing for Le Monde shows a tour guide in front of the Louvre museum pointing to the pyramid architecture in front of the museum and saying- here are the last remains of the socialist civilization. Allan Barte's drawing looks at the elections as another disappointing experience for voters. He shows two voters in front of posters of Marine Le Pen and Macron, one saying I hadn't realized what the expression really meant until now, and the girl next to him says "election piege a cons," meaning "elections are a trap for idiots" used in the May 1968 street protests in France. ...

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President Obama in an interview with Steve Inskeep of National Public Radio says that blue collar men, the white working class, have suffered in the last decade, and Trump is exploiting their fears and anxieties. Yet he made no mention of the large parts of the middle class with low levels of assets, and the extreme inequality discussed by Fed chairwoman Janet Yellen at a Boston Fed conference on inequality in October 2014. Obama addresses the war in Syria and Iraq in a similiar manner by not mentioning the millions of refugees in that region and the million that have created a refugee crisis in Europe. He attributes the problem more to media pursuing ratings than any errors of the administration in this interview with NPR, including some of it directed by pockets in the Republican Party. This ignores the many editorials and op-ed pieces on the subject from both sides of the spectrum, the Wall Street Journal and The Washington Post.

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Andrew Ross Sorkin points out that investors are sitting on their hands and money is moving out of the stock market. About $171 billion has moved out of mutual funds over the last year, according to the Investment Company Institute. About $208 billion has gone into the bond market in the same period. There are now fewer long term investors and the market is dominated by professionals which increases the volatility. There is a lack of confidence in the economy, the same reason that businesses in the U.S. are sitting on $2 trillion in cash that could be invested, and for investors the feeling that the market is rigged to favor insiders. The Financial Literacy Group surveyed 878 students at 18 high schools in 11 states in the U.S. It found that three fourths of the students agreed with the statement: "The stock market is rigged mostly to benefit greedy Wall Street bankers."

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Michael Corkery catches up with the indefatigable Paul Volcker at the office he shares with Richard Ravitch on the fourth floor of Rockefeller Center. Ravitch reminisces about events in 1975 when he tried to get a loan for New York City from the head of the New York Federal Reserve, who at the time was Paul Volcker. Today both men are working on another municipal crisis- the financial crisis facing U.S. states. They have raised $2 million from foundations and other sources, and hired a staff. They plan to publish a report on the crisis in 2012. The idea is to throw light on the issues so that the public can understand this better. Volcker says work is more relaxing than fishing, even though both men have spent much time fishing. The conversation drifts to the Occupy Wall Street protests and Ravitch says people forget what Teddy Roosevelt said about the malefactors of great wealth. Volcker insists it was Franklin Rosevelt, Ravitch says its Teddy.

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An analysis done for the Wall Street Journal by real estate portal Zillow.com, shows the median down payment in nine major U.S. cities rose to 22% in 2010 on properties purchased with conventional mortgages. Banks favor higher down payments today because it reduces the chances of delinquencies. Median down payments were at about 20% in 1990, then the payments declined in the nine cities Zillow looked at: Chicago, Stockton, Las Vegas, Miami, Phoenix, San Diego, San Francisco and Tampa. The drop went as far as 4% in 4th quarter 2006, and in some places close to zero. Experts say these are the markets where more home buyers are under water. A 2009 study by the Federal Reserve Bank of St Louis shows that buyers with smaller down payments are more likely to default in unfavorable economic situations. A contributing cause of the 2008 sub-prime mortgage crisis was the very low down payments. Federal Deposit Insurance Corporation chairwoman Sheila Bair, says she supports minimum 20% down payments....

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James Pressley reviews Simon Johnson and James Kwak's new book - "13 Bankers: The Wall Street Takeover and the Next Financial Meltdown. " He suggests reading the first and last chapter for what the authors recommend, limiting banks to no more than 4% of GDP in assets or $570 billion maximum, and investment banks to 2% of GDP or $285 billion. Pressley agrees that incremental steps are not going to change the situation. And the authors have thought this thing through, with Simon Johnson, a former chief economist at the IMF and writer of the Economix columns in the New York Times on the current crisis in Greece, Portugal and Spain. Some of their analysis on that crisis has been borne out by developments, as Greece lurched towards default with the slow response of Germany enlarging the dimensions of the crisis, and requiring a larger bailout for Greece of $160 billion in late April.

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This editorial in the Wall Street Journal on U.S. Defense Secretary Chuck Hagel being asked to step down is critical about the conduct of policy. It says Hagel is taking responsibility for the failures of foreign policy in the White House. It points to the memo written by Hagel to the NSA advisor Valerie Jarrett, whom it refers to as "Vice President," which called for clarification on policy towards the Assad government, reflecting the views of the military brass. Hagel was criticized for this inside the White House for not providing options. WSJ says the president and the small innner circle of advisors McDonough, Jarrett, around the president, want nothing more than appearing to be solving the problems without having to take action for achieving solutions. WSJ's editors say everywhere they go they hear "rogues" think they have a 2 year window to push ahead for the remaining 2 years till a new president takes office.

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The top 1% of billers get 17.5% of the payments from the U.S. Medicare program for 2012, according to the Medicare agency's reports. The Medicare agency released data with details of payments to 950,000 doctors, medical providers, certain health care companies, the second year this information is being released. This covers $90 billion of payments. Astonishing as it may sound the transparency comes late, after large increases in medical costs and the increasing U.S. deficit. It happened only after the long and persistent effort by the Wall Street Journal to overturn a 1979 ruling that required such records to be kept secret. By intervening in that suit in 2011, the WSJ's parent company Dow Jones was able to convince a judge about the need for transparency, leading to reversal of the injunction in May 2013. The WSJ and the media has used this information to monitor the waste and fraud in the Medicare system, a vital role only the media can perform to protect the public interest.

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Peter Fisher spent 15 years at the New York Fed and was Under Secretary of the Treasury for domestic finance. Interviewed by Maria Bartiromo he says the fourth quarter is going to be very hard and its going to take several quarters to get some stability and freeing up credit markets. Why did this happen. We had says Peter Fisher several years of negative interest rates the middle of this decade, and its this essentially free money that distorted the system. Capitalism he says is premised on the idea that capital is a scarce commodity rationed with a price mechanism. And everybody took advantage of this to leverage themselves too far from the clever guys on Wall Street to people in the housing and financial services industries. This in his view was the engine that led the economy so far astray. Fisher does not believe all financial institutions should be treated by fed and treasury the same way. The ones that overly leveraged with weak managements and are doing poorly ad not likely to survive should be closed. Once it is clear that the prospects for some financial institutions are dim and their survival is uncertain he thinks Fed and Treasury should not wait around for consolidation but close these as quickly as possible. He sees some banks being closed and not just commercial banks. ...

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Peter Navarro's thinking is genuinely felt and genuinely thought out after 20 years  at Harvard, UC Irvine and other universities, as an economist who abhors sitting in the office with textbook theory that has no relevance to life of working families in the heartland of America. He says of these textbook theory economists and the American companies that have recklessly shifted America's industrial base to China year after year and decade after decade- “The same damn fools who supported NAFTA, China’s entry into the W.T.O., and every other trade deal that was supposed to benefit America but only benefited Wall Street and the foreign nations screwing us. Those mainstream economists need to get out more often — maybe to Ohio or North Carolina or Pennsylvania or Wisconsin or Michigan.”  He says the 70 nations including the big ones Japan, South Korea, Taiwan, India, Britain and the European Union are already neogtiating with the Trump administration. What more proof does one want. The Nation will get a better deal as it is about fairness in world trade, and an even playing field. Navarro calls it "a beautiful thing." The three dimensional unique approach taken by Navarro, Bessent and Lutnick and by Trump is working, says Navarro. Fifteen decades ago A. Lincoln stated- "The dogmas of the quiet past are inadequate to the stormy present. The occasion is piled high with difficulty, and we must rise to the occasion.As our case is new we must think anew, and act anew. We must disenthrall ourselves, and we shall save our country."   ...

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Trump says he supports the House Republican tax plan for three brackets 12%, 25% and 33%. In his earlier proposal Trump has supported a top rate of 25%. He made these comments, including support for deducting childcare costs, in a speech at the Economic Club of Detroit. Trump did not repeat a call for repealing Dodd-Frank bank supervision legislation. Clinton was critical of Trump's economic team of business people from hedge funds and the real estate industry, saying this was another example of "trickle down economics,"  for giving  "super big tax breaks to large corporations." Michigan has not voted Republican since 1988, and the auto industry rescue was organized by president Obama, a point heavily advertised in the 2012 presidential campaign. Romney had opposed the rescue effort, and during the 2012 campaign the WSJ reports say  Trump called the bailout of automakers a mistake because of expansion overseas.

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The impact of foreclosure in one Detroit neighborhood called Boston-Edison, where Henry Ford once lived and how the residents who have a neighborhood association going back many years to the 1920's are coping. The human consequences of foreclosures for a neighborhood. How could either side win, the lenders or the borrowers in a foreclosure situation and the need for the government to step in and bring some sense to the whole thing before it sinks both and blights towns and neighborhoods across America. One home bought for $179,000 in April 2006 was sold in the Boston-Edison area for guess how much, $6,500. Which shows that by the time thieves who for the copper and metal mining of these homes can destroy tens of thousands of dollars in value in minutes, and the deterioration of the neighborhood with crime and boarded up looks, and the very presence of foreclosures on each street destroys enormous amounts of value so that in this case the bank and its lenders got how much, less than $6500 or less than 4% of its original price. Repeated all across America this just does not make sense. Just as it never made sense for those who benefitted from the housing boom to say that subprime lending was a good thing because it brought home ownership to the less well off. Only lending that is at rates that are reasonable and considers the borrowers true finances, and on ethical and fair terms can be good lending and only government regulation designed to be easily enforceable and keeps lenders responsible, can ensure that this happens, as a free market is not good for this sort of thing. And this is all the more true for lending to those who are less well of because their ability to screen these contracts and their wording is not adequate and their own understanding of their finances inadequate. Barclay's Capital estimates that there are 811,000 bank owned homes in the USA, up from 129,000 in 2006, and predicts that it will grow by 60% before peaking in late 2009. ...

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This article by Horowitz in the NYT shows some of the criticism leveled against the Clintons and how they were out of touch with the white working class voters who have drifted to Mr. Trump.  It may be overdone in that not all white working class voters have drifted to Trump, and a Gallup survey has shown Trump supporters to be some white working class but also many from other groups in society, and many older less educated voters.  Trade Unions have played a large role in this election, and workers in manufacturing have voted Democratic in midwestern states such as Wisconsin, Michigan and Illinois. Horowitz also ignores some points in this campaign such as when Bill Clinton was adept at openly stating that he agreed with people who said Obamacare had increased premiums, and that some of the Obamacare program needed to be fixed. This took some of the criticism of Republicans on Obamacare and turned this around. He also showed a better understanding at times of the plight of working class people just from his habit of listening and thinking about how this affects ordinary people, a skill he has even to this day. A 2014 NBC/WSJ poll showed Bill Clinton with a 56 percent favorability rating, which is higher than president Obama, and exceeded only by Michelle Obama at 64 percent. ...

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Fisher and Taub in NYT give a brief history of Venezuelan politics and government since the 1950's to help readers understand today's economic and political crisis under president Maduro. How did a country with huge oil resources end up with depleted cash reserves to the point of creating shortages of basic goods on supermarket shelves, how did inflation reach over 700%, and how did the economy contract by over 10%, by some estimates close to 20%, in 2016? Venezuela's story is a reminder that populist movements do not hold the answer to political or economic problems, as they create corruption of their own as new groups of people try to perpetuate themselves in power, and new economic problems as they try to win favor with their own support base. Also through economic mismanagement worsened by economic changes such as oil prices or some other adverse development in the global economy. Internal divisions means the capacity of the country to respond is weakened. Brazil has shown the problems of corruption with new political groups and the weakening of government finances. Venezuela is the extreme example of how a lot can go wrong over time after the initial response to a new populist group is positive as it was in Venezuela in 1998, even with advantage of rich natural resources. Change that fragments a country and polarizes a country instead of pulling together the country's human talent around a program that all groups agree to support, is a signal of future problems. The rule of law is an essential component not just of democracy, but of economic development and progress of any country. These are the lessons of Venezuela for today. Economic crises in the eighties led to loss of public confidence in the two main political parties which alternated in power since the founding of democracy in 1958. In 1998 a military officer named Chavez won the election on the platform of returning power to the people and reducing corruption. Chavez reforms initially were popular. Popular protests in 2002 led to the military briefly taking power before returning power back to Chavez. This led to Chavez moving further towards consolidating power leading to a polarization of society. The oil company workers who went on strike were fired replaced by Chavez supporters and oil funds were diverted to popular programs. In the process Chavez isolated Venezuela from the world economy, leading to lack of foreign investment, and Venezuela falling behind other countries in Latin America, even though it had large oil resources. To retain control of the streets this report shows Chavez helped organize the colectivos or local supporters organized as vigilante groups, which has led to further polarization. Corruption in the military and with the colectivos has led to power being fragmented between different groups. The oil companies fund reserves were depleted by corruption depriving Venezuela of an essential cushion as oil prices dropped. Chavez died of health problems with Maduro winning the election in April 2013 by 50.6% of the vote. The parliamentary elections led to the opposition parties winning by a landslide in December 2015. The current problems with daily street protests stems from the economic crisis, with inflation as high as 700% and shortages of basic goods, the economy declining by over 10% in 2016. The uncontrolled printing of money has fueled rampant inflation.The efforts by president Maduro to nullify the powers of Congress in an effort to control the country and override Congress, has worsened the discontent with the government.   ...

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Layoffs in 2008 for Wall Street could be as high or higher than 20%. Things look bad and are getting worse.