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Living wills of BNP Paribas SA, HSBC Holdings PLC and Royal Bank of Scotland Group PLC come under increased scrutiny from the U.S. Fed. These banks were added to 11 U.S. banks required to submit new drafts of "living wills" by the end of 2015, which ensure no damage to the U.S. economic system from a bank collapse. Only Wells Fargo & Co.'s "living will" was accepted by regulators as not causing economic damage. In making the decision the Fed and the FDIC agreed that the "living wills" were "not credible."

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Elelven of twelve Fed Governors support the U.S. Federal Reserve's decision to keep rates low till unemployment falls below 6.5%, as long as inflation remains subdued at 2-2.5% and inflation expectations are low. Only the Fed governor of Richmond expressed a dissenting vote. The Fed in its policy statement said it was addressing the problems of the last three years in housing and joblessness. Charles Evans of the Chicago Fed put it this way in a Sept 2011 speech- suppose the inflation rate was 5% when the target was 2%, then central banksers at the Fed would have acted as if their hair was on fire to tackle inflation, then why shouldn't the Fed do the same for unemployment. He succeeded in convincing Bernanke, Yellen and other Fed governors. Bernanke emphasized the enormous cost in human potential and productive capacity of the U.S. economy from high unemployment and people dropping out of the labor force.

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This Journal editorial points to the low labor participation rate of 63.2% in the U.S. as indication of the high unemployment in September 2013. About 90.6 million men and women over the age of 16 are not working, compared to total employment of 144.3 million, based on Labor Department statistics. Factors contributing to this are the six million baby boomers turning 65 since 2008, more young people staying in school in a poor job market, easier access to government support benefits such as unemployment insurance, disability.

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Research figures show corporate insiders are not buying into the rally in the U.S. stock market in Feb. 2012.

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Raghuram Rajan, former chief economist of the International Monetary Fund, is appointed the new chief of India's central bank in August 2013.

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The U.S. experienced a net increase in jobs of 69,000 in May. The average for the March-May 2012 period is 96,000 jobs, which is down from the figure of 245,000 net jobs added in the previous three months December- February 2012. Increasing auto sales did not increase jobs by much- only 12,000. Job gains were in health care, transportation and warehousing, with cutbacks in construction and at the local government level.

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A common error in taking out student loans is assuming that federal government loans are cheaper than private loans.

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The NYT raises questions about the stress tests. It asks whether the modest economic bounce that may or may not occur, and amix of policy actions- such as the capital infusions into banks, fiscal stimulus, and other government interventions- will revive the banks? And says its not sure at all. Questioning whether the lack of stronger government action was a wise move by the Obama administration, in the same manner as three experts Hubbard, Scott, and Zingales did in an oped piece in the WSJ last week, the NYT editorial says, "what is known is that buying time, rather than forcefully intervening to restructure weak banks, can be a dicey gambit." See the link to Hubbard. Hubbard and his colleagues say that President Obama has the wrong Roosevelt in mind, its not Franklin but Theodore he should be looking to, and his admonition to talk softly but carry a big stick. It also raises the question about the regulatory reform, and the government oversight, that as Krugman noted in a piece last week, is receiving only a weak response from the Obama administration, and the dangers of going back to "business as usual."...

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How the stress tests treated Morgan Stanley and Goldman Sachs differently. In the worst case scenario Goldman was shown as two and ahalf time as profitable as Goldman. The government assumed Goldman had $18.5 billion in resources other than capital to absorb losses, and only$7.1 billion for Morgan.

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Women in a 2011 group studied by Peter Cappelli of the Wharton School, University of Pennsylvania, Monika Hamori and Rocio Bonet of the IE Business School in Madrid, show increasing numbers of women and foreign educated managers in top positions at large corporations. Mary Barra of GM and Satya Nadella of Microsoft are two of the prominent names appointed recently. Women now have 18% of the top positions at large U.S. corporations and foreign educated have 11% in this 2011 group. The numbers would be expected to be higher in 2014 with an acceleration in this trend. On average it takes women 28 years to reach these positions compared to 29 for men. A big dropoff is noticed in the study for women in the corporate promotion track who are middle managers for a few years.

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Under IMF and US presssure S. Korea's government took tough steps to resolve its banking crisis in 1997. The government closed or restructured 12 of the 32 largest banks and put in $60 billion to write off bad loans and replenish cash reserves of remaining banks, says Prof. Eichengreen. The Korea Asset Management Corporation, a public fund, bought about two-thirds of the problem loans on the bank's books, to free up capital for new loans. This was also done in a compressed period of time under US pressure. In the US because of heavy lobbying influence in Washington and with the Bush and Obama administrations, and the lack of any external pressures such as S. Korea experienced, the banking industry has not undergone a serious restructuring. Volcker recommended reforms have actually been watered down. The difference in the two approaches is striking. S. Korea had the advantage of being able to rebound with exports to a growing US and Europe during that period. A serious restructuring of the banking industry was the first step, something that has not taken place in the US. And there is a failure to cleanup the problem of mortgage backed securities in the US financial system. ...

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S. Korea's household debt is now 155% of GDP, according to the OECD. For the last ten years the household debt is growing at 13 percent, double the rate of GDP growth. Korea was not affected to the same extent as other countries by the 2008 financial crisis. As a result household debt continues to grow rapidly. The household debt to disposable income reached 140% in the U.S. before the 2008 financial crisis, according to the IMF. Spain reached a level of 130% before the crisis, according to the McKinsey Global Institute. The Financial Services Commission in S. Korea has taken steps to control this- by imposing limits on bank lending, tighter credit checks by banks, and incentives for shifting to fixed rate mortgages. About 95% of mortgages in S. Korea are adjustable rate mortgages. Housing loan rules in S. Korea require loans to not exceed half of the value of the house, and annual payments of principal and interest cannot exceed 40% of the owners income. This effectively insulates the banks from the effects of a housing bubble. One of the effect of the 1997 financial crisis in S. Korea when it turned to the IMF for assistance, is the relaxing of controls on interest rates to encourage spending in a country that encouraged saving. The result is the growth of a nonbank sector which is not subject to central government regulation by the Financial Supervisory Service. The non-banks are regulated only by local governments and can charge upto 39% compared to 4-6% at banks. Non-banks are also allowed to turn in their licenses and operate charging even higher rates. Each year about a 1000 nonbanks from 18,500 such banks in 2007 are joining the black market according to the Consumer Loan Finance Association, showing the size of the problem of black market lending to low income borrowers. S. Korea has mostly relied on growing GDP to control the situation, but slowing growth could lead to unsustainable levels of household debt....