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Pravin ordhan who won confidence as head of the tax authority takes over Trevor Manuel's post of Finance Ministera, and Trevor is kept in an important position in strategic planning. THe communist party and unions get the Education and Economic Development ministries, but otherwise Zuma indicates a preference for continuity in South African financial and economic affairs. With one third of potential workers are without jobs according to the government so there is considerable pressure for improving these measures of development.

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President Zuma creates a new cabinet post as coordinator of government strategy, for former finance minister, Trevor Manuel. This helps him keep the confidence of markets in South Africa.

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President Obama's new rtegulatory reforms in final form as they go to Congress for passage. Exrtensive preparatory meetings with financial firms and industry participants, legislators, and consumer agencies and otehrs between Summers, Geithner and their aides and these firm's executives and leaders before the reforms were worked out.

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An interview with the President in which he says "the only real regulatory approach I've been interested in is in raising fuel efficiency standards so we can wean ourselves off dependency on foreign oil." Mr. Obama is saying that his real desire is to be doing less, when is has had to do more. The key words he comes back to are rules of the road, transparency and openness. The government's role in his view is to set clear rules of the road, but not to so few rules that you have the kind of situation that ocurred to setup this bubble and the financial collapse. In his view the right rules won't stifle finnacial marketplace innovations, but allow a recovery that does not have any of the bad characteristics of the financial bubble. He wants to see a sustainable model of economic growth that is not dependento on a supply of foreign dollars, or high levels of debt, and looks to the dynamism of the free market for growth.

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Nocera says that the Obama regulatory reform did not address the issue of banks or financial firms that are too big to fail. Issues that were raised by Former Fed chairman Volcker. It also does not address the issue of customized deritvatives, the derivatives that caused so much damage during the financial crisis, especially at AIG. For these derivatives the Treasury Department will establish a clearinghouse, so that their price and trading activity can be more readily seen. The reform places enormous trust on whoever is running the Fed. This trust has not supported by the actions of Mr Greenspan in letting the bubble develop, and in favoring little or no regulation.

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A summary of President Obama's financial regualory reform proposal by the WSJ Washington Wire. The official document is titled, A New Foundation: Rebuilding Financial Supervision and Regulation, running 89 pages.

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Pearlstein touches on the main issues raised by Obama's regulatory reform proposals. A thorough and independent analysis by a panel of seasoned regulators and independent experts would have done better, Pearlstein says. It would take more time, but the regulatory reforms need to be thorough, considering the damage that has been done to the financial system, and considering the opportunity to do something serious about this. It would have also shielded the administration from criticism if tough action was needed in some areas. Hearing all sides of the matters at hand, and weighing the pros and the cons on each issue is helpful, but there are gaps in this approach when some of the key actors like Geithner and Summers have worked too closely in the past with the financial firms that are being regulated, and may have a tendency and bias in that direction. The President's lack of expertise in these areas, and a desire to keep the regulatory hand as light as possible, and intense obying by financial firms, can tilt things away from serious regulatory reform. The danger is that the opportunity to fix things with major structural changes where necessary, and some tough actions where needed may be lost. Some of the obvious gaps are mentioned by Pearlstein. There is no measure to tackle the situation with the ratings agencies. There will be more transparency than before but complex derivative trading can take place prettty much like before. Credit default swaps will continue as before. If you set up acouncil of regulators, then why not bite the bullet and consolidate them into a single agency, asks Pearlstein? Banks will continue to have their proprietary trading desks, from where they ran up huge losses, these act like in-house hedge funds. Ultimately a lot depends on who is running these agencies, or the Fed, and what is the prevailing opinion about markets in the country. The prevailing opinion that the less regulation the better for free markets, and the lack of independent regulators, and poor appointments, had a lot to do with the capture of the regulatory agencies by the the firms they were supposed to regulate. And on this point the President is on safer ground, as he can ensure that he appoints tough regulators and create a new culture that puts regulation right where it should be, as a necessary ingredient for free markets, just like rules of the road. And in one area the President has created a new structure, a new agency with powers- this is where consumer protections are at stake- so that the abuses that took place with mortgages do not take place....

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Michelin managing partner Senard is cautious about the economic outlook. Michelin is very sensitive to forces that affect GDP. He says he sees no pickup activity in the truck business. He isn't confident arecovery is taking hol. Much of what you see in the economic upturn is due to China's economic boom, plus the rebuilding of inventories. Michelin's production is up to 70% of capacity from 30% earlier this year.

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Javier Solana reflects on his years building the institutions for a European Union foreign service. He has been the face of the EU in foreign affairs since 1999. A former foreign minister of Spain, Solana says in an interview with Steven Erlanger of the NYT, that Europe has been an adventure and he is proud to be one of its guides. In his view the European Union is a journey, a beautiful journey from the alliances that led to World War II, to the broader union and a zone of peace and stability in Europe for the first time in centuries. In a world which has changed completely with the West having less influence, he syas Europe and the USA need to talk about how the future will be shaped. For France, Germany and Britain to think that they can play an independent role in the world is a fantasy. Europe is not a sentimental thing, but a must, he says.

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A look at the graph showing inflation adjusted GDP growth in the South African apartheid years of 1980-1994, show GDP declines in 6 of the 14 years, with 3 years of decline in the last 5 years of apartheid rule. Which shows that the economy was suffering from a combination of world sanctions and the war with the African National Congress to defend apartheid. In 1996 an agreement was reached with the ANC to transfer power and end apartheid in South Africa. Some of the pressures against apartheid came from the business community's perceived interest in maintaining growth. This has been borne out by the graph showing the inflation adjusted growth in the years of ANC rule starting in 1995, which show a striking difference with growth between 4-6% for 1995-2008, high growth rates for 13 of 14 years, and slight decline in only one year 1998. This bears out the policy of business and a democratically elected government with respect for minority rights, and black-white-colored and tribal loyalties being reconciled to goals of economic growth and democracy. For two years Nelson Mandela head of the ANC maintained continuity in economic policies by retaining the white finance minister from the previous apartheid government. In 1996 Trevor Manuel who had little economic experience- who worked as an activist to organize protests against high bus fares and rents under apartheid governments- was made finance minister. He has been finance minister now for 13 years, and only resigned when President Mbeki resigned after losing the leadership election of the ANC. In the early years he controlled government spending to pay off South Africa's tremendous debt. He brought down inflation and built up foreign reserves. After the election of Jacob Zuma, another ANC veteran, supported by young black people, in September 2008, and his likely win in the current election, it appears that Zuma will retain Trevor Manuel. This ensures continuity in the face of the global recession, especially hitting commodity producers like South Africa. South Africa compares favorably with Nigeria in economic growth and modernization, spread of mobile phones, computers, literacy rates, but suffers from high unemployment, and low life expectancy. Pressures are increasing to do more for unemployment, address the crumbling infrastructure, and provide more help to the poor. Zuma has the support of the unions known as Cosatu and the Communist party, and of young blacks, in a country where one third of the population is under 15 years of age and over 40% of the population has mobile phones. South Africa has the largest economy in South Africa, is larger in land mass than Nigeria, has about 45 million people - a third of the population of Nigeria with 127 million population which has fertility rate of 5.6 twice that of South Africa- and GDP of 213 billion compared to $72 billion for Nigeria. Literacy rates are 82% for S. Africa and 68% for Nigeria, showing that higher literacy rates are lowering fertility rates and population growth. The figures are from the 2007 Economist pocketbook World in Figures. A strong press and media provides check on corruption which siphons away development funds in the public sector in commodity dependent countries like Nigeria. The private sector controls commodity exports of South Africa. So even with the relative lack neglect of the poor and unemployed in South Africa, and of health care, South Africa has done better overall than Nigeria. Average annual inflation was 5.1% in South Africa, compared to 15.7% in Nigeria, and this hits the poor the hardest. It goes to show that when it comes to modernization it helps to be inclusive, reconciliation oriented, and bring together all the resources of the country including a vigorous press and media, and business, regardless of color, race, creeds, faith, tribe or caste....

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Britain's general election results show Conservatives losing their majority in parliament. Conservatives gained 318 seats, but only because voters in Scotland voted tactically for Conservatives to avoid Scottish independence, leading to 19 fewer seats for the Scottish National Party. Labor gained seats in England and Wales. The Liberals added 3 seats. The final tally was Conservatives 318 seats, Labor 260 seats, Scottish National Party 35 seat, Liberals 12 seats Democratic Unionist Party 10 seats, others 13 seats, UKIP 0 seats. Conservatives can form a government only by joining with the Unionist Party based in Northern Ireland to have the 226 seats for forming a government. This election creates questions about the whole idea of Brexit, as a majority of the voters supported Labor, SNP and Liberal Democrats, with a total of 50.4% of the vote, according to BBC, for parties that did not see Brexit as the priority for Britain. Labor 40.0%, SNP 3.0% and LD 7.4%. By contrast UKIP, Conservatives and DU, pro-Brexit together had total of 46.1% of the vote. Any Conservative government is likely to be weak, and according to this report in WSJ may lead to new elections by the end of the year. The high turnout of 69% shows voters wanted to send a message about their doubts on Brexit. A Labor government cannot be ruled out. ...

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This report in the WSJ is about extensive cheating in ethics exams in continuting education for licenses in accounting. The failure of big accounting firms to prevent cheating. Ernst and Young will pay a $100 million fine after the SEC under Gurbir Grewal conducted an enforcement action. 

Other firms and banks have had similar problems in ensuring ethics standards are followed. For the first time in 3 decades Ernst and Young is considering splitting itself up into a consulting and a separate auditing company in recognition of the principle that combining the two activities is flawed to begin with. Increasing sales in the consulting activity leads to diluting the strength of ethical practices in the audit activity when the two are within one company. The two are diametrically opposite in intent and the tolerant attitude to combining such activities since the 1980's was itself an early mistake.

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The German ambassador to India calls the Indian preparations for the G-20 meetings simply outstanding. Annalena Baerbock, the German Foreign Minister, is a very unpretentious person and when her plane arrived early, decided to spontaneously leave the plane without any formal arrival ceremony. The German ambassador says- "she laughed, she thought to herself it was quite funny, and we had a very nice welcome." Annalena Baerbock is simply one of the friendliest persons from Germany to land in India. It is clear about the way she relates to Africa and India- Baerbock was amazing the way she took the Benin Bronzes back to their home ground in Nigeria from Germany recently. For India she is one of those rare visitors the country is grateful to have from Germany, and welcome like no other, as one of its own. Baerbock and Habeck have given Germans something they can feel optimistic about the future.

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Places like Rapid City, South Dakota, and Topeka, Kansas, where people are choosing to live because of the affordability of homes. Average 30 year mortgage jumped from 3.1% at the end of 2021 to 5.0% by April 2022. High housing prices in coastal and mountain region cities and remote work flexibility are reordering where people choose to live. Rapid City, South Dakota is near the Wyoming border, here you are in what was once the Wild West of Teddy Roosevelt, a western wilderness found in an 8 hour drive to Grand Teton National Park. Nearby to this 145,000 population city are Mount Rushmore and the Black Hills mountain range.

Other cities that are getting attention from younger buyers are Santa Cruz, California, Santa Rosa, California. These are smaller towns of less than 600,000 population with outdoor recreation opportunities and small city feel, and are also attractive to retirees.

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Jens Thurau talks about the chaos in Germany during this wave of the coronavirus in DW.com, and asks who is to blame- Merkel? The deniers? German behaviour sticking to rules? Lack of digitization technology culture? 

A German man 3 days short of his 60th birthday is turned away from a vaccination center because Astra Zeneca vaccine can only be given to persons above 60 years. The man is sent away starting a heated discussion at the vaccination center whether this was the right thing to do. He is ironically sent way because he is too young. Common sense has not prevailed.

Elsewhere local rules that are set down to the streets and house numbers where masks must be worn have been written down and followed. And deniers seem to think they have gone through enough hardships, when Italy and other countries have gone through much worse. German angst, he asks?

 

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The Fifth U.S. Circuit Court of Appeals granted a U.S. administration request staying the effect of a lower court ruling, giving the government the $3.6 billion in U.S. Defense Department funds to build a border wall. This money goes towards the goal of building 500 miles of the wall by the end of 2020. In a 2-1 decision the court majority cited a Supreme Court order from July 2019 that gave the Trump administration the go ahead to use military funds for border wall construction.

The $3.6 billion is part of a $6.7 billion plan of spending under an emergency declaration by president Trump on grounds of border security. So far 100 miles of border wall have replaced flimsier construction barriers that existed. The government now needs to convince private land owners along large stretches of the border along the Rio Grande and other areas to give up their land for the wall. 

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Researchers at Kyoto University and Hokkaido University present their analysis at the advisory panel to the Health Ministry in Japan on the Delta variant on June 23. The research by Prof. Hiroshi and Prof. Kimihito shows the Delta variant from India is 1.95 times more transmissible than the original virus.

The group of researchers examined PCR tests from Japan and an international database for their analysis. Based on data from Japan the researchers looked at the Delta variant is projected to account for more than half of new cases in Japan by July 12. By the time the Tokyo Olympics open on July 23 this variant is projected to account for 69% of new cases.  The researchers say the recent lifting of the emergency restrictions in Tokyo and other cities as well as the high transmissibility of the new variant is likely to increase risks from infections in future.

 

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Voters were split in places such as San Diego and Sacramento which have a higher degree of homeless than other places in California. California has one third of America's homeless people. Part of this is that there is a sense that this problem can't be solved, a sense of helplessness that nothing so far has worked. And confusion created about it shifting funds raised from a 1% tax on wealthy for mental health services to be delivered by counties and protests by local mental health organizations that it would prevent prevention efforts. This tax money is shifted to the state level which will put responsibility for solution in one place with a comprehensive attack on the problem in a multipronged way getting to the root of the problem with adequate funding for the first time- the unaffordability of California housing where a 1-2 bedroom house could cost $1 million.

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Dressing in a sloppy manner is related to a sloppy approach to other people's money, says this NYT story about the 30 year old founder of FTX. Silicon Valley mystique was partly built on this type of clothing and style by careful manipulation of cultural elements, just as the Marlborough campaign for cigarettes with "glamorous" cowboys at one time. The culture based in Silicon Valley has led to a massive misallocation and destruction of capital. This diverts capital into non essential purposes that is critical for  investment in America's aging and dilapidated infrastructure, and for creating social mobility in the US through investment in manufacturing, education, health and communities throughout the US. It was sold like a pack of Marlborough cigarettes were once sold in the US with television advertising of the glamorous cowboy. Conceived in 1954 it lasted till 1999.

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Inflation slows to 3.2% for October 2023, and decelerates from 3.7% in the prior month. Moderate energy prices contributed, so did lower used car prices and lower airline fares. It is also broad based decline which makes it sustainable. Biden says- "I am fighting every single day for lowering costs to hardworking families." It reduces the pressure on the Fed to raise interest rates further. Inflation in food, bakery products and fruits and vegetables was 0.2 percent and apartment rental at 0.5 percent, electricity at 0.3% making it truly broadbased. This points to major progress on inflation, that adds to gains in low unemployment that have not been seen for decades. Wage gains for workers after the UAW agreement are spreading to other companies and industries which provides cost of living relief for workers and families across the 51 states for 2024. Lowering inflation and increasing suppressed wages is the way out of the cost of living crisis facing Americans. ...

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Henrik Bohme says in DW.com that the German government may have to step in to rescue Deutsche Bank after the $14 billion legal settlement with the U.S. Justice Department for the bank's practices before the financial crisis of 2008. He points out that there are other legal settlements that are expected, including one for money laundering charges. In all he says there are 7,800 legal challenges the bank faces. The share price has dropped by 90% to 10 euros by September 2016. The market capitalization is low at 14 billion euros, and it was dropped from the Eurostoxx 50 index because of this. It has 1.7 trillion in assets under management, is a systemically important bank, which means the German government has no alternative but to step in and rescue the bank. Issuing new shares with so many legal challenges is not an option as there would be few buyers.