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Vice President Harris speaks at Carnegie Mellon University in Pittsburgh, Pennsylvania, about a fundamentally different economic vision for the country- one for the Middle Class and the other for the wealthiest in the country. "For Trump our economy works the best if it works for the people who own the skyscraper, not those who build the skyscrapers, those who wire them, the people who mop the floors." "I have pledged that a strong middle class will be the defining goal of my presidency. It is not about ideology, it is about common sense. It is just common sense." "Like generations before us let us be inspired by what came before us. I believe in what FDR called "bold persistent experimentation." "I believe in free and fair markets- in transparent rules of the road. To respect the rights of unions, and workers, and fair competition. And where this is violated I will hold them accountable. I believe the active partnership between the government and the private sector is the best way to unlock the opportunities in our Economy." ...

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Munich Security Conference is being organized by Christoph Heusgen, the conference chair, who was an adviser to Angela Merkel and previous German  Representative at the United Nations. It will be held Feb 14-16 at the Bayerischer Hof hotel in Munich. JD Vance will be attending for the US with alarge delegation including Keith Kellogg US DJT envoy to Ukraine and Zelensky of Ukraine. German federal elections are on Feb. 23, 2025 with CDU's Merz holding a lead. Pete Hegseth Defense Secretary is not attending the conference. Hegseth has expressed views skeptical about Ukraine. Mark Rutte, the former Dutch PM is attending as Secretary General of NATO. The Munich Security Conference Report cites DJT and says- "Indeed, the notion of 'resource scarcity' has become a central premise of Republican foreign policy thinking." Germany barely spends 2% on defense. DJT wants to see 5%. DJT's comments are published in the Munich Security Report- "We were being ripped off by European nations both on trade and on NATO." "If you don't pay, we're not going to protect you." ...

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French premier Francis Bayrou puts forward ideas for the new government in Jan 2025- Immigration- "Seeking a form of harmony also means addressing the fears and realities that immigration raises in our country. (...) My deep conviction is that immigration is first and foremost a question of proportion. It is our duty to direct a policy of control, regulation and return to their country of those whose presence, by their number, endangers the cohesion of the nation." Education- "I think that, in our school and university system, it must be possible to accept and even encourage [career changes], changes in [professional] training."   PM Bayrou for the promotion of reading, at a time when "screens have taken over from any other mechanism for transmitting knowledge. This is a national issue."  "We'll have to go back to studying the notebooks of grievances that were presented by the 'Yellow Vests'," for "the expectations, often the most unspoken, that are those of social circles excluded from power" to be heard. ...

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Treasury Secretary Yellen says on her second trip to China that she will make this the top issue in discussions, the danger that Chinese overproduction in green energy products will lead to the kind of overspill that happened for steel and aluminium where subsidized products drove American companies out of the market. Speaking at a solar energy factory in Norcross, Georgia, that was itself closed in 2017 and is back up again with the assistance in the Inflation Reduction Act for promoting American green energy manufacturing, Yellen said: "It is important to me and the president that American firms and workers can compete on a level playing field." Yellen's remarks on supply chain resilience- "China's overcapacity distorts global prices and production patterns and hurts American firms and workers, as well as firms and workers around the world. Challenges for individual firms can lead to concentrated supply chains, negatively impacting global economic resilience.”   ...

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German automobile companies have made some bad bets on China sales. Sales in China have collapsed for Porsche as Chinese are buying local Chinese products and local Chinese autos are competitive. NYT reports on Porsche and the bad bet on China sales, then as tariffs hit serious problems.

Oliver Blume Porsche CEO says-

"Our market in China has literally collapsed. U.S. import tariffs are weighing on our business.”

“We already faced massive headwinds last year — now we are experiencing a violent storm."

Audi, Mercedes and BMW have been caught in a storm by making most of their US sold cars in Germany. The warnings from the first DJT term were ignores as they were by Apple in the US which continued to make in China. These companies are now facing problems of acting within a short time to take action to build in America to avoid tariffs.

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Higher unemployment should be keep wages from rising and keep inflation from creeping up.

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This editorial in the Hindu- after encouraging news from Moody's and the World Bank on India's economic future- says that the Modi government should not be distracted by the upcoming elections as it focusses on the task ahead. After a gap of 14 years Moody's raises India's credit rating one notch. Moody's cites steps taken by the Modi government as creating a better environment for future growth- the implementation of GST goods and service tax, efforts to clear some of the bad loans in the banking system so that capital can be freed up for infrastructure investment, and reducing bureaucratic hurdles for clearance of projects. Moody's cites the high public debt burden as a constraint for growth. General government debt is at 68% of GDP in 2016, higher than the 44% median for economies in this range. On the plus side the better targeting of welfare measures to help the poor including steps in the banking field, bringing more businesses into the formal sector to improve tax revenues, and the large pool of private savings, are cited by Moody's. Critical is timely implementation in the future. As the discussion in the media on bullet trains and other new infrastructure shows, there is not enough momentum for stretch goals as China has done over the last 2 decades.   ...

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Pearlstein points to the need for the structural changes in the U.S., Europe and China to address the serious imbalances that are at the root of the problem. This process will be painful and mean a short term drag on the economy even if the right actions are taken. The process of unwinding the imbalances will take time. Lower growth in China will be good for the bubble in real estate markets and the reduction in the trade surplus, even though this will reduce imports of European and U.S. machinery. Higher savings in the U.S. and reduction of consumer debt will slow retail sales but this is healthy for longer term growth. The same is true for savings in deficit reduction that will result in more layoffs at the local level. The government needs to have similiar action take place at the banks to end their "extend and pretend" practices and finally write off bad loans in residential and commercial real estate. There is no easy way out, no solutions that can be made without a sharing of the pain. Policy makers around the world have tried to look for painless solutions for years and this may be the end of the road. There is some action that the governments and central banks can take. Pearlstein suggests that the European Central Bank buy up some of the sovereign bonds being dumped on the market even if it means printing money. The Fed, the Bank of Japan and the central bank of China can also swap some of the Treasuries they own for European sovereign bonds. This would give time for the EU leaders to give the European Financial Stability Facility the resources and powers to replace the sovereign bonds with more reliable European bonds. The Fed can take this opportunity to sell some of its huge pile of Treasury bills into the market so that it has more room for action in future years. The U.S. government can move up the spending for infrastructure in years 8, 9, and 10 to the next 2-3 years to give some support to the economy as these changes take place. The spending decisions should be left to an independent Infrastructure Bank. See the related article by Krauthammer in the Washington Post, August 5, 2011, which provides a companion policy prescription for U.S. deficit reduction based on the work done by the Bowles-Simpson Commission and by preserving efficiency and fairness....

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An independent parliamentary panel in Japan described the Fukushima nuclear plant disaster as a "profoundly man-made disaster." It was sharply critical of TEPCO, the company running the plant, and the Japanese government's response. The investigation chairman Kiyoshi Kurokawa said in the report: "What must be admitted- very painfully- is that this was a disaster 'Made in Japan,' its fundamental causes are to be found in the ingrained conventions of Japanese culture: our reflexive obedience; our reluctance to question authority; our devotion to 'sticking with the program'; our groupism; and our insularity." This comes as a report by TEPCO shifted public attention to "a tsunami beyond our imagination," creating a large credibility gap with the Japanese people, because the public is skeptical about TEPCO's attention to safety during the period leading to the accident. The parliamentary report calls attention to safety factors that were ignored so that companies would be required to take further steps including costly modifications of plant equipment. A critical flaw was the lack of a independent safety agency that could enforce safety measures that TEPCO might be reluctant to make because of cost considerations. Astonishing as this may sound, the Nuclear and Industrial Safety Agency (NISA) in Japan is part of the same government ministry that promotes nuclear power, creating a sort of "nuclear bloc," which before the accident connected the safety agency to the bloc. Because of this the panel report says, NISA did not require TEPCO to prepare for a full station blackout- the loss of main and backup power- because the "probability was small." Other factors that need to be addressed are the breakdown in communication and cooperation between the people operating the plant and the people responsible for Japan's nuclear safety. The prime minister's office waited too long before declaring a state of emergency. To come up with the conclusions the panel made 1000 intervews and conducted 900 hours of hearings. The questions left behind by the nuclear accident in Japan are whether Japan should continue with the same level of dependence on nuclear power, whether it should shift out of nuclear power on a gradual basis as Germany is doing ironically after the Fukushima accident while Japan is reactivating its nuclear plants to meet energy needs. If Japan continues with a smaller reliance on nuclear power what changes have to take place for an effective safety agency completely outside the "nuclear bloc," and the series of other changes that have to take place in the nuclear power industry's handling of safety. Public opposition continues to focus on this because of distrust of the nuclear power industry after the accident....

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From the first half odf 2007 to the first half of 2009 Business Week lost 46.2% of its ad pages. Magazines where news and information can be obtained on the internet are impacted more than others. McGraw Hill is now looking for a buyer for Business Week.

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News Corporation has designed a newspaper for the internet with the personal involvement of Rupert Murdoch. The newspaper is called The Daily and will be supported by Apple for the I-Pad. Pricing is 14 cents a day, 99 cents a week, or $40 a year.

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The political mood changes in Cairo as Egyptian voters choose a presidential candidate and Egyptians participate in an open political debate. For a country where open political discussion and honest elections had not taken place for three decades the change can be felt in Cairo streets.

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How returns in the U.S. stock markets of over 30% in 2013 change the picture of five year returns to the end of 2013 compared to the end of 2012. Long run has to be much more than 5 years and even longer for decent returns.

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The general feeling among the participants in this panel is that the Democrats were elected with a particular program in mind, the House was also elected recently, both Democratic. It should be their job to govern using their agenda which the voters want them to implement.

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A deal with Venezuela gives Eni Italian oil company 40% ownership in a block called Junin 5 in the Orinoco River belt. The $10 billion investment will be shared proportionally by the 2 companies PDVSA and Eni to expand production to 300,000 barrels a day by 2014.

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Chidambaram in an interview with the WSJ says he thinks India can sustain 8% growth in 2008 and 2009 and keep inflation in control at the same time bringing it down to closer to 5%, both of which would be acceptable in the more difficult global environment.

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NYT's Landon Thomas gives this exceptional report on how Deutsche Bank changed from a lender to the German auto industry and safe banking practices to enter the derivatives business and other opaque financial products that led to taking on huge risks. Deutsche Bank has agreed on Dec. 22, 2016 to settle with the U.S. Justice Department paying a fine of $7.2 billion for practices relating to faulty mortgage securities. This report says the problems started in 1995 with Deutsche Bank's leadership hiring Edson Mitchell of Merrill Lynch to promote the investment banking business at Deutsche Bank. Mitchell hired two derivatives traders Broeksmit and Anshu Jain. Mr. Mitchell died in plane crash in 2000 when he was 47 years age, Mr. Broeksmit committed suicide in 2014, 58 years in age, Mr. Anshu Jain, 53 years old, is the only surviving person of the three. Under Mr. Jain Deutsche Bank assumed more and more risk, and was involved in complex and opaque financial products leading to the toxic mortgage crisis, and manipulation of the lending rate for London banks.  It also lent $300 million to Donald Trump's businesses. Most of the profits generated from this venture have evaporated, with analysts estimating $15 billion in fines and penalties owed of the $20 billion that these ventures generated. Not counting the serious damage to the bank's reputation in Germany and the U.S. This report points out the role played by the CEO from 2002 to 2012 of Deutsche Bank, Josef Ackermann, in encouraging these ventures converting the bank from its original loan as a contintental lender to business to a bank selling opaque financial products for most of its profits. Landon Thomas also describes the events and days leading up to the suicide by Broeksmit, including a visit to a psychiatrist and Broeksmit's facing enormous stress about the investigations underway in Germany and the U.S. looking into the opaque financial products and practices of Deutsche Bank. This is also a cautionary tale about what happened in banking from the late 1990's leading to the collapse in 2008, leading to the problems of today- the need to rescue the economy in 2008-2009 and the low rate world that ensued damaging the savings of ordinary people, the infrastructure that was never built, the parallel crisis of the hollowing out in manufacturing as a false prosperity boomed in banking and finance. In a sense it is also a story of everyday lives that were damaged in the high flying boardrooms of finance in New York, London and Frankfurt. The revolving door between regulators and the banks made it harder to monitor and control banking risk letting this story unfold over decades, damaging the credibility of governments and the established political parties without clear alternatives from outside; as the dominance of Wall Street executives in the new outsider Trump administration shows.  ...

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Moody's downgraded its outlook on Germany's triple-A credit rating to negative. It also shifted to negative the outlook on triple-A ratings of Netherlands. Spain's ten year bond yield went up to 7.51% on July 23, 2012 according to Tradeweb. Analysts estimate Spain needs to issue 28 billion euros of debt for the rest of 2012 to cover deficits and repay maturing debt, and 50 billion euros in short term Treasury bills. An additional 30 billion euros may be needed if tax revenues decline increasing the deficit, and to meet the needs of regional governments. In changing the outlook for Germany, Moody's emphasized the costs Germany would incur if Spain needed a full bailout and if the situation spread to Italy, including the large exposures of German banks to Italy and Spain.

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Sharp swings in attitudes have left America divided in terms of education. A comparable situation exists also in the UK as areas with more education access have separated from areas with less access to higher education. As the WSJ analysis points out at one time social cohesion prevailed in the postwar years till 1970 with educational attainment playing a small part leaving social cohesion intact. Even in the period 1970-1990 when there was a shift for college educated women to prefer Democratic Party and white men without a college degree to prefer Republicans this was not a significant gap. The Democratic Party appealed to less educated union voters in manufacturing industries as well as it did with college educated men and women. This gradually fractured during the Clinton and Obama administrations as the Democratic Party  moved closer to the higher educated and drawing more support from new tech industries than manufacturing. Nowhere is this more evident  than in the way college educated women have shifted to the Democratic Party and white men without a college degree have moved to the Republican Party. Swings of different types are normal in elections and politics. But swings purely based on education are rare in American politics and not healthy for the democratic system of government. As the analysis from WSJ/NBC News shows college educated women favor Democratic Party by 33 percent margin. And the swing is even deeper for white men without a college educated degree who favor Republican by a 42% margin. This is the situation before the 2018 U.S. Congressional elections. The combined group of college educated women and white men without a college degree make up 40% of the U.S. voting public. This makes each group unreachable for the other party, a situation unimaginable for many of America's leaders if they would be living today- from presidents Harry Truman and Dwight Eisenhower, John Kennedy and Lyndon Johnson. White voters make up 70% of the electorate, and a situation where they would be unreachable for Democrats would be unthinkable or unimaginable for Truman, John Kennedy. And Eisenhower would also find it unimaginable that he would have to writeoff college educated women in his campaign.  By returning the Labour Party to its roots Britain is combatting this tendency for fracturing of social cohesion. In the way the UK's Blair administration moved away from Labour party's roots in manufacturing and the trade unions, the Democratic administrations under Clinton and Obama  moved away from manufacturing industries and the trade unions.   Most of the postwar leaders of the stature of Eisenhower and Kennedy would have seen such a situation as a significant failure in political leadership. ...

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What oil analysts would like to know about the Khurais oil field in Saudi Arabia is can it deliver. This is the Saudis big effort to sustain and increase oil production as other fields are aging and declining. The Saudis would like to see it add 1.2 million barrels a day to its current production of 11 million barrels a day. no date is set for when this oil field will come on stream and how much of the 1.2 million barrels a day will become reality. The Khurais field has been sitting there for many years while the Saudis tapped the Ghawar field just 60 miles away because of the complexity of the Ghawar field which situated deep within the rocky layers of the earth and dunes. Its been described as a hard sponge compared to the wet sponge that Ghawar is. The natural pressure is not enough to bring the oil up so natural gas or filtered salt water would have to be used. As natural gas is needed for soaring power generation needs filtered salt water will be brought from over 120 miles away from the Persian Gulf through pipes to Khurais and more than 100 injection wells have to be drilled so that 2.3 million barrels a day can be pumped down in a manner that would push the oil up but not kill an oil wellby going through a rocky fissure. All this has to understood through geologic mapping of 2700 square miles down to the microdetail for an area the size of Connecticut so that nothing goes wrong. 2.8 million 3-dimensional images of underground strata to trace any fractures in the rock that might cause trouble and building of models to simulate how the oil field may respond to water injection. The production would have to be monitored from Dhawan where the central monitoring facilites are for Aramco. Aramco the Saudi Oil company brought in for oil field services Foster Wheeler as project manager, Halliburton for drilling wells, Eni SpA's Saipem unit for water injection work, in the plan developed in 2005 with estimated cost of $6 billion. Halliburton is drilling more than 300 wells that go over a mile deep and then branch out horizontally, and 125 water injection wells. Nansen Saleri who heade reservoir management for Aramco and headed the Khurais revitalization effort is now running his own firm in Houston. He described it - the trick is to understand Khurais down to the smallest detail. This is a picture of the complexity and the resulting uncertainties of Khurais. A former head of Aramco oil exploration Mr. Husseini who retired 5 years ago says its quite possible that Aramco may achieve its target of 1.2 million barrels a day but isn't sure that production can be sustained at this level and what it might cost. Khuransiyah project was expected to generate half million barrels a day by 2007 en but is a year off schedule and many projects are running late from a shortage of steel and manpower. It used to cost $4000 to add one barrel of capacity through the 1990's now its estimated by experts to cost closer to $16,000 for a barrel added. So when will Khurais come on stream? And will the even more difficult Manifa field in the Persian Gulf come onstream? Its not certain. meantime oil reached 119 dollars a barrel. But analysts will be sure to watch this one and the new fields in Brazilian offshore waters to bring prices down just as conservation kicks in and global demand slips a bit from the super heated growth of the last few years especially from Asia. ...

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The Bush administration's and Paulson's thinking that letting the government buy parts of the banking system was unthinkable, as recently as late September, may have led to squandering of valuable time. Now Paulson is following Gordon Brown's lead in planning an injection of capital in banks in return for equity stakes, using much of the $700 billion Congress has authorized, and Paulson says the package that passed Congress gives Treasury all the authority it needs to do so. The failure to be open to this thinking earlier may have cost valuable time in addressing this crisis. And now there are second thoughts on whether it was wise to let Lehman fall into bankruptcy, because the Administration had not correctly anticipated or calculated the true cost of the Lehmann bankruptcy in terms of the way it created a crisis in the rest of the financial system. Paulson has still not taken Gordon Brown's lead in guaranteeing lending between the banks which the British are doing as part of their plan. Is the administration too slow in its response and a bit wrongheaded or stubborn headed as each step of the crisis has moved faster than its ability to respond, and its response being one step behind. Frederic Mishkin of Columbia University a former Fed Governor says, "if you delay and create uncertainty, the amount of money you have to put up goes up." It appears from Paulson's remarks over time first turning down proposals for capital injection into banks for equity stakes, and now in making that route central to his plan, that Paulson and Bernanke simply did not anticipate the shutting down of credit markets and the collapse of stock market prices that occurred, and they had no backup plan prepared for a situation such as this. And on top of this the backup plan they went out to sell to Congress turned out to be short on details and in this sense naive for the amount requested. And then by refusing to consider alternatives such as capital injection for equity stakes, it was wrong headed, if not closed minded. William Poole who retired in August as President of the Federal Reserve Bank of St. Louis, says that " I am not aware that Treasury presented any evidence on auctions that have been successful when they are used for assets that are so heterogenous", referring to the reverse auctions that would take weeks to set up and would be terribly complicated to buy up troubled assets, as part of the plan presented to Congress in but 3 pages. Now the plan appears to be to let Fannie and Freddie, which were given $100 billion by the Treasury as authorized by Congress, to move ahead with the purchase of troubled mortgage securities, something for which Fannie and Freddie have the capabilities. In the end the crisis in confidence and near panic generated in the markets and the climate of fear may go way beyond the actual losses incurred from debt securities, and some of this may be the result of a clumsy and poorly thought out approach by Bernanke and Paulson. The cost of fixing the problem will be higher and the recession more prolonged because of this. It is a situation of capable people blinded by ideological reasons to see what is happening and in Bernanke's case not making enough of a case to Treasury about his reservations and his own thinking that capital injection was the right approach, as people familiar with the early planning say Bernanke argued that it would be easier and more efficient to inject capital directly into banks. ...