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Should inflation be set at 2% or 3-4%? This decision affects jobs and zero interest rates hurt what retirees earn on savings.  Krugman says Americans were better off during the period under presidents including Kennedy-LBJ, Reagan right up to 2008 when interest rates were between 5-8%, and inflation of 4% was considered to be acceptable. Consider that about 90% of American retirees have savings of less than $100,000, and 50% have no savings at all after two decades of near zero interest rates. Krugman points out that Fed 2% inflation targeting is a mistake because the research is wrong and inflation of 2% gets you to near zero interest rates a third of the time, not 5% of the time as US Fed research incorrectly shows. Financial crises such as 2009 from lack of regulation of financial institutions and laissez faire policy led to zero interest rates that hurt average Americans.

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The Observe Research Foundation looks at Sri Lankan debt crisis.Too much borrowing at high interest rates above 6%, without concessionary loans typical of what developing countries need, can create havoc for poor countries such as Sri Lanka. When macroeconomic factors collide with health and politics such as drop in remittances, global financial crisis of 2009, civil war, borrowing for unsustainable type of infrastructure such as ports and airports, the results can be disastrous. Sri Lanka is an example. Borrowing that is off the official record of loans such as to state owned companies can leave the country with higher debt load than even the Finance ministry has kept track of, a severe problem for small developing countries, including countries  in the Caribbean shown in recent NYT reports.

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Us stock market gains of 24% in 2023 are seen as a surprise after fears of Fed tightening leading to a downturn. Instead inflation has come down and with government investment in infrastructure and bringing factories back to the US, boosting US manufacturing, the US is building a stronger economy. A related WSJ article has graphs that show over 50% of US households owning stocks so that the gains in stocks since 2020 are now more widely shared in the US population. Along with wage gains and bringing down the cost of living and moderating housing costs it sets the stage for a recovery of America from the free market experiments that followed after Reagan leading to the 2009 financial crisis, neglect of manufacturing and shipping of factories overseas.

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China surpassed Germany as the world's No. 1 exporter in the first 10 months of 2009, with $957 billion in exports compared to Germany's $917 billion, according to customs data compiled by Global Trade Information Services, a Geneva based firm. With the global financial crisis China's exports fell 20.4% in the first 10 months of 2009 compared to 27.4% for Germany and 21% for the USA. Global consumer spending has fallen more than the capital goods and machinery exported by Germany. Yet these numbers suggest that there has been no significant change to the export models of the two countries even after the global economc crisis revealed cracks in the export model.

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After overly aggressive bank lending following the financial crisis of 2008 China is now badly overextended. China has also learned from the U.S. experience about the risks inherent in growth generated from a credit boom. In 2009-2010 China was also getting less bang for the buck in terms of the increase in lending needed to generate growth compared to earlier periods. Orlik says don't expect China to help the global economy the way it did in 2009-2011, and that there is no Plan B for China.

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Sheila Bair releases her new book in Sept 2012 on the financial crisis of 2008-2009 and the efforts to introduce financial reforms for a safer financial system: "Bull By the Horns: Fighting to Save Main Street from Wall Street and Wall Street from Itself." She is particularly critical of U.S. Treasury Secretary, and former head of the New York Federal Reserve, Timothy Geithner, as protecting the interests of Citigroup and Wall Street in his position as Treasury Secretary of the U.S. government. She describes in detail the situations in which Geithner tried to water down essential reforms to the financial system to make it safer, including the Volcker Rule. Of particular concern is the revolving door by which banking regulators or government officials join banks after service in the government which leads to weakening of regulatory and government oversight and systemic risks as in 2008-2009. Sheila Bair is widely respected for her efforts during the financial crisis from 2008 to 2011, when she headed the Federal Deposit Insurance Corporation, the FDIC. Her active involvement in defending reforms and setting up the system by which financially failing banks could be taken over and unwound without risks to the U.S. financial system are lasting contributions. She also succeeded as a manager by setting up an experienced and effective successor in Martin Gruenberg as head of the FDIC, to continue this work. A former Congresswoman, she describes herself as a Republican populist from Kansas. Her current role is as senior advisor to the Pew Charitable Trusts, which itself is a rare phenomenon today for a senior government official leaving government....

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DJT administration 25% tariffs on Canada Mexico for not stopping fentanyl flows as domestic policy go ahead on March 4, 2025. This lays the ground to tackle aproblem that has led to 490,000 American deaths and devastated communities across the US - the flow of fentanyl into the US from Mexico, Canad and China. Separately an additional 10% tariff is going to effect on China on top of earlier tariffs on China.  The media keeps talking about this tariff as a economic action, not as action to stop all fentanyl flows as is repeatedly stated by DJT and the Administration. Most of the media has failed to talk about the fentanyl deaths over 12 years referring as one of the prominent media states as the "death of thousands" not giving the staggering number and the scale of the devastation of communities in America after the damage from the 2009 financial crisis caused by banks, the deindustrialization of America that was allowed to happen under Bush Republicans and Obama Democrats, and the covid pandemic crisis.  ...

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Greg Ip, chief economic commentator of the WSJ says economists like Summers with his theory of secular stagnation, and Kenneth Rogoff with his theory of the debt hangover from the 2009 financial crisis, have missed the true story of the last ten years with consistent growth, low inflation and lower unemployment than thought possible. Unemployment at 3.5% shows that the natural rate of unemployment is much lower that the 5% thought by economists and economic theory, and unused capacity in the economy that is being tapped for growth.

It also shows the limitations of economics and economic theory. The need always for fresh thinking and a bolder idea of what is possible. The potential for economic growth by unleashing each country's best human and technological potential in the face of obstacles. 

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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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Consumer Financial Protection Bureau comes out of a playbook of one party that supported no changes in the Financial system in the US and no consequences for financial wrongdoing in the mortgage and banking speculation financial crisis of 2009 that upended the world's financial system. The Obama administration did little to tackle the root causes of the crisis and no serious consequences for financial wrongdoing. With financial interests vested in the structure of both parties work in the financial business could go on as usual with minor changes such as the Consumer Financial Protection Bureau and financial settlements of no serious consequence. Along with this rural areas, farmers and agriculture were given less priority than Silicon Valley during the years of the Obama administration 2008-2016. The passion for a serious overhaul stems from the sense of injustice suffered by rural America and by tens of millions of middle class Americans who took the first blows with patches of period of less work or parttime work at low wages in a battered economy in the aftermath years of the global financial crisis caused by irresponsible bankers in the years 2010-2014. This strained finances and savings only to be followed in 2019 by the Covid pandemic imposing more strains on finances of American middle class and working class people. ...

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Le Monde looks at falling living standards across the UK. It looks at Essex and Brentwood and other towns outside the metro region of London. The 2009 financial crisis caused by banks was followed in four blows of Cameron's decade of austerity and of not investing in Britain, the upheavals of Brexit, the once in a century pandemic, and now inflation, causing a depressing sight of all lower and middle social classes struggling to make a living. 

Since 2007 real wages in UK have fallen by 3.5%. Between 1970 and 2008 wages grew by 33% every 10 years.

The poorest 10% in Britain have 22% lower purchasing power than the poorest 10% in France, says Torsten Bell of Resolution Foundation, author of report "Stagnation Nation."

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Lost decade term has generally referred to a lost decade from austerity policies in UK or the EU, or after the 2009 financial crisis from bad banking practices. Here the term is being used in error as investments in China have not benefitted all classes equally in China leaving the hinterland and rural areas behind, and worse has decimated America's and Europe's industrial manufacturing base destroying in its course the financial livelihoods of communities everywhere in the western world. Biden in US and Xi in China are well aware of this and their policies are intended to change the direction of the US and China towards reducing disparities in income and ensuring fairness, new goals after the pandemic. The American people and the US economy has little to gain from increased investment in China when the homeland can easily absorb investment of trillions of dollars after decades of missteps, mistaken wars and adventures overseas, neglect of infrastructure needing to be rebuilt. The damage of the environment in China and in North America and the world alone shows that the hyper growth in China was a bad idea for the American and Chinese people and the people of Europe and of the world. ...

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President Medvedev of Russia talks with Novaya Gazeta editor Dmitry Muratov for over an hour at the President's residence. The paper specializes in investigative journalism and has been critical of the control of media and politics under Putin. Four of Novaya Gazeta's reporters were killed or died mysteriously in the past 9 years, with the last Anna Politkovskaya. But Medvedev did not go beyond offering lawyerly answers according to the report. A Russian talkshow host says Medvedev can talk nicely, but can he act, and is there followup. Others see the move as a way to reduce tensions at a time of economic suffering of the people from the impact of the 2008-2009 global financial crisis.

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Philips health care division operating margins drop from 13.6% to 4.3% in the 1st quarter of 2009, a result of the severe impact of the 2008-2009 global financial crisis. Philips Electronics showed a operating loss for the 1st quarter 2009 of 74 million euros.

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Paul Barrett, Assistant Managing Editor of Business Week says the year 2009 will represent a year of lost opportunity to reform the financial system. The Obama administration and Congress did not have the courage to do what is needed, and did not take Paul Volcker's advice on the danger of ahandful of banking institutions controllig a major portion of global banking assets. The WSJ reported that the world's 10 biggest banks account for about 70% of global banking assets, up from 59% before the crisis. It is ayear he says of missed opportunities and little was done in so many areas, including derivatives regulation and the credit rating agencies continue doing business as before with clear conflict of interest inherent in their practices. Barrett says genuine reform fizzled, and we will regret it. The Obama administration and Congress let themselves be influenced by the banking lobbyists and bankers, just as they allowed genuine health reform opportunities to slip in 2009.

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Republicans have supported less regulation. After the 2009 financial crisis with faulty mortgages and excessive leveraging one would expect that there would be a shift among Republicans favoring necessary regulation of banks. This did not happen after the Obama administration failed to articulate a new culture after 2009 and lost control of Congress in 2010 by as much as 64 seats in the House 6 in the Senate, and in all demographic and income groups. The result was that the 2009 crisis changed some laws but not the culture of laissez faire that less regulation was better for the economy. It is left to president Biden to tackle this problem of culture and the Silicon Valley Bank clearly shows that the parts of the Republican and Democratic parties that support less regulation even where the regulation is essential for a good economy for workers and families, are self serving. No where is this culture of laissez fairre in its other manifestation in not planning for the US manufacturing base to be strengthened by government action more evident than in the way it has prevailed to turn a blind eye to not just sending manufacturing overseas, but over concentrating it in one country China with additional supply base from Japan into China. This is the challenge that the country faces- only if the culture or mindset changes will laws have the needed impact.  This report in the NYT shows that when president Trump appointed Randall Quarles to vice chair of banking supervision in 2017, Congressmen both Republicans and Democrats believed that less supervision was better for the economy. Democrats such as Congressmen Barney Frank were themselves part of the new culture when Frank joined Signature Bank's board in 2015, one of the banks that along with SVB bank caused the banking crisis of 2023. Its association with risky crypto assets is considered by the WSJ as being one reason the government decided to close it. Frank did not see this aspect of its risk insisting that the bank was in sound condition.  This culture is also manifested in its approach to the cost of living crisis and support for workers and families. The Biden administration sees the problem of culture and of clearly making the changes that create a new culture, and a new understanding of what is right for America, for its economy and for its role in the world, and best for its people.   ...

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The American saving rate is up to 7.8% after dropping to 3.2% by 2009 and the financial crisis. This is a good thing as Americans save for retirement and avoid extravagant expenses to build a safety net. The collapse of traditional pensions means much of the burden for retirement falls on individual families. The student debt burden means families share in high education costs, and the lack of a cost efficient health system means more money is needed for health expenses than in other advanced European countries. The savings rate is still nowhere near what it used to be in the 1970's. 

Higher savings also builds up the funds that are in banks as savings that can be a pool of funds for use in building national infrastructure and other value adding investments for the country. China has used a high savings rate and savings pool of funds for its extensive infrastructure investments that modernized the country.

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Another significant development in this crisis, is how small businesses got addicted to credit card debt as a way to operate for ongoing expenses of the small business, from a small nursery, to abed and breakfast or a solo law practice. There are an estimated 27.2 million small businesses who are supposed to be one of the growth engines of the economy. Credit card debt when banks are tightening up credit and businesses are unable to meet expenses, is extremely costly because of the underlying usurious nature of the industry in the US and lax regulation. It will only push more businesses, that have acquired the bad habit of credit cards to finance operations, into bankruptcy. There were 5 million business credit cards in 2000. By 2009 after Visa Inc, American Express Co, and MasterCard Inc. and Discover Financial Services Inc. pushed these cards aggressively, using a new credit scoring system that looked less at the business and more at personal credit scores, the number jumped six fold to what Nilsen Reports estimates as 29 million business credit cards. The spending on these cards jumped for this period four fold, from $70 billion to $296 billion. As the average debt on each credit card jumped so did the likelihood of some of these card holders difficulties. Missed payments could lead to interest rates for some card holders jumping to 30+% from initial rates of 7-8%, all in the last 12 months. This makes small businesses less likely to create the jobs they created in the past, and one more troublespot in this economy....

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Spain's Mariano Rajoy loses a no confidence motion in parliament and resigns as prime minister in May 2018. He is replaced by Pedro Sanchez of the opposition Socialist Party. It has only 84 seats in the 350 member parliament making his government short lived and paving the way for new elections. Rajoy came in after the 2009 financial crisis assuming the prime minister position in 2011. He has governed throughout the period of the economic crisis and high unemployment in Spain during the eurozone debt crisis, the collapse of the housing boom, the banking bailout and austerity programs in Spain. Economic growth resumed gradually since 2013.

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Janet Yellen preceded Mr. Powell as Fed chairman, to head the U.S. central bank. Mr. Powell has warned that it took 8 or 9 years for the Fed policies to work to get tighter labor markets where minorities and other less advantaged groups could find employment. A better solution has to be found. Crises should be anticipated and prevented such as the mortgage crisis of 2009- banks, business, regulators in government, bank policy and political leaders all have a responsibility to ensure this. A mediocre leadership in each field alone could have led to the crisis of this magnitude in 2009. The pandemic is a second blow to these same groups in society struggling to make a living and has added many more. Two large whole sections of society were hurt in the rescue from that banking debacle with shoddy mortgages. The rescue involved low interest rates and the offshoot effect of this was to reduce the return on savings of people in retirement or close to retirement who in the past could depend on interest rates of somewhere between 5 to 8% annually to increase their savings over a decade. The high costs of medical care as a result of artificially inflated medical costs and poor managing of this cost are a burden for this section of society- with diminished savings from both low interest rates and loss of employment from the financial crisis. The young people with high tuition burdens were the other section of society hit hard. Tuition costs are also out of control similar to medical costs, putting great burdens on whole sections of society in an unconscionable way for a society that claims to be "for the people." Mr. Mnuchin, Mr. Trump's Treasury Secretary, did not have a close understanding with Mr. Powell. As Mr. Powell enters the last year of his term as Fed chairman, his close relationship with Ms. Yellen at Treasury is seen in a positive way by the WSJ. Powell worked at Treasury in the 1990's. After 2012 to 2018 both Powell and Yellen were at the Federal Reserve, working closely and having adjacent offices. Will this duo make a difference? ...

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The Fed's action will help retirees and savers after two decades of low interest rates were introduced to counteract the abuses of the financial market actors in 2009 and in prior crises. It hurts borrowers who had benefitted from such policies and as the situation returns to a more normal 5-6% interest rates that have prevailed for most of the postwar period, the situation is better for most Americans and the American economy. Not only is the Fed fighting inflation, it is also ending an abnormal period for interest rates which hurt American savings and older Americans saving for retirement. When combined with the Biden administration's spirited action to invest in American manufacturing, in science and technology advancement, in infrastructure and education, this creates a resilient economy with low unemployment and moderate inflation.

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Reaganomics, trickle down economics, it is clear don't work. James Mackintosh says in WSJ, the latest version of Reaganomics, in the form of the LIz Truss budget in September 2022 with cuts in corporate taxes, no relief for vulnerable populations in the cost of living crisis as in all other major European countries and in the US, is already getting a bad reception in financial markets with the tumbling of the British pound.Times have changed there is nothing to be gained in its approach as there are no trade unions strangling growth as in Thatcher's time that need to be restrained, and not that much red tape to increase business flexibility. Most of the privatization has already been done and some of the state run companies are operating much better today than privatized companies handling water and other services.   Instead the problem is one of much needed investment in infrastructure and public services, and social protections after the pandemic. Businesses are not being crippled by high corporate taxes. Instead the opposite is the case, with windfall profits, so that the opposite approach taken by president Biden to use the higher tax on profits of Tech, oil and other companies to finance social protections and a huge climate energy initiative made more sense, leading to the passage of the $369 climate bill  and Inflation Reduction Act of 2022.  The WSJ makes these points- Britain has a higher current account deficit and higher debt at over 100% of GDP compared to the period of Thatcher in the 1980's when debt was only 40% of GDP. Most important is what the WSJ says about what has happened since the 2009 financial crisis and the austerity policies pursued after that crisis that were worsened by the pandemic so that public services in Britain are actually crumbling. Politically this lacks popular support and little backing at a time of a recession in the British economy, because such policies require public support to go through a tough period . And taking this trickle down economics today when Britain faces a cost of living crisis may be an unwise act of taking an approach that is no longer relevant or shown to be working at the worst possible time, says the WSJ. ...

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Crypto currency Terra founder Do Kwon is arrested in Montenegro. US and South Korean authorites have lawsuits against the cryptocurrency founder saying financial crimes were committed. About $40 billion in value of assets was wiped out in this scheme. Terra founder claimed the support for the currency came from algorithms as there was no solid asset at a bank supporting the currency. To strain credibility further the currency was called Stablecoin. Kwon Do was a computer science degree graduate from Stanford. The use of tech algorithms or computerized programs to create currency that has always been done by central banks of each country- such as the Federal Reserve in the US -was possible because of the culture set by Silicon Valley in the San Francisco region of California that has prevailed in the last two decades. Without this culture and its spread across America and the world no sane person would even think of putting out currency, which is the sole responsibility of the government and central bank of each country. Too many people were hurt, lives disrupted or damaged by the financial crisis from faulty mortgages in 2009 for the Federal Reserve and the Biden administration to allow cryptocurrency or some other such scheme to operate and repeat these mistakes.   ...

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This article in the New Yorker questions the judgement of CEO Reginald Jones in picking Jack Welch as CEO of General Electric in 1981. Over two decades Welch fired many of the company's employees, and built up the finance business with GE Capital, resulting in the near collapse of the company in the financial crisis of 2009. Welch's legacy happened during the period Reagan took office in 1980 when Welch was made new CEO and covers that period for three decades of the Reagan and post Reagan years that led to a period of deindustrialization of America as financial and speculative business took the place of manufacturing. Factories were shipped out to China and other countries and America lost its industrial base. It is only now that the damage done is being addressed as under president Biden GE Vernova is building turbines for energy and is called a purpose company based in Cambridge, Massachusetts, to accelerate the transition to clean energy. The other part new CEO Larry Culp heads as head of GE Aerospace, two separate companies. In 2018 it was taken off the Dow Jones Averages. This is a story that is true, and one that did great damage to America and the American people, to its workers and families, to it's factories and it's infrastructure. ...

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A former Merrill Lynch banker is shown by WSJ responsible for economic actions leading to economic meltdown in Lebanon. Lebanese currency is worth 2% in relation to the dollar and no state supplied electricity.  For most of the modern period since 1800 this part of the world has represented a place of tranquillity and rule of law. The story of the economic collapse of Lebanon as a result of unscruplous finance at the central bank leading to arrrest of Riad Salameh is told in WSJ. It acts as a reminder and warning that once tranquil places can be dislocated and turned upside down by allowing unscruplous financial dealings in the economic affairs of a Nation, putting too much trust in finance or finance professionals. Trust is easily subverted once placed by the People. It can happen in any part of the world.  It can happen in developed nations as happened during the 2009 financial crisis. A finance professional governor of the central bank of Sri Lanka raised borrowing costs with a unscruplous bond auction in 2005 leading to higher borrowing costs and bankrupting the country. This results in the familiar guardrails for democracy and rule of law collapsing in unpredictable ways leading to disaster.  ...