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President Biden addressed the Nation from the Rose garden today November 7, 2024. His remarks were conciliatory. "You can't love your neighbor only when you agree."  "Something I hope we can do, no matter who you voted for, is see each other not as adversaries, but as fellow Americans. Bring down the temperature." It is a remarkable end to a remarkable presidency which history will judge as perhaps a single term in which more was done than in any other 4 year term of a presidency, except for FDR in 1932 and Lincoln in 1861, tackling a once in a century pandemic, and rebuilding the economy, manufacturing, and infrastructure. And even correcting missteps on immigration by getting the legislation to fix it. It is a tall order for anyone who succeeds Biden though in the current post election situation there will be the typical euphoria on one side and losing on the other.  During the Republican sweep by Herbert Hoover in 1928 Franklin Roosevelt was elected governor of New York and he used the intervening years to 1932 to prepare for the monumental task ahead by testing his plan for economic recovery using New York and a couple of states from Illinois, Ohio, Pennsylvania, Massachusetts, Maine and New Hampshire, setting up the first unemployment insurance, shorter week, annual employment and other ideas to stabilize employment for one third of the US economy. Biden says he has asked his administration to work with Trump's team for the peaceful transition to a newly elected president. None of the fears about the transition came true with the new president getting a clear mandate to tackle the cost of living crisis for Americans. ...

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It took 75 years for a British prime minister to visit Gandhi Ashram on the banks of the Sabarmati river in Ahmedabad. George Bernard Shaw, the English writer, in a handwritten note at the Nehru museum in Allahabad after meeting Gandhi says "ask somebody 100 years hence" about Gandhi's contribution to the world. Today it is more clearer than ever. Mohandas Gandhi wrote Hind Swaraj on a ship from South Africa to London in 1910 after negotiating with the British government on behalf of Indians in South Africa. In 1915 Gandhi returned to India and used his savings to buy 110 acres of land for the ashram on the banks of the river Sabarmati in Ahmedabad. By 1923 Gandhi was questioning the expenditures of the British government that did little for the development of the country and a budget that was focused on military expenditures, in his magazine Young India, with nothing for developing the country except for railways and transport. Gandhi launched his non cooperation movement for self-rule or Swaraj from the Ashram. By 1937 elections were held and the first provincial assemblies were set up in an experiment for self-rule. In 1930 the Salt March for noncooperation in the British salt monopoly, salt seen as the common man's right, was launched from the Ashram. In 1942 the Quit India movement was launched in the middle of World War II. In 1945 after Labour party's Clement Atlee won the election in a landslide against Winston Churchill the path opened for Britain to start negotiations with Gandhi for independence. In 1947 India was free. Why 75 years for a British prime minister? Much of the period after 1950's was lost in the recovery from partition, wars on Kashmir, China's entry into Tibet and the invasion of India. The non aligned movement under Nehru and Indira Gandhi and successor governments to 2000 appearing more as voicing a grievance for being left out led to an ambivalence of the US and UK towards India, and reflected a period when India was small in economic terms and lacked the opportunity to find its place in the world as a country with the largest population in the world. Which today with with Bangladesh and Indonesia sharing a common history of Hinduism and Buddhism represents 1.6 billion people. In the Nehru home museum in Allahabad there is a hand written note by British writer George Bernard Shaw who visited India and the Nehru home. It says it would take maybe 100 years before the world realized the significance of what Gandhi had done and only at that time would the world truly understand Mr. Gandhi. Mr. Boris Johnson's effort to make up for 75 years that went by without UK prime minister's visit to Gandhi Ashram in Ahmedabad is one such moment that George Bernard Shaw had seen coming.  George Bernard Shaw's handwritten not at the Nehru Museum in Allahabad says- "What is the place of Mahatma Gandhi in political philosophy? I do not know. Ask somebody a century hence. I recollect Gandhi as only a very likeable fellow- Mahatma from India. We did not talk Mahatma shop."       G. Bernard Shaw            28/6/1947     ...

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After suffering a deep depression Greece's economy is in 2019 24% smaller than in 2007. It may not be till 2033 that Greece recovers to its precrisis level GDP, says Oxford Economics, a consulting firm. With the creditors of Greece maintaining a tight control and requiring high taxes and high budget surpluses of 3.5% of GDP excluding interest payments, there is very little financial leeway to reduce taxes as the newly elected government of Mr. Mitsotakis of the New Democracy party has stated. Greece spent 8 years till 2018 under an austerity regime set by the European Union overseen by the IMF with eurozone authorites in return for a financial bailout loan package. Spending cuts and tax increases of 40% of GDP led to drop in GDP of 25%. Greece had misrepresented its official spending numbers to eurozone authorites in the years leading upto the crisis, leading to a lack of sympathy from ordinary German taxpayers for the country's situation. Unlike Portugal which was able to increase exports and find ways to reduce the austerity regime with sympathy from Germany, Greece lags behind in foreign investment and is 72nd in the ease of doing business ranking of the World Bank.  Unemployment is falling very slowly and is at 18%. Greece has returned to bond markets with 10 year bond yields of 10%. Growth is stuck at 2%. Pension spending takes up most of the budget, with little left for investment, education and other needs. No parties talk about cutting pensions anymore as a grandparents pension supports many families. The high taxes have hurt the private sector with the most productive people emigrating to other countries in northern Europe and to other parts of the world. About 500,000 left from 2010 to 2017, most are college graduates, and 64% have postgraduate degrees, a survey shows. Most of them will never return as it  is difficult to live and plan a life on a Greek salary. During the financial crises affecting Latin American countries such as Mexico, Brazil and Argentina for decades, the expression lost decade became common. Some like Argentina had repeat situations of lost decade before recovering. Even the U.S. suffered badly suffering close to a lost decade with faulty mortgages causing a crisis in 2009. Only Greece has proved that this can happen for nearly three decades. Greece's experience also sullied the euro currency's image, that was further damaged by the austerity policies across the eurozone's financially weaker countries. Lack of transparency and insider groups unable to take up the national interest and pursuing narrow interests left Greece in a bad position with little sympathy from stronger northern European countries such as Netherlands, Sweden, Germany. Today's political crisis for the centre right and centre left parties in Germany and other Northern European countries such as Scandinavia, Netherlands, also stems from this flawed entry of countries such as Greece into the eurozone with poorly managed finances. A combination of Tech creating low wage jobs, erosion of working class, failure of centrist parties free market policies to protect the working class, shift of jobs to low wage countries such as China, had already eroded the situation. The humanitarian response to what was both a economic and war related migration from North Africa  to Europe only worsened the image of these parties with working class people alienating them further. The eurozone countries and the European Union are only gradually recovering from these errors.     ...

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In this exceptional report of the housing market in Roanoke, Virgina, Neil Irwin talks to builders, home buyers, renters and young people. San Francisco and Washington D.C. are the exception in housing markets- hundreds of America's midsize cities like Roanoke are seeing smaller rates of household formation leading to a decline in demand for single family homes and fewer homes being built. This accounts for a large part of the smaller growth in U.S. GDP. There are he points out about 2.3 million missing households as a result of a significant change in home buying patterns that is reducing demand for new construction of single family homes. During the period 2001-2006, before the 2008 global financial crisis, the rate of new U.S. household formation was about 1.35 million annually. This dropped to 569,000 in 2007-2013, as the effects of the crisis were felt in a deep recession. One result is more young people are postponing buying a house and living with their parents. Faced with large student debt- the total U.S. student debt passed $1 trillion for the first time recently- purchases of homes are becoming more dfficult. Of 18-34 year olds 27% lived with their parents before 2006, according to Labor Department data. This went up to 31% following the recession. Lack of good jobs is another factor. In 2014 March only 63% of 18-24 year olds had jobs. Even young people older than 24 with jobs felt it necessary to save money by living with their parents. More retirees too are moving into apartments....

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An analyst survey by MacroMarkets shows home prices as measured by the S&P Case-Shiller national index will decline by 1.4% in 2010, then increase in 2011 by 1.3% and 2.7% in 2012. At this time weaker jobs data are making analysts cautious about a rebound in the housing market.

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Short sales in the U.S. housing market in 2012-2013 are helping the recovery in housing prices and reducing foreclosures. Banks are reducing the time required to process short sales and both banks and homeowners are benefitting as foreclosures lead to much higher losses for all. In Oct 2012 foreclosures were 11.5% of total home sales, declining from 17.3% in Oct 2011, and dropping sharply from the 30% level in 2008-2009, according to CoreLogic. For the same period Oct 2011 to Oct 2012 short sales increased from 8.1% to 10.2%. Banks, real estate agents and homeowners see short sales as a better more efficient approach than letting homes go into disrepair, reducing prices in the neighborhood and creating larger losses for banks and homeowners. CoreLogic figures show short sales in Dec. 2012 cost 24% less than comparable houses not in financial distress. For foreclosures the discount was about 64%, showing the huge difference and how the wave of foreclosures in 2008-2011 must have hurt society and the economy....

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The problems facing first time home buyers of lower credit scores, a member of the household unemployed, and student debt. This lowers prospects in the housing market in 2013-2014.

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Prices of homes in the U.S. increased by 9.3% in February 2013, according to the Standard & Poor's/ Case-Shiller survey of home prices in 20 major metropolitan areas. All 20 cities posted gains for the second month. Prices in Phoenix increased by 23%, and in San Francisco by 18.9%. The median home price in March was $184,300 up from the $154,600 in Jan. 2012. The peak was at $230,400 in 2006. The WSJ quarterly survey shows less than 3 month supply of homes in Phoenix and San Francisco. Supplies of homes declined by 16.8%, sales of previously owned homes were up by 10.3% in March over the prior year month. Supplies have dropped as banks are putting fewer homes in foreclosure and many homeowners are unwilling to sell for a number of reasons. Increasing rents and low mortgage costs also help increase demand. The interesting aspect of this is that prices are rising even as homeownership rate declined to 65%, according to the Census Bureau. And compared with 2004 there are 7.2 million more renters and only about 400,000 new homeowners, according to Capital Economics. Some of the homebuying comes from investors buying homes and converting them into rentals....

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BW's report says Housing will go back to normal by 2012. This is a better case scenario. But there are serious downside risks and unknowns. A study done by Rogoff and Reinhart shows that it takes about 6 years or longer before things return to normal after a serious crisis. This could mean 2012 is the earliest things could return to normal. And this assumes that housing demand remains at about 1.5 million homes a year as in the past, and with only about half a million homes being built now as developers scale back the difference of 1 million homes would cut into the inventory to bring demand and supply back into balance. But changing demographics with an aging population and different needs, new frugality with buyers renting for longer, and the perception that homes are not a investment, slowing immigration, all factors that could change the nature of the market and demand in housing, could lead to things dragging out for longer. BW has assumed a more optimistic level of GDP numbers from Moody's Economy.com estimates made in May 2009, with GDP declining 3% in 2009, growing 1.4% in 2010, 4.7% in 2011, and 5.8% in 2012. These estimates are on soft ground because no one really knows for sure what will happen in anumber of areas in the years ahead. In terms of deflation and inflation in the years ahead, capacity utilization is at 68% but a look at the declines in manufacturing show that some of it will be a permanent loss as in the auto manufacturing base, export markets depend on how economies in Asia and other countries are performing, a new frugality and different consumer behaviour because of debt levels at 100% of GDP could permanently lower demand to levels different from that in the past. The regional nature of the recovery in housing will still be very much present, as areas with surging population growth and areas where housing price rises were modest, from Nashville to Austin, do a lot better than California and Florida....

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Cold weather dampened U.S. economic growth in the 4th quarter, with the initial reading of 3.2% seasonally adjusted annual growth in GDP revised to a reading of 2.4% by the Commerce Department. Projections by economists are for even lower growth of 2% in the 1st quarter from the cold weather, which was the worst in 35 years for some parts of the north and midwestern U.S. Consumer spending adjusted for inflation increased by 2.6%, and the savings rate dropped by one percentage point from the average of the last 3 years to 4.5%. Government spending and investment declined by 12.8%, as efforts to reduce the deficit continued. Offsetting this, and the bright spot here was more business investment on equipment, software and buldings of 7.3%, and exports up by 9.4%. GDP in the 4th quarter was up 2.5% from the prior year and unemployment rate was 6.6% in Jan 2014. Overall assessment was cautiously optimistic for the U.S. economy at the beginning of the sixth year following the global financial crisis of 2008....

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The U.S. Labor Department report shows 156,000 jobs added in September 2016. The unemployment rate increased by a tenth of a percentage point to 5.0%, because of the increase in the total pool of workers, The labor force increased by 3 million workers over the first 9 months of 2016. The labor force participation rate was up by half a percentage point to 62.9% for the year 2016, as it drew more workers who were earlier discouraged to look for work. Wages grew by 2.6% over the year.

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A shocking statistic. Of the 12 metropolitan areas in the US with over 15% unemployment, 10 are in California, and this is because the construction industry has taken a severe hit. It lost 74,000 jobs in the 12 months ending in June 2010. From June 2006 to June 2010, this industry in California lost 43% or about 402,000 jobs. And the construction industry is still shrinking there. One reason why the unemployment rate in California is 12.3%. The overbuilding during the boom makes it that much harder to rebuild. The construction industry has been hard hit in Los Angeles and Riverside metro areas and in Napa and Solano counties.

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Jeremy Grantham and Jason Zweig share the view that this market has gone up too fast too quickly. Stocks that went down the fastest of companies in industries like finance and banking, insurance and autos, went back up with government support. And many of these companies that have poor earnings prospects are issuing more shares to raise capital now that the credit markets are working, so that they have some cushion if credit markets tighten again. Grantham thinks this dilution of shares spreads future earnings thin over a larger number of shares. Zweig says whatever was garbage has done good, which suggests that what is seen as a recovery in the stock markets is not perceived as a healthy recovery. Grantham's comment that "the junky companies may be diluted to hell just to keep them alive," and Zweig's comment that these "garbage" stocks are hot, but can be expected to sink for precisely that reason, do not offer a reassuring view of this kind of fragile recovery. Companies with stable businesses and stable earnigs prospects haven't done as well as these so called "garbage" businesses to use Zweig's term. Companies like Microsoft, Procter and Gamble and Johnson, and Wal-Mart which have low debt and stable returns. Grantham sees them as offering value in today's market. ...

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Economist Paul Krugman points out the risks of a trade war in the tariffs announced for steel and aluminium by president Trump. Yet he accepts that he advocated stronger action on China's currency in 2009-2010 when the U.S. economy was weaker. In the past on the TPP agreement proposed by president Obama, Krugman said that it would have an insignificant impact as most of the gains on trade were already made. Here Krugman is critical of the language used by president Trump about trade wars being "easy."  This is taken out of context though as president Trump is saying that it is easy in the context of a country enjoying a $100 billion surplus with the U.S., because that country is going to have incentives to maintain a good trading relationship with the U.S. Essentially this means that the steel industry in the U.S. benefits. China also benefits as it closes many of the older steel plants that led to overproduction. This would reduce overcapacity in China's steel industry, a problem China's economic planners see as a priority. China already is making the shift to higher technology products and this process will be accelerated, as it puts less emphasis on steel and metals as it did in its earlier stage of development. As a result contrary to textbook economics this has the potential to be a win-win solution for the U.S. and China in the long run. So little was done under the Bush and Obama administrations to manage trading relationships with other countries so that the interests of small communities across the U.S. were protected from unfair trade- that Reagan administration trade expert Robert Lighthizer took up the cause of the U.S.,workers in these communities. Surveys showed U.S. public opinion also had shifted among educated, professionals and middle class on this issue by 2015, against unfair trade that hurt U.S. interests. Robert Lighthizer is now the Trade Representative for the U.S. in the Trump administration. Reports in the WSJ about the discussion within the Trump economic council, show Gary Cohn favored not imposing the tariffs on steel and aluminum. Lighthizer advocated the tariffs and was able to convince the president.  For Trump this presents a win-win situation, as a mild response by China -and other trading nations that have enjoyed a favorable situation in the past -with its huge surplus and favorable trading relationship with the U.S. would present a win for the president. Economist Krugman accepts this when he says tariffs in the current context of the trading field- that is more favorable to other countries- are not such a big deal, only the use of such policy that is likely to endanger world trade.  As in much of the debate that takes place this adds to the headlines today yet provides delayed and limited relief to communities across the U.S. devastated by world trade as documented by experts who studied trade patterns and their effect on regions across the U.S.  As the WSJ points out in one report the trade deficit itself may continue to grow under president Trump because of other factors. The U.S. dollar surged 8% during the last 2 years of the Obama administration with the economic recovery underway. With Trump's election win the dollar surged another 3%. This may play a bigger role in the direction of the trade deficit than the new steel tariffs announced by president Trump. Workers and unions matter. As TPP pushed by Democratic party president Obama was opposed by the unions, and by the auto industry (workers and auto companies) in the midwestern states which suffered a hollowing out in the last decade. A WSJ survey after the election showed Clinton received 56% support from union workers in 2018 compared to 65% for president Obama in the 2012 election. Some of that erosion in support may come from Obama's TPP stand fervently opposed by the unions and workers in the auto industry. A similar situation took place in Ontario with hollowing out of the auto industry in this large industrial state in Canada and led to the rejection of the Conservative government and election of the Liberal Party under Justin Trudeau. This lesson is so far lost in the Democratic Party's debate.     ...

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The percentage of borrowers with loans overdue 30-90 days is at 7.4% at the end of the 1st quarter 2012, down from 8.3% for the prior year, according to the Mortgage Bankers Association. About 4.4% of mortgages were in foreclosure at the end of the 1st quarter of 2012, close to the 4.5% the prior year. Florida had foreclosure rate of 14.3%, New Jersey 8.4%, and Illinois 7.5%, at the end of March 2012. The inventory of loans in foreclosure is at 4.39%.

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The Wall Street Journal survey of housing market in the US finds prices declined in all 28 major metropolitan areas for the fourth quarter of 2010. And the size of the declines on a year-to-year basis were larger than the previous quarter. Inventory levels are also rising.

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It makes for good political rhetoric, but in reality the flow of money goes both ways. A lot of investments are made by American companies overseas. This time the flow of oil money because of high oil prices, from the USA and Europe to the Middle East is being recycled back to the USA in the form of investments in the US through small equity stakes in companies and more so through purchases of capital equipment and services to build Saudi infrastructure projects. The $500 billion investment plan over several years in Saudi Arabia is to build everything from new cities, aluminium plants, electricity generation plants and chemicals and plastics plants. The fears and rhetoric are overblown, as the USA also invests overseas with holdings according to the Treasury department of $6 trillion of foreign stock and debt. The acceleration of foreign investment in the US is to be seen in the numbers, as the dollar gets weaker, and its more advantageous for Canadians and Euuropeans to invest here. Last year $414 billion of foreign investors money went into buying stakes in American companies and building factories and purchasing stock, according to Thomson Financial. Thats up 90% from 2006 and represented one fourth of all announced deals. This year in just 2 weeks foreign investors poured $22.6 billion in just the first 2 weeks of January, and that represents one half of all deals. Shows how quickly the picture is changing. One way of looking at it is that Americans buy a lot of foreign goods and the money Americans use to pay for a lot of imports is now being returned to the USA in the form of foreign investments. Note that foreign investment is desirable because it brings new ideas and technology and new management methods to the host country from other countries. These foreign investors in many cases are able to make these investments overseas because they are good at what they do, having them in the host country benefits the host country and shakes up competition in the particular industry in the host country that is receiving the investment. This is why economies once relatively unfavorable to foreign investors like Japan and S. Korea are now passionately seeking foreign investment to make their economies thrive through the exchange and inflow of new ideas and ways of doing things. The same can be and is true for the USA. The other aspect is that most of the investment is still from countries like Canada, Germany, Japan, S. Korea which are big free trade partners of the USA. Manufacturing investment is heavily skewed to European and Japanese companies. Foreign multinational investment (Sony, Toyota etc) grew to $43.3 billion in 2007 from $39.2 billion in 2006 according to OCO Monitor, and will accelerate significantly as companies like VW and other German companies find it cheaper to build in the USA and shift more manufacturing here. To get an idea why the rhetoric is overblown Canada spent the most in buying American companies, $65 billion in 2007, according to Thomson Financial. Russia spent $572 million and India $3.3 billion. How will this improve the chances of the USA making it out of this recession? Five million American work for foreign companies in the USA. Of these one third are manufacturing jobs. These jobs pay about 30% more than jobs in American owned companies. Figures from Treasury Department. There will be more of these jobs as companies like VW build plants here. Roubini Economics estimates that an infusion of about $300-400 billion is needed for the USA to overcome the effects of the current mortgage and credit crisis. $414 billion was invested in the USA by foreign investors according to Thomson Financial in 2007, going up from something like $200 billion in 2006. If this pace continues becasue of some of the same underlying reasons as the weaker dollar, stronger economies overseas, then $200 billion additional investments this year would add that much to a stimulus package of $150 billion by one estimate, to provide a boost of somewhere around $350 billion. In the range of the needed boost. Companies like IBM and GE which have significant investments in India and China and investments in software or infrastructure industries that are growing rapidly or Caterpillar with growth in construction overseas, may keep growing through this downturn. This recession may hit selectively and differently, not be a complete hit to the USA economy, and could prevent it from going beyond 2009 with recovery in 2010. ...

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Faces of the U.S. unemployment, foreclosure and housing crisis in Hagerstown, Maryland, in 2011.

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The home price decline is shifting from Las Vegas, Miami and Phoenix to other U.S. cities in 2011. Seattle, Minneapolis and Atlanta are seeing large declines in home prices. Seattle is down 31% from the mid-2007 peak and still has 10 percent to fall, according to real estate site Zillow.