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How a winner take all economy that pays a lot for what are called the "greedy" professions in law, consulting and finance, impact women. In these professions 24 hour or almost 24 hour availability has led to quadrupled income levels. To do this as this NYT article shows someone has to go part time time or be there when the children need it, or when the maximum work hours spouse is out at work, for doctors appointments and other needs. In many cases this is the woman as shown in examples from the law and other professions in this article. Women are finding that this shift to longer hours in these professions, consulting, law and finance, mean they have to voluntarily give up working the similar long hours that their husbands are putting in, especially when well educated women marry well educated men. A more normal level of schedules would enable both partners to work full time, and have time for each other and the children. This is one of the ways the U.S. is different from a country like France which provides the added benefit of better child care to promote balanced lives and more opportunities for women to advance their careers and use their education. ...

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What this Editorial board opinion in the Indian Express is saying is that India should concentrate its efforts on modernizing its economy on a scale that is similar or surpasses that of China because of its access to the latest technologies. Just as China capitalized on the opportunity presented by its entry in the World Trade Organization in 2001, through an economy wide effort to build a manufacturing and export logistics base. India is presented with the opportunity of building its own manufacturing and export logistics base as supply chains are being redesigned in 2023. This requires a longer term plan with clear thinking and concentrated effort with the entire resources of the nation. What looks like a small or gradual shift in supply chain with the US and EU adding India and Vietnam to their Chinese manufacturing base is going to change with every change in world events, as the US concentration of manufacturing in China becomes a situation that is impossible to to maintain. The only logical way for the US and following the US the EU to create a proper balance in its political relationship with China is to change fully its lopsided concentration of manufacturing in China. Biden is only making the initial moves, the EU is only waking up to the need to make its own changes to reduce this concentration. How much distance does the US need to cover to reduce its concentration in China? By a large amount because the shift of manufacturing was excessive and ill advised done as companies in the US raced in a competition to shift outside over 2 decades and simply outdid themselves and performed a disservice to the workers and families of America whom they served. Just for the US to get workers and families to benefit from return of good manufacturing jobs to the US and restore its manufacturing base that has shriveled, it will have to be a massive enterprise, where day by day it becomes more evident that more and more needs to be and accomplished in an accelerated way. What this also means where appropriate to leave a progressively year after a year larger base in India, and also Vietnam, much larger than is envisaged today. This situation is even more acutely felt in Japan which to bring a proper balance in its political relationship with China needs to even more urgently reduce its concentration of manufacturing in China. It must be the task of the Modi government to have a clear view of the road ahead- build the needed logistical base for exports using the latest technologies and set higher and higher targets for manufacturing.  If you look at the map of Asia this is the Global South- India is 60-70% of the Global South with its population of 1.4 billion people mostly young with aspirations for a modern economy like that of the US and Germany. Add to that Indonesia and Vietnam, and other nations already in the redesigned supply chain in 2023 and you have 2 billion people in Asia. Concentrate on this for the next 2 decades for a complete transformation of India, that is what the younger generation demands of its government. ...

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Judith Warner coins the phrase "dysregulation," for the cultural phenomena that may be behind the lack of restraint exercized in everthing that relates to personal lives like obesity, to the lack of regulation in the gulf and financial crisis. Citing Whybrow's book, "American Mania: When More Is Not Enough," she points to a disturbance in the national psyche, something that disturbs some inner clock or mechanism, that disturbs some inner balance that is built into us from the beginnings of man in the universe.

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Tokyo has the reputation for being the city with the longest working hours. Overwork leading to death has a term for it in Japan- "karoshi." But this is changing. Recent studies show Mumbai as the city with the longest working hours per worker per year at 3315 hours. The Japanese government had a law passed this year limiting legal overtime work to 45 hours a month, with an extension in busy periods to 100 hours for a maximum of 6 months. Yet the culture is taking time to change, even though long hours often leads to low productivity. It does not mean productivity is high in Mumbai or Tokyo. Dublin, Ireland has one of the highest productivity scores, workers in Dublin worked 1856 hours a year and still created $84 in GDP every hour- compared to this in Mexico City the third hardest working city had only $18 in GDP per hour. This is calculated by dividing GDP by the hours worked. Occupational health psychologists say working longer hours can be less productive because of the drain on performance, resulting in poor concentration, memory and compromised problem solving and creativity. The lack of rest means resources are not replenished with rest, and can deteriorate physical and mental health. Singapore a fairly liveable city has the highest percentage of people working more than 48 hours per week, in a Kisi study. Suggestion for work life balance include taking holidays and short breaks, and switching off from work mentally, using mindfulness and meditation. Practicing self-compassion and prioritizing self-care is needed. ...

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Cities like Huntsville, Alabama that have alarge presence of military defense contractors and have NASA presence are doing well in this downturn. So are cities that have industreies or plants not affected as much by the downturn. Cities like McAllen and Brownsville in Texas, Mobile, Alabama, Ogden and Provo, Utah, York, Pennsylvania, Youngstown, Ohio, Yakima, Washington and Lafayette, Louisiana. Consumer loan balances for these cities are shown as increasing in these cities from data developed by Equifax and Moody's Economy.com. Some of this could be from more overborrowing but other information suggests that local economies and employment have held up well in these places. Also problem loans at local banks in places like Huntsville, are a low 2%.

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Questions raised about Price Waterhouse's audit procedures, whether it contacted the banks directly to verify the cash balances on hand and whether it looked for signs of trouble like the huge discrepancies between net income and operating cash flow in recent years. The Institute of Chartered Accountants of India, India's professional accounting body is conducting its own investigation and may revoke licenses and remove members for violations of its code of conduct and ethics.

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91 year old Chuck Grassley is head of the Senate Judiciary Committee. He has a passion for vigorous Congressional Oversight that has not diminished with age. He says in an interview that he does alot of oversight and all of us should know from our 8th grade civics that Congress has a responsibility for checks and balances to make certain that the executive branch enforces laws consistent with the oath they take. Chuck Grassley of Iowa, a veteran of the US Senate, who like Biden has served for a long, long time under many presidents since he entered the US Senate in 1980 and now holds the office of Senate President pro tempore, says- "We not only pass laws, but you learn in eighth grade civics that we’ve got a responsibility of checks and balances to make sure that the executive branch of government actually enforces the laws according to the oath that they take. So that’s my job and I do a lot of oversight. " He expects Democrats to rebound quickly so that we will have a very different situation in 2026.  ...

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Mr. Trump says he will wear a mask on a visit to soldiers at Army's Walter Reed Hospital. Trump says its "a very appropriate thing. I have no problem with a mask." As cases hit 3 million in the U.S., close to 1 million in India and Russia, Mr. Trump joins the movement for masks worldwide. Early on Mr. Trump  took up the issue of transmission from Wuhan by banning flights from China, failed to get WHO and China to respond quickly to the pandemic requests from U.S. by providing information and allowing a team to visit Wuhan quickly in January. A stumbling block appeared within the health ministry in the U.S. with poor leadership which Trump had to overcome by relying on Vice President Pence to lead the stop coronavirus team at the White House.   Trump's reopening decision came under criticism and he says he had to balance the damage to jobs and economic well being that also affected health. Some of the states and young people responded in ways that led to public gatherings that have led to surges in the south and the western states such as Calfornia. The WSJ reported that in Los Angeles County on June 20 half a million people went to bars after they reopened, showing that culturally even counties in states like California lacked what is accepted good sense. For instance Tokyo bars were paid by the Japanese government not to reopen, according to one report. By wearing a mask Trump is simply acknowledging facts about transmission - a German study shows 40% reduction in cases with face coverings. ...

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A lot of readers responded to this saying that the Nano will actually reduce the consumption of gasoline per passenger mile travelled and reduce CO2 emissions as the two wheelers it replaces are very fuel inefficient and polluting. Also future versions of the Nano can be improved to develop more fuel efficent ones and also with new technologies like hybrid and so on which reduce oil consumption and emissions even further. Meantime readers say it is important for western countries to focus their energies on developing other technologies like electric vehicles and other hybrid technologies that can then be transferred to Asian countries to fuel efficient and less polluting motorization possible there. The shift to smaller vehicles in western countries would also create a healthy balance and a global partnership in the true sense of the word to oil consumption and prices down.

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The New York Times editorial page on the day following the passage of the second bailout or rescue plan of $700 billion in the Senate after it was voted down in the House of Representatives. It points out that the bailout bill does little to prevent a wave of foreclosures which the NYT estimates at six million people expected to default in the rest of this year and 2009. It faults lenders unwillingness to reduce the loan balances amount. At a Congressional hearing for the Hope for Homeowners program in which the governmet wold insure upto $300 bilonin new affordable loans for troubled borrowers if the lenders voluntarily refinance delinquent mortgages by reducing loan balances to 90% of the homes' current market value, lending banks were lukewarm about taking these losses in exchange for bigger losses in foreclosures. These lenders include Wels Fargo, Chase, Bank of America and Citigroup. The FDIC's Sheila Barr has also advocated reducing loan balances in her proposal for tackling the housing crisis presented after the Bear Stearns crisis. She is taking this approach to banks that like IndyMac were taken over by FDIC. But the numbers are not large letters were sent to 28,000 delinquent borrowers of IndyMac recently to reduce loan balances. This is a serious problem and either Congress and Treasury are leaving this problem to the next administration taking office 3 months from now as there is no real consensus on this issue even today or they are missing the impact this has in dropping home price values even further in neigborhoods across the nation as foreclosures drive prices down even further compounding the problem. For the financial institutions it would appear that they are letting this drag out because their capital is at frighteningly low levels and taking losses at one time is harder than taking the foreclosure losses dragged out over 1-3 years and they are also looking for a way in which they can let the government bear the burden of losses as the crisis intensifies which can make sense from the point of view of each institution. According to a report in the Wall Street Journal on September 29, 2008, Sheila Barr told Congress this month that in recent years troubled loan portfolios have yielded about 32% of book value, compared with more than 87% for loans in which the borrower is current. These are strong statistics in favor of lenders taking an informed decision to lower loan balances voluntarily with some government help along the way but the fact that this is not happening leads one to think that something is falling between the cracks, initial lender reluctance to take losses through voluntary balance reduction at the time of Bear Stearns crisis given taxpayer reluctance and lack of government initiative to help lenders in doing this, sort of what Martin Feldstein suggested in a series of articles during the time before and after the Bear Steans crisis. And then as the credit crisis worsened with collapse of Lehman, WaMu, Freddie, Fannie and Wachovia in September 2008 fear gripping the markets and LIBOR interbank lending rate at close to 8%, banks gripped by the fear prevailing in the market, frozen practically about any steps other than preserving their hammered capital, and reluctant to take losses which would further impair their capital. Also in the WSJ Sept 8, on help for homeowners, Deutsche Bank estimates 40% of homeowners or about 20 million households will owe more than their home is worth by the time the housing market stabilizes. This will lead to some homeowners making the rational decision as Martin Feldstein argued to walk away from their homes, leading to more foreclosure losses for th banks. This article Rescue Includes Steps to Help Borrowers Keep Homes by Ruth Simon also has some information that confirms the NYT editorial. An analysis it says of 144 mortgage modifications by the Massachusetts Attorney General's office found that none reduced mortgage balances and onoly a handful reduced monthly payments. Even with interest rate reductions, the study showed borrrowers wound up paying more because of missed paymmets penalties and fees. Another study by Credit Suisse mentioned in the same article points out that the percentage of borrowers who were behind 6 months after loan modifications dropped to 17% when lenders reduced the loan balances and 13% when mortgage companies froze the interest rate of adjustable rate mortgages. A bigger problem is the effect on consumption, if 40% of homeowners end up owing more to the bank than their home is worth as Deutsche Bank estimates, combined with higher unemployment and higher parttime employment, by the time things stabilize. And this is the big looming problem for a new administration in January even if the bailout plan passes Congress this week after revisions and eases the crisis in the credit markets. ...

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Judicial interpretation of India's Constitution enables upward mobility, building the infrastructure that supports upward mobility without leakage of funds, and world social justice, says Chief Justice of India's Supreme Court D.Y. Chandrachud. He was giving the Nani Palkhivala Memorial Lecture in Mumbai.  Prime minister Modi could not pursue India's rapid development program to benefit all parts of society without the help of the Supreme Court in interpreting the Constitution in a way that supports India's development. "The identity of the Indian Constitution has evolved through the interaction of Indian citizens with the Constitution and has been accompanied by judicial interpretation... If you look at the Constitution, it does not favor unbounded economic liberalism. Rather, our Constitution seeks to find the right balance. When individuals can exercize their liberties and to be fairly rewarded for their efforts, then economic justice becomes one of the many inter-related dimensions of life. Ultimately, we share common faiths and destinies to the point that development of each individual fosters social justice in the entire world." "The basic structure doctrine of India's Constitution is that it guides and gives certain direction to its interpreters and implementers, when the path is convoluted. The craftsmanship of a judge lies in interpreting the text of the Constitution with the changing times while keeping its soul intact." This happened when Nani Palkhivala presented the idea before the Supreme Court in 1973 against prime minister Indira Gandhi's Emergency rule that parliament had limits to its powers when it came to amending the Constitution if by amending it the amendment would destroy the spirit of the Constitution or its basic idea. This includes freedom of expression, rule of law, separation of powers, freedoms guaranteed to all citizens. The amending power is limited and cannot be turned into an absolute power. Another way of looking at it is that parliament itself is organized by statutory authority. And it cannot destroy or dismantle the very basic features of the law (the Constitution) that created it in the first place.     ...

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Clarence Cammers, 64, one of Paul Ryan's constituents back home in Wisconsin, has a question for Ryan at one of his townhall meetings. Clarence is worried about what would happen to his son Tim, 32, if Medicare cuts went through and his son had to use vouchers for getting health insurance. Ryan's district includes Racine withe high unemployment, and Janesville which was devastated by the closing of the General Motors plant in 2010. Most of the people there are conservative, believe in fiscal responsibility and a balanced budget, but they are also older, working class people. Some of them like Clarence are dependent on their Social Security check to get by from month to month and are not sure they can cope with the kinds of cuts Ryan is proposing. In this story Clarence and Tim discuss the meeting and come to the conclusion that Tim will lose either way- with taxes going up or Tim not getting the retirement that he should be getting. Clarence a life long saver decides he will cut back on his expenses and save $588 from his $1912 monthly social security check for Tim. Tim has severe attention deficit disorder and works for $10 an hour in food prep at a resort....

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The Hindu's Piyush Pandey describes the fire sale of assets that is planned as the Reserve Bank of India pushes forward with the effort to clean up the balance sheets of Indian banks. Indian banks have an estimated 5 lakh crore of bad loans. Separately Crisil ratings agency cited the bad loans in the banking system as a hurdle that must be cleared for India to make the necessary investments in infrastructure in the next five year period 2018-2022. The Hindu's own review shows a startling amount of debt in the ten largest corporate business groups in India-  500,000 crore of debt to the banks. Anil Ambani's group alone owes 121,000 crores to the banks, with some of the businesses not able to service the debt. Canadian pension funds, Nippon Life Insurance and other foreign companies are taking stakes in business as this process takes place. The Mukesh Amani Group alone has increased the debt load as a result of the 150,000 crore rupees spent on Reliance Jio. Other investments that have led to losses is the steel business of Tata Group in Britain, which is down to zero value, says the Hindu. This report gives details of the fire sale for the other leading companies in India. ...

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The 'Querdenker" ("lateral thinkers") movement in Germany now has branches in 50 towns across the country, and calls for freedom of opinion, expression, and assembly. Some of these protests are against the coronavirus restrictions, particularly because of economic difficulties and cultural attitudes towards restricted life during the first and now second lockdowns. It covers all backgrounds including far right and far left fringes and people of different views on other issues. A Berlin demonstration in late August brought out about 38,000 people and briefly some demonstrators attempted to rush into the Reichstag or parliament building. The police in Germany can only act if the town and municipal authority says it is right to intervene against unruly behaviour in demonstrations. The other factor protecting the Basic Law which protects freedoms in the German Constitution is that the courts in Germany have acted in favor of the demonstrators so that there remains a fair balance between the need for covid restrictions and the need to demonstrate against these restrictions affecting the right to work and economic freedoms. As well as the pushback against these restrictions for cultural and other reasons.  The initial fear of being infected is now being strongly offset by fears of the economic consequences of an extended lockdown particularly for vulnerable groups who cannot work from home such as in construction, manufacturing, transportation, retail and tourism related industries. The next big demonstration is set for Saturday November 14 in the eastern city of Leipzig with about 20,000 demonstrators expected and police getting reinforcements from neighboring states and federal police. ...

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When George Osborne took over at the British Treasury the deficit was 10.2% of GDP. Osborne's hope in 2010 was that the budget could be balanced by 2015, now it looks like this will happen in 2019 or later.The forecast for the end of the 2015 fiscal year is a deficit of 5% of GDP. Lower than expected tax receipts are a big reason for the difficulty in lowering the deficit. The Office for Budget Responsibility, the budget agency, has reduced the forecast for tax receipts for 2015-2019 by 87 billion pounds. This means further spending cuts will be needed, according to OBR. Budget surplus is not expected before 2019. This is happening even though lower inflation and lower market interest rates have helped reduce outlays to service the debt. OBR assumes productivity will increase to 2% for the budget to be balanced in 2019. At the average productivity growth rate of 0.5% seen since 2008, the budget deficit will still be 2.2% in 2019, in another scenario of numbers run by OBR.

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Former SEC Commissioner Arthur Levitt offers his views on what needs to be done in this mortgage crisis. He calls for more transparency, with FASB ensuring that nothing is kept off company balance sheets like the conduits and SIV's, and for more accountability, with the credit ratings agencies incentives not being subverted by the profit motive, and for accountability from originators and mortgage brokers with tough licensing standards. He calls for more regulation in the interest of quality of American capital markets with merging of CFTC and SEC, and more authority for the SEC. He calls for the Fed, the SEC, the Comptroller of Currency and other regulators to require needed risk management practices and public disclosures, and give them more teeth to ensure quality in capital markets.

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The way in which the subprime mortgage crisis is affecting Germany. How mid sized German banks formed conduits like the larger banks in Europe and expanded them to the point where their conduits were as large as those of the large banks. Lacking the resources of the larger banks these banks were the first to fall in this crisis. Conduits are off balance sheet affiliates that borrow using short term commercial paper to invest in longer term securities. Its critical that they have access to capital borrowing because the commerical paper has to be renewed. In a crisis like this one if the borrowing ability vanishes because of perceived risk by lenders then the whole operation can blow up. So the German central bank had to intervene to support 2 of these institutions IKB Deutsche Industrie Bank and Sachsen LB and organize a rescue operation. The background of how these stateowned banks got into this conduit business is explained here and information available on their exposure to USA subprime mortgage securities. ...

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Full time workers in Sweden have the right to take leave for 6 months to do something they want to do, including starting a new business. This includes taking care of a relative or study leave. Workers can come back after 6 months to resume their old job. Employers cannot say no except for special reasons.  This leave has the support of employers, unions and the government. In Sweden's unique culture which emphasizes work-life balance workers taking 6 month leave of absence can get back to their old jobs smoothly.  In Sweden it is very hard to fire an employee who is permanent. So that once an employee has permanent status there is very little incentive to leave to do something else. The 6 month leave option lets workers try out something different or start a business without incurring career risk in addition to financial risk. Workers are more comfortable venturing out when they know they can come back to their old job and are not risking their careers. This BBC report shows profiles several new business owners who took 6 month leave to start a new venture they were passionate about. The way this happens is that an employee first tries out an idea in his spare time while he works full time. When he is comfortable making the move he can take the 6 month leave to devote time to it full time. Experts say Sweden is the only country in the world to give this right to leave to start a new business. In 2017 175,000 people took this leave compared to 163,000 in 2007, according to Statistics Sweden. During this period registration of new companies shot up from 27,000 to 48,000. ...

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Charlie Rose talks to Bowles and Simpson of the President's Deficit Commission. On health care and Paul Ryan's point that the Deficit Commission did not take on health care, Simpson says they did not do as much as Paul would like to see, but they have $500 billion in cuts for the next 10 years. Simpson says its garbage to say that they balanced the budget on the backs of Social Security, and Bowles says they took a very balanced approach. With the Social Security Trust fund running out in 2037, Bowles-Simpson raises a little bit of revenue, benefit cuts mostly on upper-end people. On the Bush tax cuts Bowles says, if you give more tax cuts you lose revenue. Their approach was to broaden the base, bring down rates. Bowles points to $1.1 trillion worth of tax expenditures, what he calls spending, in the tax code that benefit mostly upper-end people. Some of these are mortgage interest deductions, deductions for state and local taxes, charitable deductions, and he says their approach was to eliminate those and bring tax rates down to 8%, 14%, and 23%, and the corporate tax rate down to 26%....

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This WSJ report shows how a record 4.4 million American workers resigned from their jobs in September 2021 alone. WSJ shows map of US with the states where this is happening marked with "I Quit." States with the largest quit rates have large share of employment  in food, restaurant, hotel and entertainment industries- Hawaii, Montana, Utah, Oregon, Colorado, New Hampshire, Louisiana. In the northeastern states the education sector which accounts for a larger share of employment the quit rate has risen at the fastest pace since January as shown in the Labor Department numbers. For years wages, benefits and working conditions in the food, restaurant, grocery store, hotel and entertainment industries, supply chain logistics, lagged behind, exacerbating inequality and widening the income gaps between working class Americans and the professional and other classes. Increases in minimum wages lagged behind the cost of raising families, rent and grocery bills. Professions such as nursing, children's education, critical to the nation's health were also left behind in wage increases as the tech boom rewarded different sectors in outrageous ways worsening the social divide and creating pools of income scarcity and income abundance in indiscriminate ways. The pandemic is changing all this. Workers in states with higher proportion of workers in these sectors of the economy are saying "I Quit," as they seek better opportunities elsewhere and better working conditions. The checks to working class Americans in 2020-2021 as aid for the pandemic, the child credits, investments in affordable housing, child care, early childhood education, and other aid in the Biden Families and Workers plan are giving workers for the first time in decades the right to choose better working conditions and incomes over worse working conditions and incomes that were set without regard to their role and contribution to the welfare of the whole country and people.  After the lockdowns in the northeastern states, States such as New York, Massachusetts, New Hampshire, Rhode Island,  with higher vaccination rates and rebound in the economy are seeing higher job openings. This is making it possible for workers in the northeastern US to quit jobs in educational services and other sectors  for better paying jobs, better working conditions, remote work options, and improved work-life balance. ...

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As with so much in life too much of anything is bad. Obsession for dealing with inequality without grasping the potential of new technology and people with skills, has hurt both China and India, with both moving to correct this in the last 20 years. Allowing too much inequality disturbs the balance in society damaging democratic processes and creating new dangers for democratic processes.  Today Piketty, and other Western and Asian leaders are presenting the argument for fairer societies principally because this is the only way to generate the kind of cycle for growth seen after the second  world war in the 1940's, 1950's and 1960's  following FDR and Truman, De Gaulle and Adenauer. At some point the curve for growth simply drops with extreme disparities in society- something that happened with disastrous consequences in the history of China and India in the 1500's and the long descent into colonial or semi-colonial rule. That pattern is documented in Adam Smith's Wealth of Nations. And it is a drop no nation or society would want to repeat because of the immense suffering, and the decline of Asian societies in a social and cultural sense, leading to a closed outlook to science in general and knowledge accumulation behaviours based on scientific observation of Nature over the course of the 17th to 19th century.  Some traces of this in the early stages are evident in the US and Europe which is why all well meaning people and people of goodwill for their countries seek a way out of this endless fracturing, the rural-urban divide, the society blind and morally neutral views of tech, and the starving of resources which benefit the broad segments of society for infrastructure, health and education through the misallocation of resources to other places. In the long run what is important is not the long theories which can fail, but to "Just Do," follow good common sense, do the right thing as Modi has done for women in essentials such as water, toilets, cooking gas, digital bank accounts, dignity, safety, access to education. And what Xi is attempting to do for Common Prosperity in China. And what Biden and Scholz are setting out to do in the US and Germany. ...

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The WPost editorial says more money may be needed in the future than the $50 billion the government has already committed to GM. A lot of the basic steps have been taken in the Obama restructuring, closing brands and dealerships, cleaning up the balance sheet, bringing costs and benefits in line with foreigh nonunion plants. But, says the Post. the auto task force wanted to see 16 plants closed, the agreement will close 14 plants and three of them will be idled instead of shut down, with GM paying maintenance and other costs. Breakeven is at 10 million vehicles per year market but this depends on GM's market share. If the market at 9.5 million vehicles per year at present shrinks further in 2010, and GM's market share faces more pressures from competition, the prospects of GM making money will dim.

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Lou Jiwei chairman of China Investment Corporation met with Treasury officials in Washington to give reassurances that China's sovereign wealth fund would invest as a portfolio investor and be a good citizen when it comes to investing in the USA. He reiterated the pledge by Chinese Premier Wen Jiabao that the Chinese government would not interfere in the operations of the fund, and that the fund would have its own corporate governance structure. He also met with officials of the IMF who are drawing up a code of "best practices" for sovereign wealth funds. Following the Chinese experience with the Unocal deal and the experience of Dubai in a deal to buy a company that manages USA ports, both deals falling apart on concerns in the media and Congress, the Chinese and the Persian Gulf sovereign funds have become more savy and aware of these concerns and tried to handle them better. They also point out that in the case of the financial institutions caught in the US mortgage securities crisis, it is these companies like Morgan Stanley and Citigroup that have come to them, to China, to Persian Gulf countries and to Singapore and other countries, asking them to invest for small stakes in the companies. Their line goes like this- if you have second thoughts about our investment we will invest elsewhere in other countries. Another facet of this is that these portfolio investments are spread out between many different countries sovereign wealth funds, and the possible influence is small in management decisions. China Investment Corporation has $200 billion in assets. Lou says that only a third would be invested to buy foreign assets, about $70 billion. The other two thirds would be used to support China's three large commercial bank balance sheets. ...

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The number of people working lesss than 35 hours per week is approaching 7 million according to the Bureau of Labor Statistics. Many of these families are seeing furloughs of afew days amonth, pay cuts and shorter working hours. All this means buying at the discount store, like this family which keeps careful track of account balances while shopping, and keeping a meticulous track of purchases tossed into the shopping cart with a calculator so as not to go over the budget. This may be the reason companies like P&G have introduced affordable lower end brands, so as not to permanently lose these customers to store brands. See the link to P&G's discount brand strategy, which couples with its developing super premium brands at the same time, yet barely eking out a 1-2 % revenue gain in 2009 and 2010 by its estimates.

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Home Prices have overshot income growth for some years , it would take another drop of 10-12 % in home prices given income growth in coming years to bring them into balance but as prices tend to overshoot in either direction Merrill thinks it would be more like another 20% to 30% decline and Goldman looks at another 15% decline home prices. The Goldman and Merrill estimates which see a strong downside have been borne out so far. For certain states like California, Florida and Arizona where the situation is worse in terms of the gap between incomes and home prices it may be higher. As home prices decline the Loan to Value Ratio rises and as Martin Feldstein fears in his article suggesting Loan Substitution with the Federal Government stepping in with a loan for 20% of the value of a loan, see link, when LTV is at 100% then it makes sense and is the rational thing to do to walk away from a house and default. This expected price decline would thus lead to losses on the mortgage securties and worsen the effect on the economy and on lending....