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If the decline in manufacturing in rural southern Virginia for 500 workers in a low tech deli meatpacking plant can devastate whole communities, then imagine what happens  when manufacturing in chips and science with high paying jobs are put at risk by market forces focused on AI.  This week WSJ carried a story about Qualcomm which does design and does no manufacturing is planning a takeover of Intel, a leader in manufacturing for advanced chips in the US, a key part of Biden-Harris strategy to regain a American foothold in Chips manufacturing. Such a takeover makes no sense for America's long term interests. Qualcomm could simply jettison the manufacturing capabilities -a key part of America's long term chips and science strategy just because AI focus has distorted market forces. IMAGINE THE DAMAGE. Regulators need to safeguard the Nation's long term interests for reliable chips manufacturing within the US, to avoid the crisis experienced with chips outsourced overseas leading to severe shortages in 2021-2023. How this has happened is that AI has created distortions in the market so that companies are valued differently. So that an Nvidia gets valued at $1 trillion and even for a day at $2 trillion then going back down to half that, all within a 12 month period. AI is distorting the market in ways that a chip leader like Intel now gets valued at $90 billion a third of the $290 billion it is valued at only a short time ago, making talk of takeovers possible even from smaller design only companies such as Qualcomm. The market failure in this case comes from markets being distorted by not reflecting true costs of shortages America experienced in chips from lack of its own advanced manufacturing during 2021-2023.   ...

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Working America, an arm of the U.S. trade union the AFL-CIO, conducted conversations with 350,000 voters in 17 U.S. states. Here a representative of Working America, says the overwhelming response to the question "does it make a difference whether Democrats or Republicans are in power for my well being," is reflected in one of the responses- "does it even matter?"

The suggested approach here is for Democrats in particular who have represented working class voters in the past, to start with a fresh approach by creating new conversations with working class Americans.

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Not Kentucky as the title suggests but Denmark's Mette Frederiksen. Lara Spirit in The Times of London looks at Starmer and Labour in the month of Feb 2025 with the challenge it faces from Reform UK. Mette Frederiksen PM from the Socialist party in Denmark and her policy to tightly restrict immigration and oppose illegal migrants are of great interest to No. 10 Downing Street. This report says No 10 is interested in how Mette Frederiksen has for years pointed out that the only people hurt from socialist parties supporting migrants are the workers and families across Denmark.  There is a disconnect with history. In the US history shows that since the 1850's to 1960 the US vigorously opposed migration from Asia, and migration from Mexico was only supported during the war years 1940-45 because of the demand for labor and quickly  reversed under president Eisenhower's 1954 Operation Wetback. Today's situation of migrant and fentanyl flows following 490,000 deaths from fentanyl over 12 years is totally unprecedented in American history, and would be unimaginable to every president from Washington and Adams to Lincoln, TR, Wilson, FDR and Kennedy. How did this happen? Why are parties including Harris Democrats, Mayorkas Democrats, in contrast to Fetterman and  Ruben Gallegos Democrats who are asking serious questions about migrants finding themselves caught with Merkel and Scholz in Germany in this situation where the wellbeing of people in each country is obscured by lofty ideas that have no connection to the history of each country and to the situation of unease on the ground? ...

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After heated debate Governor Christie and leaders of the democratic party in the legislature agree on changes to New Jersey's public employee retirement and health benefits and pension system. New Jersey's pension system has unfunded liabilities of $54 billon and some estimates forecast that it will run out of money to pay pensions by 2018. The retirement age for new workers is now set at 65 not 62, pension contributions go up to 7.5% from 5.5% for state workers and to 10% from 8.5% for public safety officers. A major change is to delay annual cost of living adjustments till the pension fund returns to a stable financial footing. The absence of this change would have meant reducing retirees pension value by 30% in the next ten years. After the plan is 80% funded a new employee-employer pension governing board will modify the contribution rates and pension rules based on advice from actuaries. On health benefits the changes are for workers earning more to pay a larger share of premiums- so that a worker earning $60,000 would pay 27%, and a worker earning $95,000 would pay 35%. This particular change is phased in over 4 years and saves $300 million....

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Bernie Sanders points out in this NYT op-ed the idea that Donald Trump could benefit from the same discontent among working class voters that helped the Leave campaign is a wake up call for the Democratic Party. He calls for global trade and a global economy that works for working class, middle class Americans.  Sanders is pushing for a Democratic Party that embraces the concerns of working class Americans, that understands the impact of factory closings and loss of jobs, of economic uncertainty, of declining incomes and shrinking opportunities.

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Op-ed contributor Reno writes about the cultural decline of the middle class and its lost sense of participation in the nation's politics. He describes the effects of social decline with use of drugs, children born outside of marraige, and children raised by grandparents. Political elites on the right and left see the white middle class as not being part of a multicultural and globalized future, which they hope to run, leading to its alienation and support for candidates such as Trump and Sanders, says Reno.

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US president Biden makes three nominations to the US central bank, the Federal Reserve. Lisa Cook's nomination to the central bank is confirmed in the Senate 51-50. Following the appointment of Lael Brainard to the central bank as vice chairwoman, president Biden has nominated Cook, the first Black woman on the Federal Reserve board from Michigan State University. He has also nominated Mr. Jefferson of Davidson College to the Federal Reserve board. A fourth nomination is of Michael Barr, a law professor, as the Federal Reserve's vice chair of supervision. Lael Brainard served under president Clinton and is on the board of the Fed since 2014. She was Treasury Under Secretary for International Affairs from 2010 to 2013, coordinating economic policy at G-7 meetings during that time. Jerome Powell, the current chairman of the US central bank is being renominated as chairman by president Biden after Powell's term expired in February. Lisa Cook's research focus was on policies that promote broad economic opportunities for women and racial minorities. She served on the Council of Economic Advisors under the Obama administration, and has worked at the Treasury Department. With Janet Yellen at Treasury and Jerome Powell and Brainard at the US central bank there is a shift to policies that will promote president Biden's agenda for his first term to invest in infrastructure, supply chain renewal and working class families in America. ...

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With gas prices at $1.98 a gallon and crude at $55 a barrel in November and falling further are Americans going to need some special incentives or a gas tax not to go back to low fuel efficency or large vehicles? With about $1 trillion dollars of consumer debt in credit cards, auto and other loans and student loans, zero savings rate, and heavily in debt, and millions under water on their mortgages, the incentive is in the need to use the savings from lower gasoline bills to paydown debt. There is also the shift to parttime workers in the workforce a long term structural change similar to Japan after the economy became stagnant there. Parttime work means lower incomes and uncertain future and need to spend carefully. All these things will likely make the shift to higher fuel economy permanent, including legislative mandates, and new management at the automakers committed to serious conservation and the environment if government aid money brings new management at GM. And public habits are changing in how much and where they drive in pickups and SUV's, many using smaller cars and letting the SUV sit on the driveway for 2 or 3 car families....

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Caterpillar is asking workers at its Canadian plant to accept a large cut in wages and benefits. Wages and benefits at Caterpillar's rail equipment plant in LaGrange, Illinois, are less than 50% of the costs at the Caterpillar locomotive assembly plant in London, Ontario. According to the U.S. Bureau of Labor Statistics U.S. manufacturing labor costs per unit of output were 13% lower in 2010 than in 2000. This compares with an increase of 2.3% in Germany, increase of 18% in Canada, and increase of 15% in South Korea. Caterpillar is also asking for more flexible work rules at the Canadian plant. The flip side of this is that U.S. workers are earning significantly less in manufacturing, especially considering inflation, and the middle class is shrinking in the U.S. At the same time wages in the U.S. that are more competitive with wages in Mexico and China with flexible work rules and use of automation and technology, is helping to reverse the shrinking of the manufacturing sector in the U.S....

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The Republican presidential debate with Chris Christie former governor of New Jersey, Nikki Haley former governor of North Carolina and UN Representative, Senator Rick Scott, Ron DeSantis governor of Florida. Mr. Trump with his lead in the polls chose not to participate. Nikki Haley comes out on top with her experience at the UN and in foreign policy.  Absent in the debate discussion of cost of living issues or issues about wages of workers, climate change, reshoring, or any of the major issues confronting the American people today.

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Sandra Day O'Connor always carried a copy of the US Constitution with her and worked to expand civic knowledge of the younger generation through iCivics from 2009 when she left the US Supreme Court after 25 years service. As she lies at the Supreme Court after her death at age 93, president Biden who was ranking member of the US Judiciary Committee when O'Connor was nominated in 1981, remembers her as "gracious and wise, civil and principled." Biden said: "One needed not agree with all of O'Connor's decisions to recognize that her principles were "deeply held and of the highest order, and that her desire for civility was genuine... She empowered generations of American women in every part of American life." 

 

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Having 12 million human beings caught in a net of fear and apprehension, living life in the shadows, even in abad economy, no, especially in a bad economy, makes no sense, says the NYT editorial. These immigrants can become productive citizens, some of the most hard working who did the backbreaking work in factories and construction, who send money to keep families in Mexico and other parts of Latin Ameica from falling into poverty. In doing so and working on the books instead of off the books, they earn more, spend more, pay more taxes. and have the ability to ensure that there are fewer abuses in the workplace. This way they also get better education for themseves to improve job prospects, and better education for their children who can become part of the next generation of productive citizens. It also clears the path for focus on how to handle better border enforcement focussing resources on fighting crime, drugs, violence, and have a future flow of workers that is in line with the economy's needs. It createss decent workplaces, where people's workplace rights are not violated by unscruplous employers. In this case the fair thing to do, is also the most beneficial thing to do in the larger sense for the economy. In this context the agreement of labor unions, the AFL-CIO and the Change to Win (a rival federation that includes auto service employees, Teamsters and carpenters), to agree that an independent national commission would figure out the size of temporary workers depending on the needs of the economy, higher if it was growing, lower if it wasn't, basing it on conditions in the labor markets, is a good things says NYT. It takes necessary courage for unions, Obama to do the needed fight to protect these future citizens and build a better America with their help, rather than wish the impossible of putting them all on the boat back. ...

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Biden has put forward a new initiative to strengthen democracy by getting increased commitments to key features for democratic processes in the world. The idea is not to limit partnerships with other countries says Anthony Blinken, Mr. Biden's main adviser and secretary of state. This means India a key partner in both democracy and the Indo-Pacific can for defending its thousands of miles of border in the high Himalayas with enroachment of China into border areas such as Tibet, maintain its good legacy relationships with Russia as happened in last weeks Modi-Putin meeting.  The idea says Blinken is- "The US does not want to limit your partnerships with other countries. We want to make your partnerships with us even stronger." This means the Philippines, Indonesia, Malaysia, Sri Lanka, can maintain economic and development related ties with China which contribute to their economy, and build stronger relationships of culture and democratic processes with the US, India, European Union and Japan. For this reason the White House has emphasized that this is not about the US giving stamp of approval or disapproval of which country is a democracy and which is not. Too much of that happened under previous governments including Reagan, Carter, Bush, Obama.  The situation of Turkey relates to independence of judiciary and the unwillingness to take another look at problems. There is also the issue of technology is to be used so that citizens are protected from undue surveillance. Mistakes can be made but judiciary acts as an independent branch under the arrangements of checks and balances in American, British and now European frameworks of democracy built over centuries of struggle between monarchies and the people dating back to the Magna Carta in Britain. Neglect of workers and families also is an issue for democracies as for instance the effort now taking place in Germany under Scholz to "respect" workers and families. Lack of this led to the movements in US and European democracies giving room to vent that could ultimately lead to subverting democracies in the homeplace of democracies in the US or Britain. Why such a large gathering of 100 countries? Biden understands that the processes of democracy are always being improved and are a work for each new generation. For this reason there is no perfect scorecard- an ever renewing effort to make the process work in the best interests of the people of the country one generation at a time, to improve the quality of life and do this by preserving the right of peoples to choose their governments.  Why exclude China and Russia, till recently China had a consultative arrangement to run the country and Russia has elections? On this question the response of the Biden administration is that countries commit to the process and back initiatives to "counter authoritarianism. combat corruption, and promote respect for human rights."   Pakistan because it struggles with a long legacy of shortfall in the area of education after the collapse of Mughal rule that was seen under the British, and the general poverty of the Indian subcontinent that is striving to preserve the practice of elections, judiciary, and other democratic processes that were introduced in the Punjab and Sind provinces, and elsewhere since 1900. This is true for much of Africa, and also in parts of India, where aspirations of the people are for democratic process but faced with difficulties, corruption and poverty. In India the efforts of Naoroji, Gokhale, Gandhi, Nehru and Rajagopachari, Govind Pant, almost all leaders of the period since the 1850's, and able well meaning administrators since Lord Mayo in 1868 were to let democratic processes gradually find deep roots. Biden see aspirational in the face of difficulties as acceptable, even truly remarkable, with a willingness to learn from other countries to strengthen its own processes for democracy. It is no longer an Anglo-Saxon model alone as Germany and Europe are part of this process to be renewed by each generation. So are India and Japan. India after a century of elections since 1900 gradually expanding voters from one million to 5 million in the 1930's and to 900 million in 2019, with independent judiciary in a system of checks and balances as in the US.    ...

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House Majority Leader Eric Cantor rejects the McConnell plan for raising the debt ceiling. Senate Minority Leader McConnell says on a conservative talk show- "all of a sudden we have co-ownership of a bad economy. That is very bad positioning going into an election." McConnell's plan is to shift the responsibility for raising the debt ceiling to President Obama, by separating debt reduction talks from debt ceiling talks. Cantor believes its best to push on with cutting back spending. Obama's response was to offer $1.7 trillion in spending cuts, at which point he expected Republicans to support tax increases, telling Cantor in negotiations "enough is enough." The McConnell plan is supported by Senate Majority Leader Harry Reid and Republicans in the Senate. The details of the plan are being are being worked out, with one strategy being to add to it the $1.5 trillion in spending cuts identified in bipartisan talks with Vice President Biden. Both sides are looking at this jockeying for advantage for the 2012 election. At one point in the talks with Cantor, Mr Obama is reported to have told him- "Eric, don't call my bluff. You know I'm going to take this to the American people." Cantor for his part, wants to limit the duration of the debt ceiling increase so that it would be a short term extension and would come up for a vote before the 2012 presidential election....

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Huge losses sustained by sovereign wealth funds. Estimated $350 billion for Gulf foreign reserve funds and SWF's, according to RGE Monitor's Rachel Ziemba, or 27% of assets. Sovereign Wealth funds are either using their funds for supporting their local banks as in the Gulf areas, or buying back stakes of cash strapped western banks like RBS in the case of China. Russia, China and other countries are using their SWF's for stimulus spending. And Russia, Gulf economies that are dependent on oil prices, are looking at possible sale of foreign assets at oil prices between $50 and a deterioration to $25. Only China has a surplus that is sustained through the last quarter of 2008, but this is changing quickly as imports pick up after the stimulus kicks in, and exports drop precipitiously in 2010. South Korea and Russia have also learned of the need to have liquid safe investments preferably in dollars in the current crisis, as they have learned how large capital outflows can get in a short time. And the US is not looking at these large capital inflows from overseas as a benevolent thing, because it overvalues American assets, and leads to all sorts of distortions in liquidity and pricing of risk that contributed to the current crisis. In short the whole situation with SWF's has a suprising ending, as with everything in the current crisis, nothing worked out as expected or planned....

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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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Brinkmauer and Pfister of the German magazine Der Spiegel interview German Chancellor Angela Merkel in September 2017. The interview covers a range of topics from whether Merkel is addicted to power, why she chose to run for a fourth term, revolving door for CDU politicians as lobbyists for the automobile industry, the AfD right wing party, the refugee crisis and the CDU's historic policy of controlled immigration, and whether democracy is losing strength.  In characteristic Merkel fashion the chancellor takes up the idea of her addiction to power by saying she is careful not to let this happen to her by reading critical articles in the press and having her staff bring critical reports. Her discussion with her constituents in her electoral district are also frank and open, more so in 2017. About the idea that Helmut Kohl's fourth term as chancellor being not good for Germany and for the CDU, Merkel responds that she has given it considerable thought. She found that she still has the intellectual curiosity to learn new things, understands that she has much to learn about how the country and the world is changing. This has been decisive in her decision to run.  Merkel believes that someone who has worked in politics should be able to work in private industry following historic practice in Germany. On the government links with the automobile industry Merkel says her approach has been to look at what was best for an industry employing 800,000 people in Germany, yet deplores the diesel emissions cheating at VW. Has democracy lost momentum after the U.S. elections and the refugee crisis? Merkel says democracy is still strong, and that she will do everything to strengthen democracy in Germany and other parts of the world.  Merkel's view is that it is important that there be counterweights in democratic systems. In this way democracy is strong in America, and also in Poland and Hungary. The chancellor cites high voter turnout of 82% in 1998, 79% in 2002, 78% in 2009. Since then she says in 2009 it dropped to 71% and 2013  72%, yet  expects that with the issues in this election people will come out to vote in larger numbers.  For many years Merkel is seen as co-opting the issues of the left parties and the SPD, being careful to move to the centre. Der Spiegel puts this idea forward to the chancellor by asking her if she is the best SPD chancellor Germany ever had.  In her matter of fact style Merkel responds that voters do not think of it this way, simply expect her to her job as best as she can possibly do it.       ...

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Investors put in $136 billion into startup companies in 2018, and $141 billion in 2019, as reported in this WSJ article on startups. Before this it peaked at $75 billion in 2000 and did not recover after the 2009 financial crisis till 2014 when it reached about 75 billion dollars.  Much of the increase in money that did not go into infrastructure at low interest rates below zero appears to have been wasted as the ideas for startups declined in quality in the years 2014-2019. Softbank put up a Vision Fund which has run up billions of dollars in losses including a disastrous investment in WeWork. The resistance to shifting all the money at low interest rates to infrastructure has faded with the election of president Trump supported by a Republican party that puts the American worker first for job retention and expansion, and America first in world trade. The pandemic has changed the environment for startup companies as most startup companies are not likely to survive the environment they are in. The big ones such as Uber have built up losses, and ones such as Airbnb are borrowing $2 billion at 10 percent interest in emergency funding. Experience and sound thinking for investments were left behind as capital was wasted in many projects. The time has come to return to investments that have built the basis of the twentieth and twenty first century's advances in quality of life, in infrastructure and strong public services. ...