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The Fed's Term Asset Backed Loan Facility (TALF), by which the Fed would give money to banks on very favorable terms to loan out to others including hedge funds who would go out and buy consumer loan backed securities, has barely made it off the ground. Its vital if consumer loan markets for everything from cars to other products is to get off the ground. The large layoff and job losses are a result of the lack of credit to finance purchases creating unneeeded manufacturing capacity, with the ensuing job losses only exacerbating sales. Investors worried about defaults have stayed away from consumer loan backed securities. The figures tell the story. According to Dealogic only $3 billion of these asset backed securities were sold in Jan-Feb 2009, down from $1 trillion in 2006. The TALF has alimit of $200 billion for the early stage, but could grow to $1 trillion as more asset classes are added. There are only about 10 deals in progress but most of them are on hold. Nissan Ford Credit and Huntington Bank are preparing to sell securties backed by car buyers. The outcry over bonuses at AIG, makes investors wary of public outcry if they were to profit unduly from the TALF, and hedge funds don't like some of the language in the agreements they have to sign with the gbanks and the Fed that would have them liable for losses, and by stimulus legislation that restricts use of foreign workers....

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Lessons for startup Jive, social networking software for business financed by Sequoia Capital. It did well in the beginning with a number of high profile sales. Then things fell apart with inexperience and a series of mistakes. With $15 million of capital raised from Sequoia in August 2007 discipline started to fall away, bad hires were made in a hurry to speed things up, staff tripled to 150 by the beginning of 2008, and there were a lot of problems with the new software. In October Sequoia went in and fired 25, 3 managers, and cancelled a project. Sequoia Capital held a direct talk in October with executives of its 100 companies, and about 1000 layoffs were made. The presentation was direct, showing a pig with a butchers knife in its head and the slide reading R.I.P. Good Times, saying that for startups it would be the survival of the quickest, the companies quickest to cut costs and be profitable. The sales people just took on as customers anyone who was interested or called. And as the economy worsened and this software was not an essential purchase they cancelled. Now the new sales approach is to say no, and get customers who actually save money from using the product or see some vitally important benefit. The sales person actually tries to find out about a company's plans, its budgets, to see if there is a good fit. Jives at this point is a survivor....

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A technology that has been known for years but with problems to solve before it can go on the road is being developed by automakers. It will increase fel economy by about 15% and reduce emissions of oxides of nitrogen a key smog component. GM is working on getting HCCI which stands for Homogenous-charge Compression- Ignition to work in a gasoline engine. For it to work the combustion process in such an engine has to meet certain conditions, the mixture of air an fuel has to be homogenous and be at certain temperatures. Once this is achieved combustion occurs without a spark. The trick is to get the temperature and gas mixture to just the right homogenous levels so that it sparks and burns efficiently, which at this time is being achieved by computer controls keeping the engine rpm within a certain optimal range of 1000-3000 rpm which covers typical driving. Problems that remain to be tackled are the faint rattling type noise when the engine shifts to spark ignition when its outside this range of rpm, and the emissions reduction at low loads, and handling a range of fuels. GM has made progress upto the advanced engineering and road test phase for the Saturn Aura. German automakers Mercedes and VW are perfecting there own versions of HCCI and Honda is developing its version and its a top priority for these automakers. ...

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Treasury Secretary Paulson has emerged as the critical bridge builder within the Bush administration to get some tangible economic results in the spirit of bipartisan cooperation. It has not been easy in a Bush Presidency that has not valued compromise and cooperative relationships with Democrats. Treasury's influence, unlike the Rubin days under Snow and his predecessor, has been overshadowed by the politics of the Bush administration. Some of his initiatives had not fared so well, the efforts to reform Social Security and Medicare. The China-America dialogue may have reduced tensions but still did not amount to something significant. Now with Bush going his own way on Jan 18, 2008 to announce his own stimulus plan and spurning Democrats efforts for a bipartisan agreement and making them feel left out and angry, Secretary Paulson finally got into his own groove of compromise, diplomacy and deft bridgebuilding to get restraint from Bush. He worked out the details in the meantime to forge an agreement by the following week. Paulson was instrumental influence behind this stimulus package. His disregard for ideological debate in an administration that has been too close to this and not known for cooperaive relationship building, is a breath of fresh air in an otherwise desolate field of politicking. Particularly helpful in the middle of a risk laden economic situation for the country, and the other global economies that are intertwined with the US economy....

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Making the shift to smaller cars and putting its money where its mouth is meant converting Ford from a large vehicle company to a company that makes a lot of smaller cars, and this meant Ford would have to convert to smaller cars a lot of its truck and SUV plants and close some of the other plants. Alan Mulally is doing just that as he moves to give Ford a completely new direction What is not surprising but is still more than a bit disconcerting is the skepticism he is meeting from executives inside the company that Ford can only make money building larger vehicles even in the face of a market that is moving in the opposite direction. So again and again Alan is having to ask the question "what does a sustainable Ford Motor look like?" Shows that the American car companies are not only caught with the wrong bag of product mix but are in some kind of culture shock as the ground below them is changing. Alan also is focused on a global market almost as though he realizes that from now on there is only a global market to deal with not the sort of American market that existed in the past, so he reminds other Ford executives that the global market share of larger vehicles is only 15%, and as if to sound incredulous asks them and you want us to continue to invest limited resources in that market?...

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Last week President Sarkozy of France referred to the golden parachutes and executive compensation when their companies were falling apart as"formidable injustice". StJohn got reguator approval for the Novi hospital based on its ability to use profits to support Riverview. St John asked for $10 million management fee from the state of Michigan for Michigan State University to use the hospital for training residents was this excessive for a hospital that was losing money, and could St John have come up with some agreement with Michigan State where they could still have kept Riverview and had support for the loss. The attached graph shows Ascension made $1250 million in 2007 , some of it on investment gains, considering what it did for the bad publicity for St John and for Ascension was closing Riverview the right decision, and was the payment of $1 million to Joseph CEO of St John the right thing to do given his role in closig St John. And did Ascension consider the devastating impact on Detroit of the closure, and its impact also on St John Hospital in the neighborhood bordering Detroit and Grosse Pointe a wealthy Detroit suburb, as the patients who used Riverview now crowded into St John Hospital thus resulting in similiar losses and the loss of patients from Gross Pointe at St John Hospital, creating the possibility of losses at St John Hospital. ...

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Many individual Britishers hold accounts in Icelandic banks that went bust and some being propped up by the Icelandic government like the Kaupthing bank and other banks like Icesave. The Britishers individual accounts are worth billions of dollars and the British government has guaranteed that individual British account holders will be compensated fully. To recover some of this money the British government had to seize the assets of British branches of Icelandic banks. How it did this is interesting. Britain used a 2001 antiterrorism law to freeze the British assets of Kaupthing bank. Alistair Darling defended this by saying that Iceland had indicated that it had no intention of paying the British account holders. So now the British Treasury Department's home page lists Iceland as a terrorist state after N. Korea, Sudan, and Al Quaeda. Under European regulations Iceland is obligated to pay 20,000 euros to each individual account holder in Icesave, but that amount would require paying $5 billion at the new collapsed exchange rate or 60% of Iceland's GDP. Iceland's economy has collapsed and interest rate is 18%, krona down 44%. Its foreign minister says the British decision puts Iceland back 30 to 40 years when it was a poor isolated country. No guarantees have been made by the British government to British local governments, universities including Oxford and Cambridge, and charities, that have billions of dollars in Icesave acccounts and this money is lost. ...

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Fifteen heads ofhome building and financial services firms each got $100 million in cash compensation and sales of stock during the past 5 years according to a WSJ analysis. Four of those heads of companies including heads of Bear Stearns and Lehman Brothers led companies that filed for bankruptcy. The overall study looked at heads of 120 public companies in sectors like banking and mortgage finance, student lending, stock brokerage, and home building, showed that top directors and executives of the firms cashed out a total of $21 billion during the past 5 years. In the tech bubble of the late 1990's more than 50 individuals each made more than $100 million from selling shares just prior to the crash, with many founding companies that were never profitable. With much of the profit coming in areas like mortgage finance and banking where many of the errors dangerous leveraging and risktaking, and failure in ethics, caused the global financial crisis, the whole issue of executive compensation without results or pernicious to the public interest is taking centre focus for today's public opinion. With the auto industry also there is a perception that there was poor management and failure to respond to national and later customer need for energy conservation till late in the day, and yet the executive compensation and entrenched management behaviours and lobbying in Congress suggested a management impervious to public opinion....

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New figures on campaign financing show the that from Oct 15 onwards the Obama campaign spent $161.5 million, the McCain campaign spent $75 million. Obama outspending McCain 2 to 1. By the end of the campaign Obama had raised $750 million. To get a sense of these numbers. This was three times what President Bush had raised, the previous record. Obama would have received $84 million in public financing after the Democratic party's national convention, and had to stop raising money at that point. This is what McCain did. Starting in September Obama spent $380 million and McCain $195 million. By mid October 2008, the Obama campaign raised $300 million in contributions of $200 or less -at which point donor identity's need not be revealed- from 4 million donors, according to Campaign Finance Institute. It also raised $300 million in contributions of $1000 or more for the period before mid-October. What this means is the figures have far outstripped what was set aside by campaign finance laws and the party with the bigger fundraising machine has little incentive to work for updating the laws. It also means good candidates who do not want to do this much fund raising or who are not good fund raisers will not participate in elections that determint the direction of the country, depriving the country of such service. It also means government policy is likely to be distorted sometimes with serious consequences by donors, bundlers and lobbyists. ...

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Many of the towns with manufacturing plants in 1992 have switched sides from Democratic in 1992 to Republican in 2016. This explains Donald Trump's success - he tapped into discontent with Democrats who supported trade agreements such as TPP and did little to take up the cause of workers in areas hit hard by foreign manufacturing and imports. It also explains why Republicans are now favoring protectionism and Democrats supporting free trade, traditionally the opposite was true.   As the U.S. manufacturing workforce diminished in size from 15% of the U.S. workforce in 1992 to 8% in 2017, it shifted from cities with unions to blue collar suburbs. Factories in traditional Democratic places were closed down and these cities ceased to be manufacturing centres. Pittsburgh ceased to be a major manufacturing centre as manufacturing jobs declined by 37000, and service industries increased by 168,000. This resulted in the manufacturing heartland going through Michigan, Minnesota, Wisconsin, through Ohio and the Carolinas and into the deep South. In these places whites without college education took up manufacturing jobs and identified with the Republican party's focus on social issues and abortion restrictions. So big is the shift that labor unions that represented 20% of manufacturing workers in 1992 represented only 9% of workers in 2017, according to economists at Georgia State University. Bill Clinton won 49% of working class counties where workers were at least 25% of the workforce. By 2016 the 860 such counties were down to 320 about two thirds now gone, and Mr. Trump took 95% of these counties. The change is dramatic. Voters that identify Democrat are now from cities, more educated, and less likely to be identified as blue collar. As the economies of these cities has shifted to finance and service industries, these residents have not accomodated the conservative cultural views. and have shifted to embracing more immigration, LGBT, gay rights on social issues. Before there was one mention in the 1992 Democratic platform of LGBT says the Journal, now there is 19 mention of rights for LGBT. Republicans have now shifted from privatizing Social Security, and now support some infrastructure spending. Republican platform now calls for free trade that is fair trade. And this has support from the left and the right. Factory owners and factory workers are united in their opposition to free trade rules that hit American factories. Union leaders say the Democratic Party left us. The Democratic Party gets more support and identifies more with Silicon Valley- Mr. Obama's TPP trade agreement benefitted Silicon Valley more than it did auto plants. The change happened over many years and Mr Trump capitalized on this. ...

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Senator Schumer calls it a "momentous 24 hours here in the US Congress, a legislative one two punch that you rarely see." Schumer negotiated a major climate change action bill for $369 billion in the Senate, that also covers tax changes to cover costs, and helps cut drug and health care expenses of Americans. The second quarter shows healthy job gains of average 375,000 a month and unemployment at 3.6%. The economy declined by 1.1% but much of this was from a slowdown in home and business construction sectors sensitive to higher interest rates and from higher inventory. Consumer spending increased by 1% during the quarter. The Fed's series of 0.75 percentage points interest rate increases had softened inflation expectations before they get entrenched in the economy. This makes it possible for Democrats to present a message to ordinary Americans that president Biden is getting things done with 2 legislative achievements. A $280 billion bill for investment in the semiconductor industry in the US. And a huge win on climate change with the $269 billion Schumer is negotiating in the US Congress. It is the opposite of what Republicans are saying is Biden's failure to tackle inflation. Appropriately Biden and Schumer are calling this the bill the Inflation Reduction Act of 2022. How did Schumer get this done? After the Ukraine war and EU decision to shut down Russian oil supplies, cut oil and gas use by 15%, and the climate change action inducing fires and floods, there is increasing awareness about climate change action as vital for our future all over the world. This gives more confidence to Democrats to negotiate a temporary continuation of oil and gas, with increased exports of US LNG to Europe. Senator Manchin from an energy producing state of West Virginia was brought over to Schumer's side with this idea. What Biden gets is a 40% reduction of US carbon emissions over 2005 levels, enough to get within reach of the 50% he promised at COP26 in Glasgow. It is a win-win for all sides and for the American people, and shows that patience and hard work, and persistence in the face of adversity can bring results. ...

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Germany's Chancellor, Angela Merkel announced that she will not seek reelection. She will finish her term in 2021 and retire from politics. She led the CDU party for 18 years and Germany for thirteen years. She started out as a youth leader in the communist German Democratic Republic shortly before the collapse of the Berlin Wall. After reunification she was given roles in the government by Chancellor Kohl of the CDU, and was favored by Kohl.  During her years in office the CDU moved to the centre adopting some of the policies of the Social Democrats party. Merkel's last two terms were marked by her leadership of the European Union in tackling the debt crisis in Greece and other countries. Her leadership of the CDU was challenged by conservative leaders from Bavaria of the CSU party who had different views than Merkel on immigration and accepting wartime and economic refugees. By the beginning of her current term in office the CDU and the Social Democrats Party which alternated in running Germany in the postwar period had lost support as voters shifted their allegiances to parties on the right such as the AfD opposing immigration, and parties on the left, and to the Greens party advocating environmental issues. One of the main drawbacks during this period were the austerity policies during Merkel's terms in office that were implemented in the EU leading to higher unemployment before a tenuous recovery, and the lack of building infrastructure. The acceptance of a large number of refugees the official tally being about 890,000 entering Germany in 2017 and 200,000 in 2018, has strained the system and created tensions in society. About 480,000 had applied for asylum in Germany by the end of December 2017. Merkel defends her decision to accept refugees in these numbers, yet she says she was wholly unprepared for the influx of refugees that happened in 2017 and the year before. She says she wishes she had many more years experience to prepare herself for handling a crisis of this kind. The decision has created dissension in Germany especially in the eastern part which was part of the former communist German Democratic Republic.  ...

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Vindu Goel of the NYT gives this report on IBM's expansion in India including an interview with Vanitha Narayanan, chairman of IBM India. In 2017 IBM had 130,000 employees in India, at operations in Pune, Calcutta, Chennai and Bangalore and other cities, double that in 2007. The U.S. operations have about 100,000 employees. As IBM's revenues have declined with technology disruptions, it has concentrated on expansion in India with its vast base of knowledge workers and costs of about one half to one fifth of what it would cost in the U.S. IBM has 380,000 employees worldwide, with 26% in the U.S. and 34% in India, and 40% in other countries. Microsoft employs 8000 employees in India and 124,000 total worldwide, Google has 1800 in India and 72,000 worldwide.  IBM removed operations in India in 1978 after a dispute with the Indian government. In 1993 it started operations in India in a joint venture with Tata. By 2004 the operations had expanded and IBM took full control. A $750 million 10 year contract was signed in 2004 with an Indian phone company Bharti Airtel. As Goel points out the shift is happening towards expansion in India with the growing demand from industry and government in India. The Watson venture has expanded in healthcare in India with contracts including one with Maniphal Hospitals. In 2016 this had reached $38 billion in hardware and software, services, to Indian industry and the government agencies. IBM's work is not simply in offsourced work from American companies. High tech and cutting edge research is also taking place and expanding. IBM is now uniquely positioned to get an expanding share of the business as more tech services are provided to the hundreds of millions of people in India who did not have access to tech and tech services before. Research concentrates on doing this at a fraction of the cost and in new ways suited to the local region, so that services can be delivered with a wider reach. This report provides a new perspective on how the next decade could see American companies with a long term focus take advantage of the rapid growth in the fastest growing large economy in the world, with advantages for both the U.S. and India. ...

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Kristof says social ills- the lack of stable marraiges, drug use, poor day care resources- compound the problems of lack of education beyond high school in America's white underclass. The lack of good manufacturing jobs and lower wages have hit people with only a high school education the hardest. Two decades of decline in good manufacturing jobs with globalization have hit this part of the population in the U.S. hard creating increasing inequality in America. He sounds a Moynihan type call to the plight of America's poorest white communities.

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Kia says it expects its sales in the United States and Canada to rise 15 percent to 350,000 vehicles in 2006, and to grow to 800,000 by 2010. Kia expects the new plant to begin production in 2009, employing about 2,500 workers and producing up to 300,000 vehicles a year. The plant will be located in West Point, on the western edge of Georgia.

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Justice John Paul Stevens is 91, but he is active as ever. He retired from the Supreme Court in 2010. He makes speeches and comments on how he would have voted on cases before the Supreme Court since he retired. He is also writing a book on the five chief justices on the Supreme Court- Fred Vinson, Earl Warrren, Warren Burger, William Rehnquist, Roberts.