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Republicans new strategy break the budget bills in half some budget parts expiring before the others- extend budgeting for some government agencies through early January and some through early February. This is what new Speaker Mike Johnson has done and what a more vocal group the ultra conservative Freedom Caucus in the Republican controlled Congress seeks. Democrat senators and some Republican senators oppose this kind of bifurcation of the budget and setting different dates. Chuck Schumer says the "hard right proposals, hard right slashing cuts have zero support among Democrats."

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Four veteran U.S. Federal Reserve officials, most of whom have said they support rate increases, will join the central bank's rate setting committee. Bullard, Evans, and Rosengren, have made the case for increasing rates to restrain growth. The question in 2019 is how fast and at what pace there will be rate increases. This will be watched carefully in developed and developing countries that are affected by U.S. central bank policies.

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Is PPP Purchasing Power Parity or Market Exchange Rates the right way to measure GDP? PPP is not reliable because of the lack of reliable pricing surveys for China, but Market Exchange Rates do not correctly reflect the growth rates of emerging market countries. The answer lies somewhere in between. The PPP rates used by the World Bank for China and India are not correct and so the numbers used by the IMF and the World Bank may be overstated upto 40% but probably somewhat less.

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Russia needs to find a solution to end the Ukraine war in coming months to protect it's economy, says Le Monde. After 3 years of war a sudden deterioration is apparent. The central bank has raised rates to 21% to tackle rising inflation of 9%.. This is seen as an alarming signal. Bank rates are close to 30% a situation that is not sustainable for long. 

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A review of Champions League games on Jan 30, 2025.

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The Economist calls for more attention to efforts to promote growth in Europe and the U.S. in 2011. It describes as nonsense the policy of the European Central Bank to increase interest rates at a time when most European economies are struggling to increase growth. And more so when the ECB is busy buying Spanish and Italian bonds to support Spain and Italy.

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BJP Modi election win in West Bengal and upset by TVK party in Tamilnadu states of India are a result of existing state governments not meeting the aspirations of young people in India for jobs, lack of progress in industrialization and lack of investment in infrastructure. These are the pressing priorities in India. Whoever can deliver on modernization and industrialization, jobs and infrastructure to meet the aspirations of the Indian people is likely to prevail. This is also no different than the process underway in the US and Europe for reindustrialization and remodernization, updating infrastructure built in the 19th century, jobs and incomes. The BJP party of prime minister Modi has set the bar high for modernization of the scale of China and Japan for India, and to even surpass them.  It is definitely doable, particularly now that India has built trade links for import of new technologies with the US and the EU, and when it is already an economy the size of Germany or Japan. Most of the Opposition parties cannot believe this is possible, and most of the media that covers India has the same views. As a result the titles and the discussion in the media are like that of 15 years back when India was led by parties that lacked the will and drive for industrialization and modernization, corruption and mismanagement dissipated resources, could not create the master plan and execution needed,  and lacked the leaders at the ministerial level to accomplish this to deliver on every promise. In fact the elections of the last 2 years have created a new northeastern India - changed the map completely with the growth in a region half the size of the European Union of 300 million people that is able to grow at 20% a year for 10 years in Bihar, West Bengal, and Orissa, Assam regions, where the mighty Ganges and the Brahmaputra rivers flow into the seas from the Himalayas. There is that much potential and it means India itself can grow at rates of 10% once all the conditions are right in a few years to 2047 for Vikshit Bharat, Modernized India. The world economy can also grow with such a vibrant dynamic India. ...

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Census data show that 41% of all Mexican Americans in New York city schools have dropped out of school. Of Mexican American immigrants ages 19-23 only 6% are enrolled in college. This becomes significant considering that Mexican Americans are the fastest growing large immigrant group in the city, numbering 183,200, up from 33,600 in 1990, according to Census figures. These figures are worse than that of the Mexican American population as a whole, because of higher rates of illegal immigration, lack of stability in households, parents holding multiple jobs and lacking knowledge of English or contact with the school. Many are not aware that illegal immigrants who graduate from high school in New York State or earn a G.E.D. are allowed to attend the state public university system and pay in-state tution.

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India's central bank chief, Rajan, favors a lower inflation target of 4%, with fluctuations of 2% up or down. Lower inflation is critical for India to achieve higher growth rates. The World Bank lowered the rate of growth in the global economy but kept the rate of growth of 6.4% for India unchanged. Rajan also favors creating a more formal system for setting rates, with a committee like the Open Market Committee in the U.S. deliberating over the different factors for such a decision. Rajan was a professor at the University of Chicago, and chief economist at the IMF, before joining the central bank. Central bank policies have helped stabilize India's currency, the rupee. The lower cost of oil for India with an oil import bill of $100 billion is a big boost for economic growth. For the global economy this comes at a time when China's growth rate is slowing to below 7%.

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About 15% of Americans are below the official poverty line of $23,492 for family of four. In 1975 3.7% of Americans were in deep poverty, defined as being 50% below the offical poverty line. In 2012 the Census Bureau Population Survey shows 6.6% of Americans in deep poverty, close to doubling the percentage of people in deep poverty. States in the southern U.S. and midwest have some of the largest increase in deep poverty- Georgia's going from 5.3% in 2000 to 8.8% in 2012. Mississippi and Indiana show similiar increases. And in D.C. with high income levels the deep poverty rate is at 10.4%, affluent communities have high deep poverty rates in their midst, higher than rates in 2009.

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The first budget of the Obama government makes a sharp swing away from decades of earlier policy, and puts America on a new direction focussed on priorities in education, health care for all, and energy. The 134 page doocument on the budget defines the governing principles and priorities of the new government. "This is the legacy that we inherit- a legacy of mismanagement and misplaced priorities, of missed opportunities and of deep, strutural problems ignored for too long," the document says. It declares that "government must lead" in contrast to Reagan's "government is not the solution, government is the problem." In contrast to "trickle down" policies of Reagan it proposes "trickle up" policies- shifting income from rich to the poor. It creates a $630 billion fund towards a national health insurance program built with the help of savings and cuts elsewhere. Government takes over most student lending, and dramatically expands Pell grants for poor college bound strudents, transforming it into something like Medicare that is automatic rather than approved each year by Congress. Businesses that emit carbon and heat trapping gases will have to purchase permits to do so starting in 2012. Hundreds of billions of dollars from these permits will pay for clean-energy technology and for tax credits for working couples. Income tax rates will rise for couples earning more than $250,000 beginning in 2011 and will have lower personal exemptions, lower itemized deductions, and higher capital gains tax rates. The estate tax will be preserved. Hedge fund and private equity managers wil have to pay income tax rates for that compensation as high as 39.6% after 2010, not the low 15% capital gains rate they pay now. The Defense Department would see a $20.4 billion boost or a 4% increase in 2010 over 2009, it will request an additional $75.5 billion in 2009 for the wars in Iraq and Afghanistan, and an additional $130 billion for 2010. The budget is for $3.6 trillion for 2009, and projects a deficit of $1.75 trillion for 2009, or 12.3% of GDP- a level see in 1942 when the US entered World War II. Under optimistic White House assumptions for a strong economic rebound, the deficit would drop to $533 billion by 2013....

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Greg Ip, Chief Economics correspondent of the WSJ, says there is a disconnect between falling stock markets in Jan 2016 and the economy. This is true not only for the U.S. economy but for China as well, says Ip. He points to the 6.9% growth rate in China for 2015 as close to the target set by China's government. Reports of economic output and exports show China's economy stabilizing. This contrasts with weakness in the way the government and the central bank have managed financial markets since the summer of 2015, sending confusing signals and hurting investor confidence. One difference as the stock markets decline worldwide- the Fed in the U.S has little room to cut rates and plans to gradually increase rates, the Chinese govenment and planners do not plan stimulus as they look for ways to reduce debt in the economy. This means less support for financial markets and less support for high valuations in the tech and startup sectors, which could provide stability in the long run.

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After half a million visitors overstayed visas to US  in 2023 State Department pilot program puts a bond requirement. Countries with high overstay rates will have visitors to put up bonds of $15,000, and no less than $5000 to deter such misuse of visas and ignoring US law.

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This report in NYT looks at the Barbados debt crisis. Barbados spends 55% of its budget to pay interest on debt (servicing the debt). That leaves about 5% for health and climate change. Years of borrowing that ignored basic rules of financing have created serious problems that were compounded by the pandemic and hurricanes. This report shows that the total deb of Barbados was not known to the central bank. Borrowing was approved at exorbitant interest rates. One loan with Credit Suisse for $150 million is shown here with interest rates that lead it to become a catastrophic amount owed. Many such loans without any checks and supervision of total loans taken, lack of financial prudence rules followed, lack of transparency and alerts on borrowing and spending tend to create this kind of situation in many poor countries. About two thirds of developing countries are in this situation owing one third of their budget for debt service or paying interest on the loan. The situation is unstable to begin with. Then on comes along a hurricane or natural disaster such as the pandemic and the unstable situation becomes a catastrophe. Sri Lanka, Pakistan, the Caribbean nations, nations in Africa, face debt crises that are getting worse. It is not inevitable or destiny for nations today, consider the examples of large nations such as Japan, China, South Korea and India, Malaysia, Indonesia, and one can see that development finance can be prudent and responsible, so that situations such as the pandemic can be handled without going into disarray. ...

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Americans Save Early and set aside for savings 10% of your pre-tax income, is the advice to ensure a safe and healthy savings retirement. This is absolutely critical. What the government can do is to ensure that incomes keep uo with inflation with fair wages in industry. It also can and should protect Americans from unexpected medical costs by ensuring that all Americans are covered by health care and for catastrophic situations. Then it is the task of Americans to build a culture of careful saving that their ancestors had and considered a essential part of virtue. For this to help build savings for retirement the government and the Federal Reserve together- as Biden and Powell have shown one with capital investments to build a strong economy and the other by protecting savings and cost of living action- must ensure that no financial crises take interest rates to zero or 1-2%. At interest rates of 5-6% for returns this helps build savings for retirement. For this to happen banks have to go back to their traditional work in the economy and no speculation risk, and Silicon Valley go back to inventing and not a culture of capturing capital allocation in capital markets and paying little in taxes. A new culture would put government in its right place to ensure that it plays a significant role in building manufacturing and science and technology in the US as president Biden has done through government investing in infrastructure and renewable energy, chips and science, and in education, healthcare.  ...

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Geithner in written testimony to the Senate Finance Committee, stated that "President Obama - backed by the conclusions of a broad range of economists- believes that China is manipulating its currency." What is noteworthy is that experts are generally in agreement that something should be done about this in cooperative fashion, from Obama's economic team, Obama's own views on this, The National Association of Maufacturers, Labor and so on. The trade deficit with China has continued at high levels even with the current economic slowdown, so this issue remains as one that the Bush administration never really addressed. Simon Johnson, a MIT Professor, and former IMF Chief economist says that even the IMF has not addressed it, and that the Obama administration needs to call China to account. He says this could lead to a spat with China, and if the US does not back down to a row. The concern has been that China would not buy up Treasury debt the way it has in the past, at the same time the question is whether there is some point where the deficit is so large and the US so dependent on foreign buyers of Treasury debt, that it needs to be addressed on a number of levels. Including addressing currency and fair trade issues, a more rational balanced consumption of everything from oil to goods from lowcost Asian countries, to reduce the toll on the overextended American consumer and on the extent of US borrowing needed. From China's perspective there may also be the same concern about export led growth, which may come to be seen as undependable anyway, because with or without some currency advantage the overextended US consumer is not buying anyway, holding off on purchases of everying from cars to flatscreen televisions. With growth at 6.8% in 4th quarter 2008, according to the Chinese Government Statistics Bureau, and expected to drop to 5% in 2009, the export growth model is no longer the panacea for China's unemployed as it once was at 12-13% growth rates in 2006-2007. In fact it may now look to be a better wiser policy if China had increased the value of its currency even more than its slow gradual approach to slow the growth rate from 12-13% to a more sustainable 9-10%, and lower American imports and lower the American trade deficit. Part of the problem in China was the difficulty of applying any sort of brakes once the local governments were set free to expand as much as they could, and prevented any controls from being effective. Steel production continued to grow even after there was evidence of large overcapacity, and government direction failed. Buy some time to shift to domestic consumption based recovery, is what the Chinese policy may be now. Indications of this are evident with its grappling at the issues it has not tackled like giving ownership of land to farmers in rural areas, and to building a healthcare system for the country, both of which are part of a host of issues to shift to domestic consumption based recovery. So unlike the way the media and some experts portray it its not a tough line that the US is taking against Chinese unwillingness. China may want to cooperate.That may be true if China was missing out on 10-13% growth rates, but these were unsustainable anyway and bad policy. At growth rates below 5% as projected by analysts China may want to jettison the export model of growth and build an alternative one. In that case as China shifts to domestic consumption, currency adjustments may be seen quite differently than they were in the past....

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Thucydides, Greek historian on the Peloponnesian War between Sparta and Athens 431 BC, cited by Xi Jinping of China during DJT visit to China, May 2026. “Can China and the United States transcend the so-called ‘Thucydides Trap’ and forge a new paradigm for major-power relations?” "Thucydides Trap," is about one established power being threatened by another rising power, as Sparta felt threatened by a rising Athens in the Greek world around 431 BC, leading to a long over 30 years war.  “The Taiwan question is the most important issue in China-US relations,” Xi said, of Taiwan, an island near China's coast where ChiangKaishek set up his government after the fall of his government in Beijing in 1949 to Communist People's Army of Mao Zedong. “If mishandled, the two nations could collide or even come into conflict, pushing the entire China-US relationship into a highly perilous situation."  What China sees is a future of strong economic growth based on China having built its industrial strength and world trade to exceed 1.2 trillion dollars of trade surplus in 2026. Yet this is only the beginning. US and European Union, and India+Japan are three economic regions compared to the situation in Greek history. The combined three economic regions potential for scientific and industrial advances in the future till 2045 in a synergistic fashion one building on top of the other's advances, far exceed the potential of the Chinese economy and industry by itself. This is why any such conflict may over time fizzle away as three economic regions of EU, US and India advance, particularly the 1.4 billion people of India, which will see growth rates of 20% annually for 10 years to 2035 in Eastern Indian region of the size of the EU. That region extends from Lucknow and Patna to Vizag and Chennai. Another aspect of this concerns China itself which sees slowing growth of 5% in 2026. Growth could slow further as US, European Union and India/Japan push back on Chinese exports during a period of reindustrialization in US, EU, Japan and rapid industrial development in India to 2040. China's development is only midway in terms of per capita GNP which lags most of Europe and the US, Japan. Thus the main concern in China is that China will not be able top go beyond middle income country as its demographics and aging population look more like Japan's over the period 2026-2040. China needs the US EU trade and markets for it to meet the needs and aspirations of its 1.4 billon people as the other engines of development such as housing construction, infrastructure building, have lost momentum. ...

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Mario Draghi, President of the ECB, turned down proposals to let European central banks send money to troubled European governments through the IMF. Draghi said- "we should't try to circumvent the spirit of the treaty, no matter what the legal trick is." The ECB also opposes large government bond buying to bring down yields on Italian and Spanish government bonds. The ECB by majority vote reduced interest rates in the eurozone by 0.25%, bringing interest rates down to 1%, and reversing rate increases under the previous president Trichet. It also made medium term funding available to European banks on better terms. According to a person in the room, German Chancellor Merkel opened the summit saying Germany opposes a plan to let the European Stability Mechanism (ESM) borrow from the ECB. The ESM is the bailout mechanism for future bailouts.

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Krugman points out that the federal tax rate for the top 1% is 34% in 2013, according to the Congressional Budget Office, because president Obama let the high end Bush tax cuts to expire. It is the number to remember says Krugman- 34. In 2008 the figure was 28.2. Under Hillary Clinton the average tax rate for the top 1% would go up by 3.4 percentage points, according to the Tax Policy Center. Some of this would help pay for the tution plan to provide access to the middle class to public universities. Under populist Trump, Krugman points to the elimination of the inheritance tax and tax rates going down substantially, and no such programs to promote the upward mobility that everyone is talking about, and no way to pay for a big infrastructure building effort for growth and jobs- upward mobility that is the focus of every candidate's election campaign including Sanders, Trump in appealing to older white working class families, Clinton, Ryan, Bush, and others in both parties.   ...

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The Rupee is moving close to 80 to the US dollar with increase in interest rates by the US Federal Reserve. The IMF expects the Rupee to go past 94 to the dollar in 2029. India's Reserve Bank is interested in carefully managing the steady decline so that business decisions can be made with some measure of stability. The weaker rupee will help increase exports at a time when India's is raising its logistics capabilities and creating the capabilities on the ground that will give India a key role in the new supply chain the US and the EU are building in Asia.

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Countries in South Asia such as Sri Lanka and Pakistan, as well as other countries in Africa and Asia, Latin America face debt repayment problems. These countries need debt restructuring and restructuring of payments by the International Monetary Fund in the current environment of surging inflation, depreciating currencies, and need to first support essential food imports and essential supplies including medical supplies. This report in The Guardian says IMF's Kistalina Georgieva is sensitive to the needs of these countries as they face surging inflation. Georgieva talks about the need for central banks to raise interest rates till other solutions are found.

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The US dollar is only 5% way from reaching parity with the euro. The euro was at $1.03 during the beginning of May. It is at $1.05 on May 21. With the US central bank raising rates, and the effects of energy shortages on the European economy, parity looks likely says this report in WSJ. Additionally weakening demand from China for European goods or the EU shifting its supply chains back to home countries and trading less with China could also have an impact from the ripple effects of China's support for the Russian position on Ukraine.

 

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With staff shortages and the spread of omicron variant some German states are no longer doing contact tracing. Contact tracing is not happening in Berlin or Hamburg says this report in DW.com. The chair of the Federal Association of Doctors, Dr. Teichert, in an interview with RND says "comprehensive followup is almost no longer taking place at the moment." He also said there is a "massive fluctuation" in staffing levels for nearly two years. Experts even say that because of staff leaves and office closures infection rates will not be really known till later, a "sink into ignorance" says a medical statistician.

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The Russian central bank under Elvira Nabiullina raises interest rates by 3.5% to 12%. In the first 5 months of 2023 the Russian government spent 50% more in rubles than in the same period in 2022. The increase in spending meant increase in wages and more hiring for production of goods including production for the war effort. The policy was to carry on the war effort without the effects of the war being felt by ordinary Russian citizens. The result has been higher inflation at 7.6%. Nabiullina faces a unique set of challenges to control inflation, maintain the economy even as Russia continues the war effort in Ukraine. 

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Scientists worry that microplastics are linked to growing rates of cancer, heart disease, and other diseases. One study says people inhale or ingest 74,000 to 124,000 microplastic particles per year through breathing, eating and drinking. The plastic particles are everywhere around us. Of 10,000 chemicals used in making plastic a fourth of these are toxic. Consider in 1950 2 million metric tons of plastic were made, now 400 million metric tons. Of 8 billion tons produced only 10% recycled so the rest are in oceans, landfills, and around us. Ingested or inhaled they cause inflammation in our bodies that lead to cancer or other diseases.