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Russian president, Vladimir Putin, tells academics and journalists at an event called the Valdai Discussion Club, he had reservations about expanding the state sector by approving the deal for Rosneft to acquire TNK-BP assets. His motivation for doing this was the endless shareholder conflict between the Russian partners and BP. Putin says he warned British prime minister Tony Blair that a 50%-50% ownership venture would not work as nobody was in control, and described this as so bad that "sometimes they were fighting each other with their bare hands." The injection of private ownership into Rosneft with the 20% stake for BP would provide stability for the company and was the bright side to this. Foreign academics and journalists participate in three days of discussions with Russian academics and journalists in this event. Putin has no new vision for this third term beyond consolidating and protecting the achievements of the last decade. He cited as his achievements- growth of the economy, expansion of the foreign exchange reserves, and the increase in the birthrate....

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Several experts point to a dangerous change in the nature of unemployment in this downturn. Heidi Shierholz of the Economic Policy Institute, says people are more likely to get stuck with unemployment now than at any time in the post war period. Andrew Stettner, deputy Director of the National Employment Law Project, says a larger share of the unemployed are not going to be able to go to the same line of work. They will need new skills, just like an auto worker in a permanently downsized industry would have to find new skills to make a product in the renewable energy field or health care. And the law as it currently stands does not help either. Because if an unmeployed worker looks for training or goes back to school he loses his unemployment benefits, something the Obama administration proposes to change. What this means is that many of the unemployed will end up as permanent job losers. Rob Valetta, an economist at the San Francisco Federal Reserve Bank says that throughout the the last 3 decades including good times, the unemployment pool is shifting towards permanent job losers. Lawrence Katz, a Harvard University economist, points out that once workers exhaust their unemployment benefits and don't get new training, they become disconnected to the labor market, and bascially end up on disability or become permanently unemployed. The statistics bear this out. In April 2009, 47.1% of the people collecting state unemployment insurance exhausted the usual 26 weeks of benefits without finding work, according to the Bureau of Laor Statistics, that is the highest rate on record. In December 2007, there were about 2 unemployed workers for every job opening, according to Labor Department data. In March 2009 there were five unemployed workers for every opening. Mark Beaupre, 49, of Providence, R.I. lost his $8 an hour manufacturing job an year ago, one of many manufacturing jobs he has held since the 1980's. His wife Cathy lost her customer service job a year ago. This couple who together made $50,000 a year, are now behind on their mortgage payments and have applied for food assistance. At a recent job fair in Providence he says three thousand people turned up and he could not even get into the parking lot. ...

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Koch describes Trump's statement about Muslims with the notion that 'We'll have them all register' as "monstrous" and "reminiscent of Nazi Germany," in an interview with George Stephanopoulos on ABC News weekly program. Trump is reported to have been open to a database tracking Muslims in the U.S. before backing off, according to WP, which is what Koch referrred to. About Cruz's statement about "carpet bombing" the ISIS group, Koch says he finds it "frightening." He calls both candidates "terrible role models" and agrees with George Stephanopoulos that Hillary could be a better presidential candidate than the two Republicans.

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Austin Goolsbee says the overvalued currencies of Italy, Greece, Spain and Portugal and the lack of growth under austerity plans proposed for these countries create impossible odds for resolution of the financial problems in these countries. The German position is that profligate spending and irresponsible accounting in Greece, and structural issues in Italy ranging from entitlement spending to tax evasion, need to be resolved.

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The IMF's changing views on the value of fiscal austerity. In the current debate about the value of fiscal austerity, there is the IMF view, a German view based on its own experience, and the views of other countries in Europe. The IMF's view has shifted over time. The IMF World Economic Outlook 2010, describes its view of the effects of austerity measures in the form of spending cuts and tax increases- "Fiscal consolidation typically has a contractionary effect on output. A fiscal consolidation equal to 1% of GDP typically reduces GDP by about 0.5% within 2 years and raises the unemployment rate by about 0.3% percentage points." Over the longer term there are benefits as the private sector is not crowded out in the search for captal funding by the excessive government borrowing. The IMF's economic models suggest that it would take 5 years before reaching the breakeven point when the benefits of austerity measures exceed the effects of austerity. The German view held by German central bankers is that the actions stimulate growth in the short term. Manfred Neumann, professor emeritus at the Institute for Economic Policy at the University of Bonn, says this is called the "German hypothesis" as it reflects the experience of Germany from austerity actions taken by Germany. Laurence Ball, professor of Economics at John Hopkins University, is critical of the "German hypothesis" and its application across Europe in different situations. Germany is a large exporting nation and exports helped counterbalance the effects of austerity measures. Within the eurozone with fixed exchange rates the exports of less competitive countries cannot be boosted through devaluing the currency to gain price competitiveness. The other problem is that with interest rates close to zero in the euro zone the central banks cannot cut rates aggressively to counteract the effects of spending cuts. The problem gets compounded when a number of countries are taking austerity measures at the same time accentuating the downturn....

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The IMF's World Economic Outlook in March 2008. The IMF Outlook has been behind the curve in looking ahead at the world economy. The IMF chief economist Simon Johnson cut the baseline forecast cut its US growth forecast by a percentage point since its January outlook, its now at 0.5% for 2008 and 0.6% for 2009. But thats when the Fed minutes already show the discussion about a" severe and protracted recession " in the USA, so it looks like its a bit late and after the fact. And some experts expect a contraction in the US economy this year. More indicative is its forecast of the European economy which is not as upbeat as the OECD estimates and suggests that the ECB may be more receptive to monetary easing and lowering interest rates because of lower growth in the Euro region. IMF sees eurozone growth at 1.4% in 2008 and 1.2% in 2009. Germany and France are expected to grow at 1.4%.

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The large increase in auto sales in 2013 to 15.6 million follows a strong rebound in the U.S. market. The gains in sales over 2009 at the peak of the financial crisis, shows Chrysler at 93% gain in sales over 2009, VW at 92%, Nissan 62% and Ford 54%, according to Autodata. Smaller gains of 33% and 26% for Honda and Toyota. Chrysler's sales were 1.8 million in 2013- the company which depended on policymakers in the Obama administration for survival showed remarkable gains under Fiat's CEO Marchionne. VW returning to the market and stumbling repeatedly in the previous ten years, made serious gains with Jetta and Passat models designed and priced for the U.S. market. VW achieved sales of 0.6 million in 2013. Ford sales were 2.5 million, Nissan 1.2 million, Honda 1.5 million and Toyota 2.2 million for 2013. GM sales 2.8 million increasing by 35% in 2013 over 2009. The automobile story may be the biggest story in the U.S. manufacturing recovery. It also may have made a difference in the election campaign of 2012- with winning campaign points in key midwestern states such as Michigan and Ohio for the Obama administration's backing of a renewed auto industry around fuel efficiency improvements, new management, and new relationship with unions. In the period 1998-2007 average sales were 16 million in the U.S. market, with a nosedive to 10.4 million vehicles in 2009, and a rebound to 15.6 million in 2013, according to Autodata. Under previous union contracts with higher wages and pension costs, and a flurry of price incentives, car makers needed higher volume to make profits. Changes since the bankruptcy of 2 automakers include bringing in management from outside the auto industry- Marchionne at Chrysler, Whittaker and Akerson at GM came from other fields (telecom, finance) bringing new perspectives. Mulally at Ford was from Boeing commercial aerospace. Other changes were lower wages and pension costs with renegotiated contracts and relationships with unions, discipline to lower incentives, younger managers moved up and brought in from outside including Reuss and Barra at GM, Farley at Ford, lower sales to fleets, improved fuel efficiency for SUV's and pickups to change the cost of operating, a mix shifted to smaller and midsized cars, improved quality, and changing the buyer perception of American brands....

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Krugman questions whether the assumptions behind the austerity policies are true- that they would inspire confidence in economic recovery, or that in the absence of austerity policies borrowing costs would go through the roof. The recent events in Holland with the collapse of the government in the Netherlands- when a party leader supporting the government said he did not want to hurt pensioners in the Netherlands just to satisfy German opinion- and the mood in France with economic anxiety vote going to Marie Le Pen and Francois Hollande in the first round of presidential elections, shows that very little confidence has been created. High unemployment and economic anxiety are leading to a reappraisal of austerity cuts that depress the economy and reduce tax revenues, but Krugman says no changes are taking place to correct these policies. This is true for Spain with its high unemployment, and Britain which now has two quarters of negative growth.

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A report by pharmacy benefits managing company Express Scripts shows a 13% increase in the price of branded drugs in the U.S. from Sept 2011 to Sept 2012. Generic drug prices declined by 22% in this period. The report also shows that growing spending on specialty drugs for cancer, MS and other diseases is a big reason for the increase in prices of branded drugs. This report is from a random sample of six millon Express Scripts members using prescription drug coverage. Prof. Schondelmeyer of the University of Minnesota, who manages the drug benefits program at the university and conducts a similiar price report for AARP, says the potential benefits for these specialty drugs are not that good to justify the high prices.

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The startling truth about health "reforms," - they won't control spending, and without that the whole system of health care will rapidly become unaffordable and unsustainable. Obama's Council of Economic Advisors points out in new report that since 1975 annual health spending per person, adjusted for inflation has grown 2.1 percentage points faster than overall economic growth per person. At this rate health spending which was 5% of the GDP in 1960, and is 18% of GDP today, would grow to 40% of GDP in 2040. Medicare and Medicaid would increase from 6% of GDP now to 15% in 2040, or equal to three fourths of federal spending. Employer paid insurance premiums for families which grew 85% in inflation adjusted terms from 1996 to $11,941 in 2006, would increase to $25,200 by 2025 and $45,000 in 2040. This would force employers to reduce take home pay. Samuelson says the uncontrolled health spending is singlehandedly determining national priorities, reducing discretionary income, raising taxes, widening budget deficits and squeezing other government programs, while it is producing large amount of waste in medical spending. See the link to Prof. Tyler Cowen of George Mason University in NYT, 6/14/ 2009, who cites the habit of doctors to write many expensive tests as one of the prime culprits in the wasteful spending. And in the process it delivers higher cost for lower overall quality of health for the American people. This at a time when many European countries provide live examples of doing it in a better way- lower cost, better health. The serious problem with the Obama health reforms says Samuelson is that it talks about restraining spending but may end up increasing spending. Its talk about controlling spending he says is good intentions, but based more on hopeful thinking, public realtions and risks becoming cosmetic reform. Because to really control spending will require coming to grips with its fundamental cause- hospitals and doctors are paid mostly on a fee-for-service basis and reimbursed by insurance, private or governmental. Such a system encourages doctors and hospitals to provide more services, expensive tests, favors heavy use of expensive medical technologies to increase profits, and for patients to expect them. Samuelson puts his finger on the root of the problem - there is no incentive and every disincentive for all the players in this game , doctors, hospitals and patients to seek reform of this system. For doctors and hospitals the hope would be that this cosmetic "reform" would leave the system basically unchanged, and patients to continue with a lifestyle and expectations that do not not acknowledge the fact that a lot of healthcare does not come from spending but from preventative care, education, good eating and exercize habits, and healthy lifestyles. And the uninsured are no exception, they would simply start consuming the expensive care for lower quality of overall health like everyone else. With this kind of situation confronting us, the views of Samuelson, and Professor Tyler Cowen of George Mason University, as welll as a growing chorus of informed public opinion on this subject, is that insuring the uninsured is a good idea, but doing it within the bounds of the present system, can only increase the costs. And too much is at risk, to rely on what Samuelson calls a scattershot of measures to control costs made up by Congress such as "evidence -based guidelines," "electronic record-keeping," "bundled payments to hospitals, to give the illusion of progress that won't make a serious difference. A sweeping restructuring of health care is needed, that would overhaul "fee-for-service" payment and reduce the fragmentation of care. It will also need what has not even be touched on adequately in the debate. This is the massive need for education in the schools about nutrition, eating, exercize, healthy lifestyles. It would also require opinion leaders in each field from sports and other fields to lead by example and with constant public presence, the media, and companies to form a partnership with private institutions to change existing eating habits and lifestyles that encourage obesity, smoking, fast food eating habits, large portions in restaurants....

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This Journal editorial cites the regulatory burdens imposed on small and medium sized businesses in Italy that discourage hiring and innovation. Prime minister Mario Monti's efforts to reduce these burdens and change labor laws in Italy.

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Reports that the family and relatives of China's prime minister Wen Jiabao have accumulated assets worth about $2.7 billion.

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Full face veils for women are now a topic in the immigration debate in Germany. Interior Minister Thomas de Maiziere now favors a ban on full face veils, agreeing with state level party members of the Christian Democratic Union. CDU interior ministers are now in agreement to come up with legislation to require that people show their faces where necessary "for living together in our society." Maziere says the Social Democrats SPD party agrees with much of this agreement, called the Berlin declaration. Chancellor Merkel told news group RND that she understands and accepts that "a fully covered woman has little chance of integrating in Germany." Some CDU officials such as state premier of Hesse, Volker Bouffier, say its all about liberating women, because he thinks it simply isn't true that this is what a woman wants. Other CDU leaders interior ministers in Berlin and Mecklenburg, Henkel and Caffier, say dual citizenship needs to be abolished. The Berlin Declaration put off this issue by requiring a report on this by 2019, on whether it helps integration. The Berlin Declaration calls for 15,000 additional police officers, though the association BDK of police officers says this is not enough. ...

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The current economic expansion in the U.S. in April 2014 is at 58 months from the beginning of recovery in 2009. In this exceptional account Josh Zombrun of WSJ compares the current expansion to previous expansions since 1950, with the views of experts such as Stan Hall of the NBER committee, which studies turning points. This expansion is forecast to go for 90 months into 2016 by the U.S. Federal Reserve, and 102 months into 2017 by the CBO. Sooner or later, says Stan Hall, some adverse unpredictable event takes place that ends the expansion. So far the expansion has been slow and protracted, as predicted by economists Reinhart and Rogoff from previous financial crises in the last century, giving it room to grow as corporate earnings continue to improve. Fed chairwoman's sense of slack in the economy also provides room for employment and incomes to grow in the later stages of the expansion. This is good news for the emerging market economies such as India and China, and for the European Union, faced with slowing growth. So how does this expansion compare with earlier ones. The expansion of the 1991-2001 of the tech boom was 120 months, 1961-1969 of the Sixties 106 months, 1982-1990 of the Reagan era 92 months. The controversial one on shaky foundations is the recent housing boom 2001-2007 of 73 months ending in a huge bust with the 2008 financial crisis. The shorter expansions are the 1975-1980 Post-Vietnam one for 58 months, and the 1970-1973 spurt before the OPEC price surge. Figures are from the NBER, CBO and the Federal Reserve's Summary of Economic Projections....

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White, Thomson and Blumenstein interview Russian President Medvedev. Medvedev says he is very conscious of what is happening to the EU and its fiscal affairs, and to the euro, in this intervew. He sees Russia's future as a European country closely related to the future of the EU and its member countries, especially how the EU countries do as they adopt austerity measures and cut spending.

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Economists are calling this a "wage-less" recovery in the U.S. With unemployment at 8.8%, wage pressures are weak. Average hourly earnings were flat in March 2011. The annualized growth of average hourly earnings for the last 5 months is 1%, according to Gluskin Sheff chief economist Rosenberg. After accounting for higher inflation, real wages are actually falling.

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Friedman reviews Acemoglu and Robinson's new book, "Why Nations Fail." Acemoglu says that nations fail when wealth and opportunities are concentrated in the hands of few people, that a condition for societies to succeed is to create opportunities for more people. For this to happen it is important to create inclusive political and economic institutions. This is an important insight, but for Western society this is an insight as old as Adam Smith when he pointed out the importance of this aspect of western societies after the feudal period in his "Wealth of Nations." For Smith it was the failure to create inclusive societies that led to the gradual unravelling of societies in the river valleys of the Yangste and the Ganges, in China and India, of increasing poverty and the gradual disappearance of what constituted the middle class in India and China. Chapter 8 titled "Of Wages and Labor" in the "Wealth of Nations" makes specific reference to this.