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Panasonic announced a third quarter loss of over $8.8 billion. New CEO Kazuhiro Tsuga says Panasonic will reduce manufacturing in Japan, cease selling mobile phones overseas and reduce investments in solar panels and rechargeable batteries. Tsuga told a news conference: "Unless we take this step, whatever we say will be an empty promise. That's how damaged our current situation is." Panasonic faces severe competition from Samsung which has larger investments in manufacturing, research and marketing of televisions and mobile phones. Panasonic share prices fell 19%.

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In this thoughtful essay Bob Davis of the WSJ asks whether the decision of the Clinton administration to admit China into the World Trade Organization was a bad one for the U.S.  Mr. Clinton in 2000 tried to persuade Congress citing words of president Woodrow Wilson that of a dream "of a world full of free markets, free elections, and free peoples working together."  Every year China would have its most favored nation status renewed with help from supporters in Congress. After WTO entry this was not necessary. Chinese leaders saw the entry into WTO as a way to knock down trade barriers, to act a wrecking ball for the planned economy, to give the economy a big boost.  In 1994 China was a relatively backward economy with 60% of the population living on less than $1.90 a day. Hard to imagine today.  Not everyone was convinced that it was good for the U.S. This included a trade attorney who had tackled a huge trade deficit with Japan in the Reagan period- Robert Lighthizer. Lighthizer was Deputy Trade Representative negotiating with the Japanese. His prediction was that no job in America would be safe once China entered the WTO, that China would become a dominant trading nation.  Robert Cassidy, 73, trade negotiator for president Clinton looks back on that time and says that he regrets what has happened, that all his work night and a day only benefited business and hurt workers. David Autor, MIT economist and his colleagues,  in a later study documented loss of 2.4 million jobs to Chinese competition between 1999 and 2011, in many manufacturing towns dotting the landscape of America, particularly in the midwestern states. And the expectation that the higher economic growth would lead to less political control did not turn out to be true.  In the process multinationals rushed to China after WTO entry and China became the world's manufacturing floor. By 2013 China's per capita income reached $7000, after years of fast GDP growth approaching 10% a year.  About 400 million Chinese were lifted out of poverty from living on less than $1.90 per day from 1999 to 2011, according to the World Bank. A big problem was that the U.S. did not plan for the change from WTO entry. No resources were allocated for the plan to let American workers adjust through worker retraining and special trade handicapped income support, to allow for a slow planned shift. Instead the pace of growth was faster than that which the U.S. faced with the Japanese export offensive in the eighties. China experienced double digit growth after 2000. The irony is that the Republican administrations that followed Clinton followed a policy of free trade to the advantage of China's state run economy when working class Americans voted mostly for the Democratic Party. Little was done and little said in the media from Democrats and Republicans in Congress and the establishment during this time even after Mr. David Autor documented the effects of trade in the U.S.  Till Mr. Trump recognizing the alienation in communities hit by job losses from trade upended American politics, shifted this part of the electorate to the Republican base. Mr. Lighthizer's view is that complaints about China should be left out of WTO because it is naive to tackle it that way. With a $375 billion China trade deficit for 2017 the challenge has to be met in a different way, and the U.S. has to rely on regaining its economic strength within a fair trading framework. Having negotiated with the Japanese Mr. Lighthizer sees the approach adopted then as the one right for today. During the long negotiations Lighthizer is said to have received many negotiating positions of the Japanese signifying no change in long sessions. He once simply made a paper plane and sent it right back, in one of these sessions. He meant that the U.S. was serious about reversing the imbalance in trade. ...

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Efforts by BNP Paribas to get bondholders to take a 50% loss on Greek bonds, and exchange their old bonds for new ones that mature in 50 years. BNP Paribas is working for the Greek government to get other banks and bondholders to accept this exchange so that Greece can tackle its debt load and interest payments on debt. Some arm twisting by BNP Paribas to get bondholders who have insurance through CDS to accept the exchange. This is being done on the grounds that the I.S.D.A. committe would declare the restructuring in Greece as being "voluntary" and not a default, so that bondholders who do not accept this deal would not get paid through CDS insurance.

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Citadel, a large hedge fund headed by Kenneth Griffin is having problems, with its flagship fund down 35% this year. And the rumor mill saying some of its funds are down 60% and Fed Reserve officials are visiting the fund. Citadel is leveraged 3 to 1 and this is down from higher levels . Ironically Griffin has been known for buying other companies assets for pennies on the dollar, including E Trade and hedge funds Sowood Capital. And where did Griffin get started? He started trading in his dorm room at Harvard in the eighties. The hedge fund $1.7 trillion industry is facing a shakeout. It has already lost $180 billion in the August-October 2008 period and some hedge funds face collapse.

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Steve Bannon is described in this indepth report by Scott Shane as a workaholic, born to working class family with his father a telephone line operator, who went to Virginia Tech and joined the Navy in the hope of advancing a career in politics. At Virginia Tech he won a leadership position of the student organization. He was described by another student who knew him well as passionate but not likely to get much done. The period at Virginia Tech and in the Navy were the Carter years followed by election of Ronald Reagan. The election of Reagan had a huge influence on Bannon- the same overtones of that campaign of Reagan are seen today in the forgotten men and women, white working class families that Conservatives then and Tea Party Conservatives in the Obama years felt ignored. The downward drift of the lower middle class families that saw incomes drop as manufacturing hollowed out in the U.S. with foreign competition, the failure of establishment politicians of both parties to protect American manufacturing and working class families, added to the sense of angst for Bannon. Bannon just like politicians in the Obama camp such as Emmanuel, found the way to politics through finance and gains made as the banking sector and financial institutions made huge financial gains by 2008. This was a stepping stone for their political ambitions. Emmanuel who is also a workaholic and passionate about his views worked to elect a black president, Bannon choosing to do the opposite and push for bringing back the Reagan era. Most on the liberal side see him as part of a racist movement. Reagan was none of those things. How does one reconcile the two? It is possible that seeing the fight against the established politics as an impossible task, Bannon in his passionate temperament did not object to the support of right wing extremists, in the same way that Trump did. As both Trump and Bannon have people of Jewish origin and black people in their circle of friends or family. What incensed Bannon as described here by Scott Shane of the NYT, was that after the financial crisis of 2008, hardly any bank executives who had committed wrongdoing went to jail, his father's line operator retirement savings were devastated by the financial crisis, and working class families struggled harder than ever, that his daughter at West Point was with mostly children of working class families who were the ones fighting America's wars. Many ironies abound in the story. Bannon got his business start in the same financial institutions that were involved in the financial crisis of 2008, Bannon & Co was acquired by Societe Generale. He is from an Irish Catholic working class family in Richmond and attended Benedictine High School, with a mother Doris that worked on the campaign to elect Douglas Wilder, a Democrat, as the first African American governor of Virgina.  The other ironies are in that Bannon sees Trump as "an imperfect vessel" but still good enough, and Trump sees himself as "making all the decisions" when asked about Bannon, as a range of interests struggle to form a coherent movement on the right in American politics- an unlikely combination of a telephone operator's son and real estate magnate's son who built his own real estate business in luxury real estate towers far removed from ordinary men and women they represent. ...

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Xi Jinping, president of China says at the Davos Forum that world leaders should "join hands and rise to the challenge" from protectionism coming from the new U.S. administration. He called on world leaders to support the Paris climate accords- "to stick to it instead of walking away from it."

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After the hearing on November 18, 2007, in the Senate in front of the Banking Committee, most senators remained unconvinced. Prof. Morici of the University of Maryland and some senators including the senator from Tennessee asked tough questions about the automakers business model and viability going forward and some senators voiced deep concern about the automakers resistance to better fuel efficiency standards. The testimony given in advance and the remarks ahead of the questions showed the Detroit automakers CEO's were in a disconnect as they did not come forward with an acceptance of past mistakes on fuel efficiency, lack of vision on energy conservation, and failure of union and management to address benefits and work rules that were obsolete a long time ago, relying too heavily on lobbyists and on the plea by Michigan senator Debbie Stabenow for aid. Failure to do this and relying too heavily on the job losses and economic threat may have alienated many senators who are outside the midwestern region where most of the Detroit automakers are concentrated....

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The demand for ships went up so steeply that shipping rates hit the roof, and the prices of ships went up accordingly. Between the end of 2006 and July 2008 , shipyards received enough commissions, says the Economist, that this would double the world's fleet. Just as demand has collapsed and international trade has gone down, about 9000 ships are coming onstream. Now 11% of fleet capacity justs sits on the water, in the seas outside the harbors of Singapore, Hong Kong and other southeast Asian ports. A 150 tonne cape class ship that sold in 2003 for $18.5 million in the used market, when rates for charter were $15,000 a day, had risen by summer 2008, to $85 million with rates of $175,000 a day. These rates went up even more to $300,000 a day, which is 20 times what it was in 2003. And rates today are back down to $15,000 a day, where they were in 2003. This ship, cited by a broker, to give some idea of the extent of this boom and its collapse, was sold for scrap at $7 million. And South Korean shipyards are taking this into account, in their pricing and collection of payment, with 20% demanded upfront, 60% during construction, and 20% upon delivery. The backlog in shipyards is estimated by Clarkson Research, a maritime research firm, at $526 billion, even as banks are leery of lending and concerned about the value of the collateral in the event of default. Some smaller Korean shipyards are closing. Steve Mann, analyst at HSBC, says that half of the orders for delivery in 2010 will be delayed, so that there is work for 2011 and inventory or excess capacity does not pile up on the oceans. Even in this situation China, India and Vietnam continue to support the expansion of their own shipyards. This suggests additional losses for shipbuilders, shipping lines and the banks that lend to shipyards. All this also goes to show that the rush to industrialize, once it gets a firm footing- like it has in the Chinese model of increasing investment and local governments pushing infrastructure, industry and export factories with officials judged on GNP growth numbers- can exacerbate a boom-bust cycle. This is one industry, others include machinery manufacturers, commodity producers, and manufacturers of parts that go into finished products assembled in China for export. This means it would take the world economy down with it, if some external factor like the drop in export demand suddenly slows everything down. Machinery manufacturers in Germany, commodity producers in Brazil, Argentina, Chile, Australia, and manufacturers of the high tech parts in Japan and Taiwan that are shipped to China for assembly, all go down in this boom-bust cycle, in a dramatic manner. ...

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The government is focussing on tangible common equity ratio which for Citigroup is at a low of 1.5%. A 3% TCE is considered safe. The tier 1 capital ratio for Citigroup is 11.8% above the level that shows capital adequacy. To boost the Citigroup TCE ratio the government is expected to convert its preferred stock into common stock that would give it about 40% of Citigroup's common stock.

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A joint article by Robert Rubin, Clinton era Treasury Secretary and Jared Bernstein of the Economic Policy Institute. Rubin was senior adviser to Citigroup during the period that Citigroup leveraged itself and invested in lower quality securities that have left the firm exposed to substanital losses, and led to hiring a new CEO Vikram Pandit to clean up the mess. And this may explain the joint article with a less well known economist Jared Bernstein, and the tentative nature of their advice as the two differ on the important issue of long term fiscal deficits and still agree on investing heavily in healthcare, education infrastructure, worker training and energy. In a short recession they may be complementary and you could have the best of both worlds as in the other postwar recessions. But this is unlike any of the postwar recessions and is shaping up to be a long and deep downturn unlike anything seen in the postwar period. That Rubin does not even mention this shows that probably he is out of touch, as he was during his years when Citigroup was acting much like the other banks that were in serious trouble this year. Some of the decisions for lax regulation during the Clinton years were taken with the support of Rubin and Greenspan. What Rubin calls the longest expansion could have been for the most part good fortune and a steady period for the economy with Rubin's contribution being fiscal discipline, stewardship of the Mexican rescue package and committment to free trade policies, but not facing upto huge headwinds in the economy that required challenging leadership and judgement. Here Rubin mentions nothing that suggests bold vision and judgement, instead hoping that old policies that worked during the good times would somehow work today. And on some issues like labor being squeezed and getting a smaller portion of the economic pie with no support for unionization, a drop in the number of unionized workers and weakened labor bargaining strength, Rubin who now sees this as a bad trend for the working middle class incomes, did little in his years in the Clinton administration to reverse or slow this trend. He cites productivity growth of 20% from 2000 to 2007, and yet the real income of working age middle class households was falling $2000 or 3%. ...

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Some Knight employees noticed the erratic orders going out in the first couple of minutes of trading on the New York Stock Exchange and sent messages to Knight managers. Yet it took over half an hour, something like eternity say traders, for Knight to respond. It should have pressed the "Off" switch to stop the erratic orders, so traders are now asking why there was no mechanism for Knight to stop the trading immediately.

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Credit Agricole's plans to sell its Emporiki unit in Greece after suffering large losses.

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After suffering losses in the television market Japanese electronic manufacturers, Panasonic, Sharp and Sony, have diversified into solar energy, electric car batteries, and medical devices.

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Finally after prolonged dithering Angela Merkel had her cabinet approve 22.4 billion euros of loans to Greece over 3 years, with parliamentary approval the next step. And the ECB followed this with its announcement that it would accept Greek debt as collateral regardless of downgrades. This follows the approval of a $110 billion rescue plan for Greece from the IMF and other European nations announced over the weekend. That ECB decision comes in the wake of Standard and Poors decision to downgrade Greek debt to junk status.