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Bloomberg View says it is important for the living wills for U.S. banks that are "too big to fail" to be ready by the end of August 2011. This is required under the Dodd-Frank legislation. The living wills are designed to provide the government and the FDIC with an orderly pathway for winding down the business of a bank. On August 8, 2011, when the Dow Jones Averages dropped by 634 points, shares of Bank of America and Citigroup led the decline. Bloomberg points out that investors think Bank of America's net worth is only one third of what the bank claims, and for Citigroup this is less than half. Investors view the stocks of these banks as risky because they are likely to need to raise fresh capital and this would dilute the value of existing shares.

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Unemployment in the U.S. will be hard to bring down with the mismatch in skills for new jobs created. The National Skills Coalition, which works to promote job training, says in a report that 46% of the jobs in New York state in 2009 were in the middle skills category, and only 39% of New York workers had the skills for these jobs. Mid-skilled workers are workers with a high school diploma and training, an associates degree or vocational training. The problem is that students from public schools and community colleges who are not prepared with mid-skills and training, or lack a two year degree, are not prepared for these mid-skilled jobs in health care, transportation and other fields. This report says 40% of new jobs created in New York state will be for mid-skilled workers. In the low skilled workers category there is downward pressure on wages because there are more workers than jobs- 21% of new jobs are low-skilled and 23% of New York workers are low-skilled, according to the report. The problem is serious because funding for training programs has been cut over the years, and at the same time government policy- including that of the Obama administration- has focussed on getting people to college. Less attention has gone to training programs and vocational education. This at a time when a college education has become costly and difficult for families....

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The Bush administration's and Paulson's thinking that letting the government buy parts of the banking system was unthinkable, as recently as late September, may have led to squandering of valuable time. Now Paulson is following Gordon Brown's lead in planning an injection of capital in banks in return for equity stakes, using much of the $700 billion Congress has authorized, and Paulson says the package that passed Congress gives Treasury all the authority it needs to do so. The failure to be open to this thinking earlier may have cost valuable time in addressing this crisis. And now there are second thoughts on whether it was wise to let Lehman fall into bankruptcy, because the Administration had not correctly anticipated or calculated the true cost of the Lehmann bankruptcy in terms of the way it created a crisis in the rest of the financial system. Paulson has still not taken Gordon Brown's lead in guaranteeing lending between the banks which the British are doing as part of their plan. Is the administration too slow in its response and a bit wrongheaded or stubborn headed as each step of the crisis has moved faster than its ability to respond, and its response being one step behind. Frederic Mishkin of Columbia University a former Fed Governor says, "if you delay and create uncertainty, the amount of money you have to put up goes up." It appears from Paulson's remarks over time first turning down proposals for capital injection into banks for equity stakes, and now in making that route central to his plan, that Paulson and Bernanke simply did not anticipate the shutting down of credit markets and the collapse of stock market prices that occurred, and they had no backup plan prepared for a situation such as this. And on top of this the backup plan they went out to sell to Congress turned out to be short on details and in this sense naive for the amount requested. And then by refusing to consider alternatives such as capital injection for equity stakes, it was wrong headed, if not closed minded. William Poole who retired in August as President of the Federal Reserve Bank of St. Louis, says that " I am not aware that Treasury presented any evidence on auctions that have been successful when they are used for assets that are so heterogenous", referring to the reverse auctions that would take weeks to set up and would be terribly complicated to buy up troubled assets, as part of the plan presented to Congress in but 3 pages. Now the plan appears to be to let Fannie and Freddie, which were given $100 billion by the Treasury as authorized by Congress, to move ahead with the purchase of troubled mortgage securities, something for which Fannie and Freddie have the capabilities. In the end the crisis in confidence and near panic generated in the markets and the climate of fear may go way beyond the actual losses incurred from debt securities, and some of this may be the result of a clumsy and poorly thought out approach by Bernanke and Paulson. The cost of fixing the problem will be higher and the recession more prolonged because of this. It is a situation of capable people blinded by ideological reasons to see what is happening and in Bernanke's case not making enough of a case to Treasury about his reservations and his own thinking that capital injection was the right approach, as people familiar with the early planning say Bernanke argued that it would be easier and more efficient to inject capital directly into banks. ...

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The leaders of Republicans and Democrats, Senate Majority Leader Mitch McConnell, Speaker Boehner, Minority Leader Nancy Pelosi, and Minority leader Harry Reid, reached a budget compromise with the White House in October 2015 after long closed door negotiations, following years of deadlock in previous years. The compromise lifts sequester spending caps agreed to previously in a previous settlement of differences, and lifts the budget ceiling till March 2017. Speaker Boehner said it was time to "clean out the barn," as he did this over the opposition of Senators Rand Paul and Ted Cruz from the right wing of his party who opposed his efforts to compromise with Democrats. On October 28, 2015, the House of Representatives passed the two year budget agreement 266-167, and the following day Speaker Boehner passed on the Speaker's position to Rep. Paul Ryan of Wisconsin. On Oct. 29, 2015, the Senate voted 64-35 to pass the budget compromise agreement. The agreement increases discretionary spending by $80 billion over 2 years, giving half to defense spending with the increase in military threats overseas, and the other half to domestic spending programs. The domestic spending goes to limit premium increases for some Medicare Part B beneficiaries, and a prevents a 20% across the board cut to Social Security Disability Insurance benefits, set for 2016. This removes the uncertainty posed by threats of a showdown on the budget ceiling and threat of defunding Planned Parenthood posed by right wing Republicans in Congress, which were bad for the economy at a time when the U.S. and Europe faces increasing threats overseas. Without a budget agreement the U.S. Treasury Department would have seen its borrrowing authority expire on Nov. 3, 2015....

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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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The Labor Department figures showed the U.S. added 157,000 jobs in January 2013. The unemployment rate edged slighly higher to 7.9%. Government jobs declined by 9000 in January, and the risk remains that drastic job cuts under a sequester of government spending cuts supported by some in Congress would hurt the job market.

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An internal IMF document that estimates Europe's banks are short of capital by $273 billion. IMF managing director, Christine Lagarde, tries to downplay the report by saying this is not from a stress test that the IMF conducts. In August, Lagarde, called for an "urgent recapitalization" of European banks. As France's finance minister, Lagarde, steadfastly insisted French banks were well capitalized. France worked hard to prevent requirements for significant capital reserves under the Basel III rules. The higher capital requirements were supported by the U.S.. Simon Johnson said in his blog, that as long as European banks had inadequate capital to act as a buffer against losses, European countries had no safe route for restructuring their debts.

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The loan-to-deposit ratios on average for European banks of over 110% are much higher than the average in the U.S. of about 78%, according to analysts. The loan-to-deposit ratios for Spanish and Italian banks are much higher, with 160% for Bankia. If Spain leaves the eurozone and places a moratorium on loan payments the Greek loans on the books of France's banks in Greece would be in default, especially Credit Agricole. The French banks would suffer an estimated loss of 20 billion euros, and German banks 4.5 billion euros. German banks have been more aggressive in reducing their loan protfolios at risk than French banks during 2010-2012, hence their smaller exposure.

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Jenna Wortham asks the question do tech companies have undue influence in Washington especially when they are pursuing their own ecosystem expansion, citing an example from Facebook app Free Basics. There is another question that comes with the election campaigns of Sanders, Trump and Clinton, and issues of upward mobility. With this issue raised also by Janet Yellen of the U.S. Federal Reserve of the loss of intergenerational mobility in the U.S. at a conference in Oct. 2014. This question is whether the tech world in California can be sensitive to the problems of cities depending on manufacturing in the midwest and the eastern U.S. that are recovering from deep recession, because the environments are so different. Working in the tech world in California is so different from the rest of the country, almost a different way of life. It also has deep political implications, because the priorities are different. Sometimes as with the TPP trade agreement they may conflict- this includes an industry such as the auto industry that also is incorporating technology at an accelerating pace and which has employed many times more people than does the tech industry in California, and in many states. This leads to president Obama's support for the TPP trade agreement, an agreement which analysis by some experts shows is more beneficial to the tech industry in California than to the auto industry in the midwestern states. The NYT's Krugman says overall for the U.S. it is marginally helpful as most of the gains in free trade are already behind us. See Lyrarc using search terms-Trans Pacific Trade Agreement, Trans Pacific Partnership. Yet it remains a mystery why president Obama has made it a part of his legacy, when Hillary Clinton realizing the issues in this election has clearly stated she will not support it. It has other implications as well, as it has given rise to demagogic rhetoric in this election, where other issues far more significant such as the condition of western democracy are at stake. ...