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The head of the Liberal-National coalition wins the election in Australia coming from behind because of inflighting in his coalition. Australia had 5 prime ministers in 6 years because of differences within the Liberal party.  Mr. Morrison's coalition was leading or won in 74 seats with 75% of votes counted, and headed for a 76 vote majority. Morrison campaigned alone on economic issues while the opposition Labour party led by Mr. Shorten, a trade union leader campaigned on climate change and better relations with China. ScoMo kade this election about the economic choice for Australians and who they could trust for jobs and the future. Morrison had just replaced Malcolm Turnbull only 9 months ago. Mr. Morrison planned to continue with the close relations with the U.S. as it confronts China on trade and technology issues. Mr. Shorten would have diverged from the U.S. on these issues, even though Australia has already turned down Huawei 5G on its telecom networks. With so much infighting in both parties, no prime minister has served a full term in Australia since 2007. Every 3 years Australia has an election. Voting is mandatory with a A$20 fine for not voting resulting in 95% of 16.3 million voters voting this time, compared to 55% in the U.S. and 69% in UK for their last elections. ...

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Details of the $825 billion stimulus plan. Renewable energy does well under the plan including production tax credit for renewables, with $32 billion for a "smart" electrical grid for which GE makes components and lobbied for. Renewable energy producers win an extension of production tax credits now convertible into cash for companies whose losses leave them unable to use the credits. Transportation infrastructure green projects did not do so well, with $32 billion for transportation projects and only $10 billion for mass transit projects.The Natural Resources Defense Council had compiled a list of more than 80 environmentally friendly infrastructure and transportation projects worth about $405 billion. Only a small number of these projects made it. What is in the stimulus to create jobs and stimulate capital investment? Businesses get bonus depreciation, which speeds up depreciation deductions for companies that invest in plant and equipment. The stimulus doubles the amount small businesses can immediately write off for capital investments and purchasing new eqipment, and gives incentives for businesses to invest in renewable energy. States get help with $90 billion going to increase the federal share of Medicaid payments, and an additional $79 billion to help states avoid cutbacks in education and other services. And there is a "Make Work Pay" tax credit for $500 per worer and $1000 per couple. Experts say the effects of the stimulus will be felt in the latter part of 2009 and into 2010. Which is one reason the view of economists that there would be a second half recovery does not reflect conditions on the ground. Goldman has revised its view to 2010 and even that may be optimistic. One example of what has happened in the stimulus in this respect is that the earlier optimistic view of largeinvestments in science and technology, broadband networks, and transportation projects for fast rail and transit have all been trimmed down. Part of the reason may be that the bill for the nation's banking system revival may be larger than realized as an additional amount of $15-20 billion is being negotiated for Bank of America and more money will go to Citigroup. $6 billion is shown for highspeed internet access for rural and underserved areas. Science facilities get $10 billion. Repair of public infrastructure (read roads and bridges) gets $31 billion. School modernization gets $21 billion. And modernization of health information technology systems gets $20 billion which its hoped will provide equivalent or higher returns to pay for some of the universal health care costs, and preventative care gets $4 billion. There is a tax credit for R&D work on energy innovations and renewable energy production of $20 billion, and $32 billion for a "smart electricity grid." These are the proactive parts of the stimulus that create something new and make improvements. They add up to $144 billion. So much money goes to shore up the existing services and supplement incomes, and to relieve stresses on the banking system, and other ways to shore up the system, that the proactive expenditures are only a small fraction or 17% of the $825 billion stimulus. And all the time the federal deficit and debt increases with these huge outlays just to shore up the system. The Heritage Foundation Data Analysis Director Mr. Beach told Congressmen at a discussion chaired by Congressman Cantor (R), on January 16, 2009, that the federal debt would reach 92% of the nation's GDP in 2009 from 58 billion or 70% in 2008, with the $825 billion for stimulus. The federal deficit would go up to $1.31 trillion or 9.2% of GDP up from $541 billion in 2008. See the research paper on the Heritage website. ...

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Pearlstein says the major news stories of today all are about the same theme- of how the US was encouraged to live beyond its means by trading partners who prospered as this went on, with the tacit agreement of financial and political leadership in the US who raised no alarm about this. These stories are: the G-20 meeting in South Korea with the goal of rebalancing the world economy, the President's Deficit Commission Report recommending bold steps in changing the tax and spending policies of the US, the criticism of the Fed's decision on $600 billion of quantitative easing, and the renewed concerns about Ireland where severe cuts in public spending have failed to reverse a downward slide.These trading partners prospered by lending Americans the money to consume more than they produce. It was he says a wonderful arrangement while it lasted, because it helped bring millions out of poverty in Asia, while letting Americans enjoy a transitory period of a higher standard of living. This unsustainable arrangement converted the US from world's biggest creditor nation after World War II to the world's bigggest debtor nation. He credits Geithner for coming up with a more convincing and less confrontational way to correct the imbalances by setting limits on the deficits and surpluses of trading nations. He points out that the Chinese have barely budged on the issue of an undervalued currency, the world be damned. And the German and Chinese criticism rings hollow he says, as both countries are the main beneficiaries of the current system. The normal mechanism of correcting imbalances with a floating rate exchange system is hardly relevant, as it is incompatible with state run economy and strategy of export growth of China. Erskine Bowles and Alan Simpson have presented he says a bold deficit reduction plan that is credible, fair, economically sound. Even though it was received with the usual complacency and lack of awareness both in the media and in Congress. The simple reality after all the awfully complicated details and the painful implications is this: Americans have to consume less and produce more, and trading partners have to consume more and produce less. And this shift cannot be pushed into the future as our trading partners would like....

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The lack of ample natural gas supplies has hurt Mexico's manufacturing sector. Pemex has focussed on crude oil production and Mexico imports natural gas from Texas. BBVA Bancomer estimates a loss of 3.6% of manufacturing output in the last year from the lack of natural gas produced in Mexico from its large gas reserves.

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Hassett and Baker suggest learning from the German experience of the last decade in reducing unemployment, including "kurzarbeit" programs, work sharing, and cooperation between industry, unions and government to reduce unemployment. France is already taking action to learn from the German experience.

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Hingh unemployment in important states including Florida, Pennsylvania, Colorado (8%). Unemployment has improved in Ohio (7%), Virginia and Iowa (6%).

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Former World Bank chief Zoellick points to the need for investments in human capital and productivity improvements in emerging markets such as India, China and Brazil to overcome the problem of slow growth in 2013.

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On Monday August 8, 2010, the Dow Jones Industrial Averages went down by 634 points and closed below 11,000 points. This is not far from the 10,165 level of the DJIA on August 27, 2010. It was on August 27, 2010 that Fed chairman Ben Bernanke made the speech at the Kansas City Fed's Jackson Hole conference about the strategy for a QE II. Its about the time for this years Jackson Hole conference and the gains in the stock market are melting away. The DJIA closed at 12810 by April 29, 2011, then went below 11,000 by August 8, 2011. With higher inflation the Fed's options are limited.

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The shift of offshore manufacturing jobs from China to Mexico in 2014-2015.

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This story in the WSJ shows how the Phase 1 deal between the U.S. and China was negotiated in November and December 2019. As a bargaining chip for negotiations on a Phase 2 deal the U.S. has preserved tariffs of 25% on $250 billion in imports from China, and the reduced tariff  of 7.5% on $120 billion of imports. In Phase 1 Mr. Trump convinced the Chinese leadership that he was serious about going ahead with further tariffs to cover all of China's exports to the U.S.by a December deadline. This was also Mr. Kushner's message to the Chinese ambassador. In talks China gave easy concessions on agricultural imports and offered to buy twice the amount of soyabeans and other food imports- which helps Mr. Trump with farmers in the U.S. At the same time difficult concessions on enforcement to change subsidies to Chinese state owned companies were put off. China formally says it is an issue of Chinese sovereignty. It is also seen as a part of the Chinese business model that is working and China is in no hurry to change this. It has offered to step back from asking foreign companies to transfer technology in exchange for market access. On technology issues and subsidies the tough negotiating issues on which the U.S. has insisted for changes, China has held back. Phase Two is not likely to happen at least not till after the election, as China wants to be able to develop its own technology rivaling the U.S. and Europe, without the kind of formal enforcement the U.S. is demanding. In the long run it plans a shift to an economy that is less dependent on the U.S. for imports which may be in the interest of both countries, as U.S. manufacturing has shriveled over two decades hurting American jobs as a result.   ...

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The American consumer still spends money on bigger ticket items like luxury cars and iPads. The rich are largely shielded from this recession and one might forget that even with a 10% unemployment rate, says one economist, there are still 90% with jobs, about 75% confident of keeping them, and half with liquidity. So there is spending which is erratic. A sort of EKG type recovery in which it keeps changing all the time, with no consistent pattern. Consumers who are uncertain about the future and facing tight budgets save on toothpaste and basic consumer items, while other consumers continue to spend. A Consumer Reports survey shows consumers willing to spend on appliances and electronics. American Express conducted its survey of consumers and found consumers behind on their savings plans and making impulse purchases, or going outside their means to buy things. One analyst who follows the savings rate closely thinks consumers are spending because the stock market recovered after the 2008 crisis, and as the stock market falters consumers will start saving more. And Prof. Dan Ariely of Duke University, a behavioural economist, says that people who fear losing money in stock market fluctuations feel better spending their money, this way a least they have something to show for it. One reason apple's IPad has done so well is that consumers see it as a compromise purchase, they can give themselves a little something as a reward and still not have to buy a Mac which costs a lot more. And in the patterns of American consumer behaviour experts point to behaviour where consumers will save at Target by buying cheaper brands or buy at Dollar stores for things like paper towels and detergents, and then go out and spend on something pricey to reward themselves or have that feel good feeling. So you have this development that sales are up 9% this year at the Mall of America in Bloomington, Minneapolis, USA's largest mall. People look at price tags and shop for deals, they cut spending in places and spend in other areas. ...

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Paletta looks at the studies made for President Reagan's immigration action in 1986 for information on how president Obama's executive order on immigration in 2014 will impact jobs and wages of undocumented workers. These studies show increase in wages of 5-16% for some workers, as undocumented workers with new legal papers moved to higher paying jobs by the early 1990's, according to Lindsay Lowell of the Georgetown University's Institute for the Study of International Migration.

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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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A crisis situation exists in state revenue and spending needs. According to a Census Bureau report overall state revenue in the US dropped 30.8%, to $1.1 trillion, between fiscal 2008 and 2009. The gap between the spending needed to provide services in the recession and revenues is very large. States fiscal problems along with housing losses, will be the two forces acting as a drag to the US recovery in 2011-2012. State payrolls will be cut back and contracts to private companies reduced to cut spending. Declining federal help in 2011-2012, with the new focus on reducing the federal deficit, will worsen the situation. According to the Center for Budget and Policy Priorities, even with large federal help 46 states had to raise taxes and make cuts to close a combined gap of $130 billion in their current budgets. And next year 40 states already have projected gaps totaling $113 billion. Even as revenues drop, the Census Bureau report says the state government expenditures went up by 3% to provide essential services, safety net programs and education. Illinois has a budget deficit of 45 percent of its overall budget, according to the Pew Center on the States. In California it is equal to 13% of te state's total budget, and in Arizona it is 15%. For 2009 tax collections fell by 8.5%, and were partially offset by a 12.9% increase in federal help, which was a total of $477.7 billion, according to te Census Bureau report....

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Jaffe and Eilperin provide this exceptional account describing the huge struggle of Agriculture Secretary Tom Vilsack to come to grips with the opioid crisis in rural America. Vilsack is from rural Iowa, where he was a small town Mayor. The opioid epidemic has personal overtones for Vilsack because of his parents addiction and growing up seeing the lack of helping hands. Vilsack. a two term governor of Iowa has witnesses these struggles in Iowa, as the state rural areas faced high poverty rates, more likelihood of being obese, less likely to go to college, and more likely to be pregnant in the teen years, than the rest of America. Vilsack is frustrated not just with the Obama administration but also with Congress, the media, the private sector with high pharmaceutical prices, for not giving enough attention to rural America. He sees rural America as providing the food grown and a disproportionate share of the military. The opioid epidemic comes at a bad time for rural America. This report provides a story that is typical where a dose of painkillers for a Navy employee leads to addiction and use of opioids. The whole experience has made Vilsack sound cranky to people in the White House. ...

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Nobel laureate Michael Spence says the structural problems in the U.S. economy will require structural solutions where government, business and labor come up with collective efforts to restore economic growth. This might take some time says Spence. Short term fiscal spending alone is not the answer for jobs growth. And it will take a joint concerted effort of government, business and labor. Part of the effort might include a period in which there is lower income growth to regain competitiveness. This would be similiar to what Germany accomplished in the last decade in which it faced high unemployment. The German government, labor unions and business forged a consensus which included wage restraint, changes in the labor market. This would have to be combined with government-business partnership to make investments in advanced manufacturing technology and other innovations to improve competitive position. Educational standards and productive skill development issues would have to be addressed to create new advantage for the U.S., just as emerging market economies are making new strides of their own....

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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.