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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 Dow Jones Average in the US went up by 11.3% since August 26, 2010, in anticipation of the Fed's quantitative easing, and the Republican win in the House and a filibuster capable 41 seats in the Senate. But on the eve of the midterm election in the first week of November 2010, the mood is changing. There is considerable concern that the Dow Jones average may have gone too far. Experts question the advantages of gridlock in Washington, especially when strong government action may be necessary in a crisis. And there are questions on how effective the Fed can be this time when the interest rates are already near zero.

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Jens Weidmann becomes the new president of the German central bank, taking over from Axel Weber. Weber was critical of the ECB's bond buying program for Greece and other countries facing a deficit crisis, to which he alluded when he said at the handover ceremony- "at times we struggled with one another in light of difficult and far reaching decisions- not over the common goal, but how to reach it." Weidmann was an advisor to Chancellor Merkel. He is a student of Weber and the youngest President of the Bundesbank. He brings a measure of flexibility and trust for Merkel, as he was part of her inner circle of advisors.

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This editorial in the NYT calls for the IMF and the EU to rip up their I.O.U.'s after five years of debt negotiations with Greece and a contracting Greek economy. German public opinion looks at it differently having shifted to favoring Greece's exit from the euro. Chancellor Merkel says "if the Euro fails, Europe fails," what she means by this is that the economic responsibility of countries in the eurozone is a condition for the Euro to succeed. The two sides are far apart as Greece faces a "yes" or "no" vote to remain in the eurozone in the July 5, 2015 referendum.

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US Senator Lisa Murkowski gets $25 billion for rural hospitals and assistance for Alaska in One Big Beautiful Act 2025. She was the 50th vote for the Tax Cuts Bill in the US Senate, without her vote the bill would not pass. Senator John Thune worked hard to get her on board. At about 1.30 am in the wee hours she agreed to support it only after getting $25 billion for rural hospitals and special allocations for Alaska healthcare needs, and other benefits for Alaskans including $25 billion for the Coast Guard. Places are spread far out in Alaska and patients have to be flown in to Anchorage for care. Alaska is a different place for health care including needs of native tribes. Lisa Murkowski is a rare senator with a passion to serve Alaska, and her concerns for disadvantaged people.

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Harvard professor, Benjamin Friedman, reviews journalist Timothy Noah's book "The Great Divergences: America's Growing Inequality Crisis and What We Can Do About It." Friedman says, Karl Marx got it wrong when he predicted greater inequality based on the situation he saw in Europe and the U.S. in the late nineteenth century. Inequality actually decreased in the U.S. and Europe with industrialization, technological progress, higher educational and income levels by the early part of the twentieth century. Similiarly Simon Kuznets, Nobel Laureate, also got it wrong when he extrapolated from what he saw in the early postwar period, assuming greater equality and better opportunities in future decades. The approach Noah and Friedman advise is to look at individual factors that promote or discourage less divergence in income levels, opportunities and upward mobility. And based on this shape policy and action agenda for better outcomes. A whole range of issues fall in this range- promoting manufacturing and higher wage jobs, immigration policy, investments in education to upgrade skills, better educational opportunities, vocational training, upgrading education to keep up with new technology, and investments in research and new technologies for new industries that would create better opportunities. Because inequality is increasing worldwide, and countries are focussing on improving competitiveness as well as preserving the social fabric in a global economy, this is an issue facing all countries that seek a better future....

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India's new bankruptcy law is a big step forward in letting credit markets function normally and drawing in new capital. The new law says the bankruptcy should be completed in 180 days after a default. Indian banks hold about $105 billion in non-performing or bad loans, according to the Reserve Bank of India. It is essential that India cope with the bad debt to attract new capital investment and increase growth. Asset reconstruction company being formed by Ambit and J.C. Flowers & Company was approved in late 2016 by the Reserve Bank of India, India's central bank. So far Indian banks have showed unwillingness to take a loss on the loans and take a big discount. Only $3 billion in asset reconstruction has taken place in 2016 through selling bad loans, according to Credit Suisse. Indian industry has relied heavily on bank loans and sale of stock for capital investment as the corporate bond market is undeveloped. This is about to change to finance growth, with the bankruptcy law and transparency as a first step. Larger foreign firms are teaming up with local partners to tackle distressed debt and bad loans, with locals knowledge of risks making it easier to profit from capital invested. ICICI bank won the first ruling of the new bankruptcy law by the National Company Law Tribunal against Innoventive to recover assets, providing the first test of the law. In the past such action would drag on for years, showing India is now serious about getting rid of bad loans in the banking system, and to revitalize credit markets to finance new growth. ...

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Some Republicans are saying that it is time to give up the conceit that increasing the incomes of the upper classes will bring benefits to all Americans, and whether making individual tax cuts the priority is a policy that no longer works and can even bring disaster as it did for British prime minister Liz Truss recently. In this camp are Senators Josh Hawley of Missouri and think tank American Compass. Others including Marc Rubio no longer favor globalization and see it important for the US to bring back American manufacturing at every opportunity with incentives and government action as the Biden administration is currently doing. This is creating new faultlines in the Republican party between the people who support the party of Reagan and its priorities and others who are questioning whether Reagan is relevant anymore. The fight that delayed the election of Speaker McCarthy also brought out some of these fissures as a subsection of the party felt strongly that it was important to go after entitlement programs and other social spending by the Biden administration. This is creating a new situation in American politics and in world trade and economics as the Biden Administration is not meekly accepting the detours of so called Third Way Democratic and Labour politicians of the US and Britain such as Tony Blair, Clinton and Obama who let the traditional backing of the Democratic Party in the working class wither with ties to Big Tech and acceptance of Reagan type free trade policies for manufacturing that ignored American working class communities. Biden's recent success in fighting for railway trade unions in restoring fairness in vacation and sick leave is only one of the battles that Biden has shown he can fight for American workers. Republicans now face the prospect of appearing divided and ambiguous in their support of working class, and overdependent on cultural issues for working class support. A recent British study on Labour's prospects showed that a slight shift on cultural issues can create a strong shift and have a large impact in Labour forming a new government with a secure majority in parliament.   ...

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The U.S. and China sign Phase 1 of the trade agreement in a sign of reduction of trade tensions between the two countries. Difficult issues of state subsidies under China's state enterprise model of development, and technological competition were put off for the future. China made the deal possible by agreeing to double its purchases of agricultural products, and offering to purchase about $200 billion in American goods and services over the next two years. This gives relief to farmers, a key part of Mr.Trump's support base. This also helps achieve a key Trump and U.S. goal of cutting the U.S. trade deficit with China quickly, just as happened decades ago with Japan.  See the related article and link on how for the first time in decades China's trade surplus with the U.S. is now set on a path for permanent decline. It dropped significantly in 2019 by 12.5% even though China's imports from the U.S. dropped by 21%, based on Chinese customs data released for 2019. With China increasing these imports significantly and the U.S. holding on to tariffs of 25% on $250 billon of China's exports to the U.S. which are outside the Phase 1 agreement, the downward course is set for the next few years for correction of a dangerous trade imbalance. That imbalance was allowed to develop over successive Republican and Democratic administrations. China already has the European Union as its first leading trading partner and south east Asia as its second. China plans to not be so closely intertwined with the U.S. in trade, and yet preserve its state sponsored development model and drive to compete in technology. China's increased purchases from the U.S. of $200 billon are broken down in terms of farm products- $32 billion, manufactured goods- $80 billion, energy products- $50 billion, services $35 billion. In effect the U.S. gets its goal of cutting the unsustainable China trade surplus quickly and with certainty in 3-5 years. China uses the period to transition for less trade linkage with the U.S. yet preserving its state sponsored model of development and drive for technological advancement.   ...

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This Times report looks at the management style of Jeff Bezos who started Amazon as a online store selling books and the extraordinary growth of the company. Bezos is stepping down from the day to day role of CEO to focus on new growth opportunities. His role as CEO will be taken by the head of the cloud computing business, Andy Jassy. He joined in 1997. Amazon was started in 1994.  Amazon's growth comes from carefully focussing on specific growth fields, first retail, then cloud computing, and changing the way business is run with innovative ways of conducting business. One click and Prime in retail, Kindle e reader in books, and massive investments in logistics, warehousing, cloud computing to run its business efficiently. During the pandemic criticism of low wages for warehouse workers was met with an increase in wages to $15 an hour.  Management style discourages meetings. Most meetings are held in the morning, and after 10 am. The person presenting is asked to hand out a six page memo which is read in silence before the meeting. The idea is that writing it out helps make the ideas clear. Decisions are made in this way. Employees are asked to think in innovative ways to run the business. Thrift is practiced as part of the Bezos way. Bezos is relatively young, only 57 years. Bezos was born in Albuquerque, New Mexico in 1964 when his mother was in high school. His mother married a Cuban immigrant, Miguel Bezos 4 years later and the boy took the name Bezos. He spent much time at his grandparents ranch in South Texas working on the farm, and went to school at Princeton University, graduating in 1987. In 1993 he married Mackenzie Tuttle, a novelist, then started an online bookstore called Amazon from Seattle. Before this he worked at a telecom company and at a hedge fund, which helped him finance his new online bookstore. Bezos turned Amazon into a retail store selling a wide variety of merchandise, an built up a strong warehousing and delivery network. ...

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Court blocks deportation of a group of Venezuelans on the basis of Alien Enemies Act of 1798, says other remedies can be tried. This is one of 4 laws passed under John Adams in 1798 to remove citizens or subjects of a hostile nation during times of war or invasion. The case now goes to the US Supreme Court. The Court of Appeals of the Fifth Circuit is based in New Orleans with 3 Judges making the decision. Bush appointee Southwick joined Biden appointee Ramirez against Trump appointee Oldham in a 2-1 decision. Oldham in a 131 page dissent says-“Today the majority holds that President Trump is just an ordinary civil litigant. His declaration of a predatory incursion is not conclusive. Far from it. Rather, President Trump must plead sufficient facts — as if he were some run-of-the-mill plaintiff in a breach-of-contract case — to convince a federal judge that he is entitled to relief.” Southwick does not appear to see this as an invasion ignoring the deaths from fentanyl and drug trafficking in the US, the strain on public resources and cities of uncontrolled flow of migrants in recent years, saying- “A country’s encouraging its residents and citizens to enter this country illegally is not the modern-day equivalent of sending an armed, organized force to occupy, to disrupt or to otherwise harm the United States.” Yet even an armed organized force was pushed back in the War of 1812, and has little chance where the current problems have led to the deaths of more young Americans from drug trafficking than three times the deaths in the Vietnam and Korean Wars combined, three times the deaths in World War I and about 75% of the deaths in World War II, something that needs reflection and action. With the changing public sentiment in the UK and Europe and in the US on law and order and on migrants the Supreme Court is faced with coming up with a decision in the best interests of the Nation and its People. ...

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Deteriorating China Iran relations as the oil imports from Iran for China face US tariffs of 25% on China's exports to US, and US economic relations far more significant for the Chinese economy. China gets somwhere between 1.4 to 1.6 million barrels aday from Iran (80% of Iran's oil exports) into Shandong refiners at $10 below Brent crude prices. Another 400 mbd comes from Venezuela to China. This means $30 billion comes to Iran from oil sales to China at $59 a barrel, and $8 billion for Venezuela from oil sales to China. This has financed much of the bellicose policies towards the US in the western hemisphere and in the Gulf region. Iran's bellicose policies in the Middle East, its nuclear policy, are now seen by China as a distraction and  detract from good economic relations with the US. China $400 billion oil deal 25 year cooperation agreement signed in 2021 was signed under the Biden administration and China today faces a completely different situation in 2026. Even China's relations with Russia are not the same as the US builds better relations with Russia. A wind down of the Ukraine war would change the situation completely and ensure peace in Europe including Russia, as the US works with the EU to meet future challenges having learned from this experience in Europe (Ukraine dividing Europe) and in the Western hemisphere (drug/ migrant. trafficking). When historians write this chapter of the inflows of capital from advanced West to Arab countries and the Gulf region they will write about the huge contrast between China/India's efforts to modernize and these nations where much of that capital was wasted in wars and conflicts and in grandiose projects that made no material difference to the standard of living and quality of life of the vast number of ordinary people. Once the oil dividend is gone with fossil fuels replaced with renewable energy by 2035-2040 this opportunity to advance is lost for the Arab and Gulf region. ...

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Krauthammer quotes Congressional Budget Office Director, Elmendorf, who said "we don't estimate speeches," when Elmendorf was asked about President Obama's April 13 debt plan speech. President Obama has failed to come up with specific ideas for debt reduction and not taken up any position on debt reduction, including removing tax expenditures as recommended by the President's Bowles-Simpson Commission report. Krauthammer says the President is using the discussion on debt reduction and the debt talks as a way to move forward with his reelection campaign. This President Obama has done by not putting forward any new ideas of his own or backing the ideas of the Bowles -Simpson Commission, and by putting Republicans on the defensive for coming up with any new ideas which may be unpopular. He calls the President's February 2011 efforts on debt issues a farce, and the April 2011 efforts empty, lacking any substantial specifics.

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The government bailout of Fannie and Freddie was expected to cost hundreds of billions of dollars according to some estimates during the financial crisis in 2008-2009. The costs peaked at $187 billion in 2011. The transfer of $59.4 billion by Fannie Mae to the U.S. Treasury in 2013 lowers the net cost to $60.5 billion. The net cost of the Troubled Asset Relief Program or TARP has decreased to less than $23 billion. At one point the cost of TARP reached $419 billion for the U.S. Treasury. The government sold the last of its shares in private insurance company AIG and made $22.7 billion in gains. Treasury and Fed loaned $182 billion to AIG and at one point owned 90% of the company. Chrysler exited the TARP bailout program in 2011 at a net cost to the U.S. government of $1.2 billion. So far in May 2013 the GM bailout cost $19.6 billion, this would come down to about $11.82 billion if the U.S. government sold its GM shares at the price in May 2013. The U.S. Federal Reserve says it has not lost money in any of its emergency lending facilities, even though some loans are outstanding. The FDIC says its fees from rescue programs exceed losses....

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As German chancellor Merkel pointed out at the EU summit, all central European states and Eastern European staes are not doing the same. Czech Republic and Poland are doing relatively better, Hungary, Romania and the Baltic Countries are in serious crisis. And smaller Slovenia and Slovakia are part of the core countries in the EU which use the euro. The Baltic countries are looking to Sweden to help and the Swedish Finance Minister has said it is the political responsibility of Sweden to help the Baltic countries, which Sweden should consider as part of the home region. Romania is looking to a reluctant Germany for help. And voices in Europe are asking if it isn't the political responsiility of Western European countries like Germany to help, and if not what does it mean to be part of the European Union? The Eastern European countries caught up in this crisis with their currencies losing value and large loan repayments to western European banks, feel they embraced the liberal capitalist model without any knowledge or experience with its fluctuations and crisis prone nature, as part of the integration into a united Europe. Now they are left they feel, to drift on their own. The recent emergency European summit meeting in Brussels saw the Czech prime minister Topolanek, who holds the rotating presidency of the EU, say that no member would be left in the lurch, and the need to avoid a dividing line in Europe that North-South or East-West. The Hungarian prime minister insisted on a special European Union fund of upto $241 billion to protect the weakest members, and circulated a paper saying that Central Europe's refinancing needs for 2009 were $380 billion. So far the governments of the EU have already spent $380 billion in bank recapitalizations and put up $3.17 trillion to guarantee bank's loans and to get credit moving again. And the European Bank for Reconstruction and Development, the European Investment Bank and the World Bank have promised $31.1 billion to Eastern European countries....

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China faces three main challenges and how well it handles them will determine if China does well in the future because the things that helped China in the last 30 years of development are now gradually coming to a close. The three main challenges are a changing work force and the gradual phasing out of the demographic dividend thats responsible according to some experts for a third of the progress this far, the gap between the rich and the poor, and severely constrained resources and supplies of energy and environmental resources. On the first its not something China can do to much about, on the second its going to have to have a more balanced development and repair the network of social services and redirect resources to the poorer sections (see the link to the conference at Lindau, Germany and Nobel Prize Winning economists opinions on this issue). This will bring more discussion and challenges about how to proceed as a lot of actions to build new infrastructure and new construction has been done by taking over land where needed. And on the third challenge has not been done so well so far as the amount of energy required to each yuan of economic output has not changed much, seeing a 3.7% improvement over 2006 in 2007 and only a 2.9% improvement in the first half of 2008 over 2007. All this is why Secretary Paulson cautions that many American might be worrying about the wrong thing, China overtaking the USA, what really is the worry he says is whether serious troubles in China will affect the stability of the USA and global economies....

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The Washington Post cites researchers at the University of Chicago about the kind of economy Biden achieved by Jan 2025-

“Under the Biden administration, real GDP rose 12.6 percent, rightly cheered ... as ‘a historically robust expansion’ that repeatedly defied forecasts. Since the pandemic, economic growth in the US has far outpaced that of our peer nations. Business investment is up; unemployment is low.”

As a new DJT administration takes over in the US it has the potential of carrying on the task of rebuilding infrastructure, and strengthening the economy,  tackling cost of living, income indisparities, with greater involvement of the private sector, in the same way that some of the priorities of the first DJT administration such as infrastructure and bringing jobs home in manufacturing were taken up by the Biden administration with participation of the US government in rebuilding the economy.

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This title is misleading. 40% of Americans are unable to make their goal of decent living in retirement.

On the positive side a look at Fidelity's 24 million 401 K accounts at 25,000 companies shows people are saving closer to the suggested 15% with the average at 14.3%. Older baby boomers saving at 17%. Generation X at 15% and millenials at 13%. Companies are also moving people into higher and higher savings rates which is a good thing. 70% of the private workforce has access, companies automaticall enroll employees increasing participation.

Yet the average savings account is still very low at $127,000 and down 3% from 2024. If this is the saving of the well to do with Fidelity accounts then even the well to do are still far behind. And only about 5 million of 24 million are in 401 K savings accounts for 5 years or more.

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The White House gives details of a new Trade Agreement with Indonesia. There will be zero tariffs on exports to Indonesia of US goods. Indonesia will have lower tariffs of 19% on most products, and higher duties of 40% on goods that are sent through Indonesia to evade tariffs such as from China. Indonesia will place no restrictions on export of rare earth minerals. Indonesia will remove non tariff barriers by action to accept U.S. safety regulations for automobiles, medical devices and pharmaceuticals, and remove preshipment inspections for US agricultural products.

Its significance is that Indonesia is a producer of rare earth minerals giving US full access. Indonesia has a large population of 250 million and this opens up markets for US farmers. It means US energy products and pharmaceuticals, and aircraft makers have access to this market. Because of far flung islands Indonesia will need more Boeing aircraft as it modernizes.

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The situation in China with recent rural migrants shown to be different from the migrants from rural areas in the earlier phase of development after the opening in 1990 under Deng. The overnight eviction of recent rural area migrants from Beijing, referred in official documents as "low-end population" leaves this segment of the population (about 90 million) facing uncertain future. The previous generation of rural migrants were seen as more stable as they could farm and had connections to the villages and rural areas. The new migrants lack connection to villages and have little experience working on farms. They were born since 1980, and are seen in party documents as a new generation of migrants. The earlier generation had seen the upheavals of the Cultural Revolution and memories of poverty, and were focused on basic needs.  The new generation of migrants is more dissatisfied, has more education but of lower quality, some were left behind in rural areas by parents who migrated to cities, and men in this group face a lack of women partners because of the one child system and decline in female births. Two thirds of these migrants are unmarried and the men lack the income to pay what is called a reverse dowry of having an apartment and a car to attract women for marraige. The governing party sees this new group of $90 million which has no access to subisidized education and health care under the resident "hukou" system as a source of instability in urban areas of China. ...

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Spain's banks have government debt holdings as a percentage of bank assets of 6.8% compared to 13.1% for Italy's banks. This is based on data available from the IMF. But Italian banks are far better capitalized than Spanish banks. Bank shares of Italy and Spain hit post Lehman lows in July 2011, but Italian bank shares are likely to recover faster than Spanish bank shares. Italian banks raised 8 billion euros of capital in 2011 and most banks have an average core Tier 1 ratio of over 8%. By contrast Spain's bank sector is perceived by markets as undercapitalized and the IPO's of savings banks Bankia and Banca Civica will be affected by the unsettled markets.

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Simon Nixon points out the problems investors had with UBS before the Oct 2012 decision to drastically reduce the size of the investment banking operations. UBS had three fourths of its capital engaged in investment banking earning only about 5% return. Private bank and wealth management businesses earned far better returns of 25%-40%. Under the new plan core Tier 1 ratio on a fully applied Basel III basis would be 13% in 2014. And return on equity under CEO Ermotti's plan would increase to over 15% by 2015. UBS would put emphasis on the private bank and wealth management businesses under the new plan and shrink the investment banking operations with large job cuts.

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Australia's Qantas airline and its low cost carrier Jetstar is facing new competition on international routes from Malaysian airline Air Asia X. Air Asia X has new promotional one way fares of 60 Australian dollars for its Kuala Lumpur-Sydney route starting in April 2012. Scoot run by Singapore Airlines is also another competitor with 400 seats from Sydney to Australia each day. Virgin Australia is offering 30% lower fares on business class fares for domestic routes covering Melbourne, Brisbane and Sydney. Jetstar has provided 26% of Qantas earnings in the year ending June 30. So far Qantas has been the main beneficiary from the 50% increase in Australians going overseas in the last 5 years.

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The Obama administration's Small Business Jobs Act of Sept 2010 set aside $30 billion to stimulate lending to small business. Only 7% of 7700 U.S. lenders have signed up for the program so far. The deadline to sign up to participate has been extended from March 31 to May 16, 2011, by the Treasury Department. Banks have been hesitant to sign up for various reasons: banks say they see a stigma to taking these loans, and need additional staff to handle the extra paperwork. Banks say there isn't enough demand for loans from small business, or that there is enough capital already to handle larger better collateralized borrowers with the others considered too risky anyway.