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LyrArc brings in selected articles from many of the world's top publications.

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New York Times Original article ›
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ECB president Draghi tells a Brookings Institution audience on Oct. 9, 2014 "for governments that have fiscal space, then of course it makes sense to use it," referring to Germany. IMF's Christine Lagarde is also calling on Germany to increase spending. The German statistics office says exports declined 5.8% in August from prior month. Mr. Draghi also emphasized that the survival of European governments depended on getting economic changes right- "if they don't do the right things, they will disappear forever because they will not be re-elected." Germany's respected economic institutes said in a joint statement that GDP growth in 2014 will be down from earlier forecast of 1.9% to 1.3%. In 2015 growth is forecast at 1.2%. For the 3rd quarter 2014 growth is zero and for the 4th quarter 2014 it is estimated at 0.1%. Economic contraction is not ruled out.
Wall Street Journal Original article ›
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Italy's major problem is lack of growth, with growth averaging 0.3% in 2001-2010 compared to 1.1% for the eurozone area. In the 1st quarter of 2011 growth was only 0.1%. Italian bonds yield two percentage points above the yield on German bunds. With growth at the present level, Italy's would see an increase in debt to GDP ratios, according to Barclays Capital. Debt to GDP is currently at 119%.
Washington Post Original article ›
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The recent appointment of fast food executive Andrew Puzder as Labor Secretary has caused great concern among union leaders. Puzder supports a $9 minimum wage compared to $15 supported by Democrats. Unions now represent 7% of the labor force, down from a high of 20% during Reagan's time when Reagan appointed a construction company executive as Labor Secretary and cut regulations.  Globalization has thinned the ranks of workers in unions. And the failure of Democratic administrations to stem the shift of factories overseas to China, Mexico and other places, as part of global supply chains focussed on cost, has weakened Democratic support among workers since the period of Bill Clinton. It eroded to the point where Obama won 65% of support among unions and Hillary Clinton won 56% in 2016. Interestingly the Republican Romney gained 33% versus 37% for Trump, showing voters were more inclined to move away from Democrats and only a smaller number willing to support Republicans, but the shift enough to give Republicans a win in 2016 for the presidency. The figures are from a Election Day survey of trade union AFL-CIO, and a larger proportion in midwestern states showed disaffection with policies from Clinton to Obama. In fact Obama spent years promoting another free trade agreement TPP that favored tech more than auto and older industries, just as Bill Clinton had promoted NAFTA, without giving thought to what this was doing to its worker base of support. A similar situation happened with Social Democrats in Germany as a SPD administration moved to the centre and handed Christian Democrats led by Merkel a win in parliamentary elections. As Democrats such as former Labor Secretary Reich, a professor at UC Berkeley who served under Bill Clinton, describe the problems of working class people their is less reflection on the impact of the changes from globalization and how Democrats handled or mishandled it, and more on the politics between the two parties.   ...
The New York Times Original article ›
Washington Post Original article ›
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Spain's central bank was lauded for macroprudential supervision before the housing bubble burst. Will China's central bank and financial authorites which have managed the housing bubble upto this point face similiar problems? Can China be the sole exception even as housing bubbles burst with wide repercussions in the U.S., UK and Spain? Nicholas Lardy, of the Peterson Institute of international Economics, says urban housing stock makes up 41% of Chinese household wealth in 2011. The same figure for the U.S. is 26%. Chinese buyers invest in homes because low interest rates on savings accounts cannot keep up with inflation. Real estate investment was 13% of GDP in 2011. Home ownership is a recent development in China, only since 1990, Chinese have never experienced large price declines. Household debt as a percentage of disposable income has increased significantly in recent years, up to 53.6% in 2011 from 31.3% in 2008, according to Lardy.
New York Times Original article ›
Washington Post Original article ›
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Studies at the University of Padova in Italy and by France's research agency INSERM show higher risks of dementia from retiring early. The INSERM study shows that for every additional year worked we reduce the risk of dementia by 3.2 percent. Retiring at age 50 is considered very, very poor decision, and before 60 very poor decision, as cognitive development, mood, and active engagement with work offering complexity, all relate to good mental health. Countries like U.S. and Denmark where people tend to work for longer than in France and Austria are shown to be doing significantly better in cognitive performance in a 2010 study published in the Journal of Economic Perspectives. The Italian study shows the longer you spend in retirement the higher the risks of cognitive decline.
Wall Street Journal Original article ›
New York Times Original article ›
New York Times Original article ›
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Medvedev appears to have little role in setting policy in Russia, even though he has presented a different view of liberal groups and showed interest in pluralistic democracy and free expression of opinion. Putin has expressed a very different view about liberal groups, as representing foreign interests in Russia. The media remains tightly controlled in Russia, and elections are determined in the Putin way. A mayor picked by Putin won the Sochi elections even without campaigning, as many opposition candidates were disqualified or discredited before the campaign. He won with 77% of the vote. In this way elections take place in Russia but are conducted in a way which makes it very difficult for the opposition parties, and keeps media television coverage heavily pro-government.
Wall Street Journal Original article ›
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Another significant development in this crisis, is how small businesses got addicted to credit card debt as a way to operate for ongoing expenses of the small business, from a small nursery, to abed and breakfast or a solo law practice. There are an estimated 27.2 million small businesses who are supposed to be one of the growth engines of the economy. Credit card debt when banks are tightening up credit and businesses are unable to meet expenses, is extremely costly because of the underlying usurious nature of the industry in the US and lax regulation. It will only push more businesses, that have acquired the bad habit of credit cards to finance operations, into bankruptcy. There were 5 million business credit cards in 2000. By 2009 after Visa Inc, American Express Co, and MasterCard Inc. and Discover Financial Services Inc. pushed these cards aggressively, using a new credit scoring system that looked less at the business and more at personal credit scores, the number jumped six fold to what Nilsen Reports estimates as 29 million business credit cards. The spending on these cards jumped for this period four fold, from $70 billion to $296 billion. As the average debt on each credit card jumped so did the likelihood of some of these card holders difficulties. Missed payments could lead to interest rates for some card holders jumping to 30+% from initial rates of 7-8%, all in the last 12 months. This makes small businesses less likely to create the jobs they created in the past, and one more troublespot in this economy....
New York Times Original article ›
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The failure of the MF Global Board of Directors to question the huge bets on European sovereign bonds taken by Jon Corzine. This board had members with sophisticated knowledge of financial markets. Then why did it act passively, asks Davidoff. Boards have some of the same blinkers that the CEO has, and may have been led to believe that this was a good course of action. Failure of boards of directors in recent times include a long list- Lehman Brothers, GM, H-P, Toyota, most recently Olympus, and others. In some cases as with Corzine and the head of Lehman, one sees a headstrong executive with a history of success, in others as at GM and Toyota the Board is stacked with members selected by or favorable to voting with the CEO. And at H-P or Olympus, an inside group that runs things the way they see fit. Most boards of this type are highly insulated from outside opinion, and highly confirmed in the correctness of their own opinion even when the situation has dangerously deteriorated.
WSJ Original article ›
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Montes and Cordoba of the WSJ provide this exceptional account of corruption at the state level in Mexico. Ironically the very effort to reduce the power of centralized administration with PRI winning repeated elections and having a monopoly in power for many years, led to the decentralization and passing on power and money to the state governments in Mexico after the 1990's. But this was done without putting in the checks and balances required. Instead too much power was now concentrated in the hands of the state governments which appointed even the judges and officials at all levels including election bodies. Federal transfers of tax money to states increased 20 fold to $88 billion in 2016, according to this report.  The result 41 state governors faced corruption charges between 2000 and 2013, according to the Mexican Competitiveness Institute. This includes the state of Veracruz where state coffers are almost empty and there is no money to pay municipal bodies. The PRI governor of Veracruz Mr. Duarte supported president Pena Nieto, and was at 43 years age cited as the new face of the young PRI. This report  says he is nowhere to be found now that $2.5 billion in state funds cannot be verified. Other states are Tamaulipas, Quintana Roo, Coahuila, Sonora, where corruption charges remain. The Veracruz scandal is among the worst and is the focus of attention for the public in Mexico. At this point president Pena Nieto of PRI has about 12% popularity rating, lowest of any modern Mexican president.   ...
New York Times Original article ›
New York Times Original article ›
DW.COM Original article ›
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Chancellor Merkel of Germany proposed bilateral or trilateral deals between smaller groups of countries as a temporary solution till some agreement can be reached on immigration. She said "The European Council will not yet provide an overall solution to the migration problem." Hungary, Poland, Slovakia, Czech Republic which have opposed a quota system for asylum seekers did not attend.  Austria, Denmark, and Italy with the new government openly opposing immigration, attended the summit. Merkel said  a "lot of goodwill" was created, and leaders agreed that borders need to be better protected to prevent people from entering illegally, and reducing immigration at its source points in Africa. The migration problem has persisted as an issue long after the huge surge in immigration in 2015 has diminished to a trickle, and after chancellor Merkel has accomodated critics with new policies strictly limiting new immigration. New governments in Denmark, Austria and Italy, and the government in Hungary under Viktor Orban, have kept the issue alive by running on anti-immigration platforms. The European summit in 2018 was used by Merkel to reduce disagreement on this issue by allowing different countries to express their views and working in smaller groups for mutual benefit. It also reduces tension inside her CDP-CSU coalition after Bavaria based CSU decided to run in 2018 state elections on a platform calling for securing borders. ...
New York Times Original article ›
The New York Times Original article ›
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This report by Martin in the NYT points out that Ohio no longer plays a critical role in U.S. presidential elections. It was critical for a Bush win over Gore, and president Obama carried it by 2 points against Romney in 2012. It is critical for Trump to win. For Hillary Clinton other states are gaining importance as they better reflect the demographic changes in the U.S. and the mix with minorities- states such as Georgia, N. Carolina, Colorado and Florida. Ohio has not seen an influx of Hispanics as other states, and is now more white, more evangelical voters, and reflects a mix that was prevalent earlier. 

Wall Street Journal Original article ›
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Matteo Renzi, recently elected chief of Italy's ruling Democratic party, is likely to be the next prime minister as current prime minister Letta resigns. Letta's administration had come under increasing criticism from business and public opinion about the slow pace of economic changes in Italy. Italy's 2 trillion debt, or about $2.7 trillion, at 130% of GDP, and the declining GDP with little or no economic growth, is a problem for the eurozone. At the current pace of economic change the IMF forecast estimates only 0.5% annual growth in GDP till 2018. Foreign direct investment 2005-2011 is about one third of the eurozone average, according to the IMF, and Italy has failed to attract foreign investment for the last two decades with its weak political system and lack of competitiveness. By comparison Spain has seen an increase in exports and increasing foreign investment as it positions itself for a recovery. The austerity measures adopted by the Monti and Letta adminstrations in 2011-2013 helped to improve confidence in capital markets and lower borrowing rates, however this is clearly not the answer to Italy's problems of slow or no growth in the economy for the last decade. This is the problem Matteo Renzi, the 39 year old Mayor of Florence, is pushing to tackle as the mood in the country calls for aggressive action. Renzi's economic advisor is Filippo Taddei, who has a doctorate from Columbia University. He says at the core the issues are about what kind of "productive identity" Italy should have. Taxation that promotes higher rates of business investment is needed to promote growth, and creating a business climate that encourages investment in human capital and new technology. Payroll and business taxes take up about two thirds of a company's earnings leaving less for investment. Renzi is planning to take the centre left Democratic party in a new direction, "the road less travelled," as he put it in a televised speech, with innovative solutions including pro-market approach. As a first step he negotiated a deal with former premier Berlusconi for electoral reforms that would give a party or coalition winning electoral support a strong mandate to make and execute policy, without being hobbled in the way previous administrations were in the post war period. Lucrezia Reichlin, former head of research at the ECB, and Lorenzo Bini Smaghi, a former member of the ECB executive council, are candidates to be the economics minister in the Renzi administration....
New York Times Original article ›
DW.COM Original article ›
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German perceptions of Mikhail Gorbachev are shown here in DW.com. He is revered in Germany because of Gorbachev's efforts to end Soviet rule in East German state called the GDR, leading to the fall of the Berlin Wall. Gorbachev supported German reunification but did not do this is in a way that ensured that ordinary Russians and citizens of the GDR could make the transition to democratic processes in a smooth way. He also failed to grasp that economic transition could be difficult and would require extensive aid and grants from the west, and that safeguards and protections for retired pensioners and vulnerable sections of society needed to be in place. The following is a reflection of the background in political government and economy of the events in Europe leading to the war in Ukraine.  As a result Gorbachev's instincts were right by first 1956 as a student, and then 1979 as government official about the need for democratic processes to realize the real potential of Russia, just as has happened in many countries that lacked these processes for change in government- Japan, Germany, South Korea, India, Brazil and many countries in Asia and Latin America. But not realizing that these countries made the transition with considerable American and British assistance. Even where there was no direct assistance indirectly the British setup the first limited Swaraj or free rule in India, with elections and elected assemblies in Indian states in the 1930's, following the pattern in Dominion states Australia and Canada. Mohandas Gandhi negotiated within these processes for rights of South African Indians and Colored people, gaining experience, including study of British law.  A son of poor farmers in the agricultural region of North Caucasus, in Stavropol, it is relevant today that his maternal grand parents were from Chernihiv in Ukraine. He came to power in 1980 after entering the Politburo that year. These were the waning years of Leonid Brezhnev, president of the Soviet Union who followed Nikita Khrushchev (1953- 1964). Khrushchev was from eastern Ukrainian region near Donetsk. Leonid Brezhnev was a protege of Krushchev since 1931, from Kamianske, Ukraine.   Gorbachev was influenced by Khrushchev's speech that denounced Stalin in 1956 in favor of a freer and more open society. Khrushchev, became first secretary of the Communist party in 1953 after the death of Stalin and set the pace of post war Soviet society from 1950 to 1964. He removed the fear of the dictatorship of the proleteriat working class, increasingly dictatorial under Lenin, and blatantly arbitrary under his successor to make Soviet Union a freer society.  Yet his tendency to make decisions on his own without consulting others, and the failure of agriculture in the Soviet Union including food shortages led to his replacement by his protege Brezhnev. Brezhnev's whole career was built under Krushchev in Ukraine, in the army in Ukraine, and as a political leader in the Soviet 18th Army that entered Prague in 1945 defeating the Nazis. Why is this relevant? Gorbachev was educated at Moscow State University when the Soviet Union was in the Sputnik era, and felt at the time that it could reach the 1950's standard of living in the US- very different from the earlier leaders. Yet he may have been too much of an optimist and not hands on in understanding the working of a modern economy as large as Russia and the interests of different groups of society that had to be be balanced and protected. His understanding of the US and of how the US and British economies had evolved was limited or nonexistent. The isolation of the Soviet period may have compounded this. The Russian state in the Soviet Union could not simply unwind the power of the state and its intervention and everything would come out right of its own accord.   Leonid Brezhnev, the Ukrainian Russian who succeeded Krushchev from 1964 to 1979 let the system of Soviet rule remain as it was, in the Great Stagnation, leading to lethargy, lack of innovation, and a weak economy with military expansion. Gorbachev tried to regenerate the system by opening it up, but failed to see that there was a risk that it could come apart quickly as it did in just 4 years after he became president in 1985. Only the centralized power of the state had kept the Russian state together from the Tsarist period through the Communist period. The risks of this Gorbachev failed to grasp. What if it happened too quickly without a safety net for the people who could not make the transition. What lawlessness and failure of the rule of law could happen. The US and Britain had evolved their democracies over centuries. Wars were fought in the US and Britain over rights and responsibilities of kings and parliaments. In the US Lincoln fought the civil war not just for emancipation but to ensure safeguards for free white men on the farms so that Labor did not get disabilities placed on them by Capital (entrenched forces of Capital of which the southern plantation economy was only one aspect.)  Japan and Germany were set up as democratic states through American power and constitutional frameworks with Marshall Plans or agreement to take in unlimited imports from Japan. This bad scenario happened in Russia because Gorbachev failed to set the conditions first and work patiently to achieve them including introducing limited  elections and parliamentary processes first in Russia.  Leaders such as Yeltsin who succeeded Gorbachev in 1989, winning the elections that followed, failed to provide a safety net for the vulnerable in the 1980's. Unemployment increased rapidly, life expectancy dropped in Russia, and the economy failed in the early years after 1980. A Marshall Plan like that offered to Germany could have helped but Gorbachev's failure may have been his failure to provide this transition by arranging for West Germany and the US to support a planned transition, a kind of Marshall Plan of Aid, and maintaining a gradual move to democracy as the country was given time to learn institutions of American and British parliamentary democracy. No such Marshall Plan was negotiated for a smooth transition over inevitable obstacles, no safeguards were put in place for illegal efforts to control the state by rogue elements and to seize assets of state companies, no efforts to first introduce limited elections and parliamentary processes for learning democratic process in Russia, and the people of Russia were left with a memory of the this period as a bad lawless period from 1989 to 2005.  Leading to the situation today under Putin of aspiring to the Soviet period as a kind of period that had offered Russia the world recognition it had lost. And this had happened even though the Russian economy had recovered and the standard of living had risen under Putin. Putin's career spanned the period as a Russian official in Dresden, Germany Democratic Republic or Soviet period East Germany to working in the St Petersburg City Council under Yeltsin. He personally witnessed the fall of the Berlin Wall and the fall of the German Democratic Republic from Dresden and Gorbachev's refusal to build a transition period for the changes so that it would not be traumatic for the GDR. Even after reunification these traumas remain in some segments of the older population in East Germany that saw themselves as neglected and support extreme right wing parties in eastern German states by 2020- considering the Soviet period as one in which their lives were less neglected.  After three terms as president Putin with his own traumas from that period in Dresden, and with a mother lost in the period after the Nazi invasion of Russia, a father who survived the Battle of Stalingrad, saw the period of lawless behaviour in the collapse of the Soviet Union as the"greatest geopolitical disaster of the century."  Putin and people around him made missteps and miscalculations launching a war in Ukraine, leading to the situation today- jeopardizing hard won gains for the Russian economy. By 2022 Russian standards of living had risen and the economy was in the best shape it had been in the modern period since the Industrial Revolution. Yet largely exposed because of the dependence on oil and gas during a period of climate change and focus on building future economies free of fossil fuels.  Putin in his own peculiar logic may have seen this as the only opportunity in 2022 before deliinking from fossil fuel reduced the importance of the Russian fuel dependent economy to make some territorial readjusments in Ukraine with a quick war taking Kviv. That turned into a massive miscalculation with the emergence of nationalist fervor in western Ukraine spreading to the whole country of 40 million people. In the future to 2030 with phasing out of the fossil fuel economy, Russia without the connections to the US and European Union's technology and resources it had during Putin's three terms, and facing strict sanctions from US and EU, faces a difficult future. This has cautionary lessons for all countries- the US that read too much into the fall of the Berlin wall and indulged in a losing proposition with free markets that damaged its infrastructure and manufacturing with shifts to China, China understanding of how it to was dependent on the world economy for its future development, India that had to navigate a difficult period and what lessons to draw for building a bigger economy, the EU realizing the failure of its policies of depending on Russia for energy and China for manufacturing with fragile supply chains,  and Russia that there were twists and turns and the need for safeguards and experience building democratic processes before these processes would work for the economy, its people and for Russia as a nation. ...
New York Times Original article ›
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Oil prices are forecast to remain above $100 a barrel in 2012 because of higher social spending in Saudi Arabia, Iran and other countries after the democracy protests, and the threat of retaliation by Iran in the Straits of Hormuz. Iranian threats of retaliation for increased sanctions has embedded a $10-$20 premium in oil prices say some experts.
Economist Original article ›
Wall Street Journal Original article ›
Economist Original article ›
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The Economist looks at real estate markets in the U.S., Canada, Britain, Germany, Hong Kong, India and other countries in May 2013. It looks at price to disposable income and price to rent ratios and sees if these ratios are higher than historical averages to determine if prices are based on sound foundations. Canada's real estate market looks set to face problems of a bubble bursting. The U.S. recovery is seen to be based on firm foundations. Property prices are undervalued in Germany and set to rise.

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