LyrArc Article Gist
Lael Brainard, head of the National Economic Council, and former Vice Chair at the Federal Reserve answers questions at the Council of Foreign Relations in Dec. 2024. Points she made are- The inflation we experienced was correctly diagnosed by Powell and the Fed as caused by Supply shocks from the pandemic not 1970's style embedded expectations inflation.  The response was to free up the supply by freeing up the clogged Los Angles Ports with labour and logistics coordination, and other actions. It also included redoing the supply chains to reduce dependence on China as only supplier. The 2017 tax cuts mean revenue will be 1.5 percentage points lower than the historically 18% of the GDP. This will increase the deficit. Biden administration had kept the deficit in control and reduced it by making offsetting adjustments when investment in certain areas such as childcare was done. The childcare tax credit is important for American families. Action is needed to increase the supply of housing. These are reminders of what is needed for the new DJT administration to keep the American economy on a strong footing says Brainard.     ...

LyrArc Article Gist
About two thirds of China is urban people but only 48% have residency rights, meaning about 250 million people are not getting the benefits of schools, pensions and healthcare in cities. Ministry of Human Resources shows only 22% of migrant workers have these benefits.  There are about 67 million Chinese children left behind by their parents in rural areas as they search for jobs in cities. These children do not see their parents often, sometimes not at all in a particular year. They have suffered lack of parental attention and have poorer schooling. In 2024 as some of these children grew up and became migrants themselves they did not want want happened to them happen to their children, and delay having children.  China's government considered rural couples as a good way to makeup for low birthrates. This has been proved not to be the case. China's household registration system is call hukou- it restricts access to healthcare and schools for migrants and discourages migrans who live in factory dorms or other restricted housing arrangements from taking children with them. Rural incomes are less than half of urban $3000 vs $7000 a year. ...

LyrArc Article Gist
Nigel Farage of Reform UK surges as its membership reaches 100,000 to Kemi Badenoch's Tories with 132,000 and split in their ranks. Tories are nervous about what is happening. Labour is trying to get its act together, and trying to get the civil service to serve the people. Starmer even goes on to warn that the civil service is "in managed decline." Every ministry is asked to save 5% through cutting waste and inefficiency, and to make good use of limited resources to deliver results to the British people. 2025 will be critical not only for Wales, Scottish and local elections, 2025 will show whether Labour can tackle the immediate problms of housing, cost of living, transport and show results in delivering on infrastructure and improvements at the NHS. Labour needs to get its execution for the goals set right and stay on top of delivery metrics at every stage on a monthly and quarterly basis. Can a lawyer like Starmer do this? It took years of execution of projects for Modi of India at the state level as chief minister in Gujarat to executi at the national level. Can Starmer/Reeves and the rest of the team learn, and learn quickly? ...

LyrArc Article Gist
Colombia's GDP is $350 billion, in 2025 Venezuela's is $50 billion. Socialism under Chavez imitating Simon Bolivar as shown here starts out well with more housing, health care reaching poorer neighborhoods and parts of the population that were ignored. But only till 2011 in the early years. As mismanagement, corrupt cronies take over the nationalized enterprises, petroleum company fails to invest, and mismanagement of the economy sets in, educated classes leave the country in the class warfare, the results are disastrous. As much as 20-30% of the population leaves, hyperinflation, bad relations with the US, leading to the worst humanitarian disaster in the American continent since 1900.  It shows that the educated classes of every nation bear a major responsibility to  create a healthier society at the beginning so that the glimmers of hope of free services lead to the wrong people ending up in power and mismanagement on a massive scale destroying everything. New York City's educated classes should shoulder the responsibilities that people like Felix Rohatyn as head of MAC describes in his book- Bold Endeavors, that is the true spirit of the Nation (2009). ...

LyrArc Article Gist
How the housing slump that hit subprime borrowers is now beginning to affect prime borrowers.

LyrArc Article Gist
Building housing in gated communities and apartment complexes for the new middle class in China.

LyrArc Article Gist
Zombrun describes the effect of low interest rates on savings for the bottom half of households in the U.S., the pressure to invest in stocks without the skills and experience of the better educated part of households in the top 20% of households by wealth and income. This resulted in a negative effect, a depletion of savings compared to an increase under a higher interest rates scenario with less pressure to take risks in a volatile stock market. This is the direct cost of the crises in stock and financial markets of 2000 caused by a internet bubble, and the larger crisis of 2008-2009 caused by the bubble in mortgages and housing. The secondary effects of the mortgage price bubble and faulty mortgage securities was in the millions of homeowners who went into foreclosure in 2009-2013, which further depleted wealth and savings of households in the bottom half lacking the experience and skills to navigate this type of housing market. The failure of the Obama administration to stem the foreclosures with practical steps which would have helped not hurt the banking sector, as suggested by FDIC's Sheila Bair and Harvard economist Martin Feldstein in many WSJ op-eds in 2010-2012, added to the erosion of savings and wealth of the bottom half. Minorities in particular were hit hard. A third effect is of communities across America that are feeling the effects of job migration to emerging markets such as China that has been underway as part of the globalization of the last three decades. A fourth effect in the rising cost of education, particularly since 2000, has reduced the opportunities for struggling working class people to enter the middle class and enjoy the higher incomes in precisely the very period when the divergence of incomes between less educated, less killed people and the more educated and better skilled people was taking place. The last two effects were neutral as part of the overall process of emergence of a globalized economy with a premium on more skills and education, requiring action by the government, universities and business for a concerted effort to mitigate in some places the negative effects and enhance in other places the positive effects. The first two effects were man made crises which required managing in constructive and positive ways for the entire American people, taking risks where necessary such as fears about the financial system if foreclosures did not go through. The risks of a long period of extremely low interest rates for savers and the middle as well as working class were poorly understood by the Fed since 2000. A similiar crisis is being faced in Europe with extremely low interest rates. Janet Yellen was only doing the honest thing by acknowledging how far and how different the situation is now compared to the period of three decades following 1945- a question not just of values cherished in America, also of the need for societies to advance through creation of wealth across all sectors of society or regress, as described by Smith in the Wealth of Nations....

LyrArc Article Gist
As one wonders how the housing crisis will affect sales of items like cars and other items, its interesting to note that in addition to subprime borrowers who should never have taken the mortgage in the first place because of lack of proper credit background, there are borrowers who were otherwise healthy but are in a financial bind because of house flipping or speculative buying in the hope of gaining from the speculative price increases. These are defaults on prime quality loans and about 21 to 32 percent of the prime quality loan defaults in California, Nevada, Arizona, and Florida are mortgages with homes not occupied by the owner. Note that Goldman Sachs estimates that housing prices will fall about 7% this year and another 7% next year. These estimates may change as the housing crisis deepens with more foreclosures on subprime and prime properties.

LyrArc Article Gist
Democratic states face a sobering reality- can California, Minnesota, Illinois afford it? It turns out that they cannot and are diverting important funds away from the Nation's priorities in transportation, housing, education, rural healthcare. Here is what happened-- When California Gov. Newsom used state's Medicaid budget for poor citizens and disabled for illegal migrants to give free coverage, Medi-Cal went $6.2 billion over budget in 2025. In Illinois the program for Medicaid coverge to illegal migrants estimated at $112 million annually now costs $800 million and parts of it are now suspended. California had not thought this thing through, with free medical coverage not available to even citizens of the US, why would unrestricted borders not overwhelm a border state's Medicaid system signed into law by a Texan president Lyndon Johnson for the people of this Nation. Democratic States are running into a logical fallacy that the European Union and Germany are already experiencing, stretching straining public services, which has nothing to do with one's sentiments. Gov. Newsom now wants to give this benefit for $100 monthly premiums in 2027. ...

LyrArc Article Gist
The Economist magazine describes Trump's business assets based on a few buildings in Manhattan, including one on Fifth Avenue. Compared to other real estate firms Trump's assets are small and lack the organization and structure typical of real estate firms. Asset values estimates also have a large range, as it lacks transparency. Not much can be concluded about his business skills says the Economist, other than that his company is not exceptional, has not raised permanent captal in capital markets, or developed a truly global business. Much of the business now relies on licensing the Trump name to properties, especially golf courses, following Trump's success with a television show "The Apprentice." In terms of cash flow the television show may have produced much of Trump's income in the last decade. The Economist says Trump's performance in the real estate business is mediocre when compared to his peers.

LyrArc Article Gist
The story of a company and its founder in Seattle who realized that $40,000 a year is not much to make a decent living in Seattle- that people had to work 2 jobs. In the process hurting the productivity at the company, with employees putting in less of the kind of energy and motivated work that helps companies grow. The founder decides to cut back on his own expenses and extravagant lifestyle to make sure his employees are paid a decent wage. He did the math and decided on $70,000 Five years later sales of the company have doubled. It is a payments company and the payments processed at Gravity doubled from $3.8 billion a year to $10.2 billion. The number employees have doubled. For employee productivity it mattered that they were not doing 2 jobs and worrying about credit card debt. Now 70% of employees have paid off debt. The amount of money they put into pension funds has doubled. And instead of 1% about 10% own their own homes. This suggests the old culture was bad for the economy as well as employees. More housing demand, more homes built, more cars sold, more money for pension funds to manage, all translate into a better performing economy and economic growth. Simply stated the old culture has put an artificial ceiling on economic growth and worse set a low bar fro productivity in companies. Healthier employees who could spend the time doing second jobs doing exercize instead and staying fit would also bring down the money spent on healthcare.  Ultimately it us about good common sense, and honest thinking about what works and does not work. The old culture simply fails good common sense. ...

LyrArc Article Gist
Zero covid lockdowns have added to the sentiment seeing China as a less attractive location for foreign investment. American companies are seeing staff resign due the lockdowns and zero covid policy. About a fourth of companies in a US Chamber of Commerce survey see a 20% drop in sales in 2022. A similar situation is being seen for European companies in China. The other area of growth from property sector is not working anymore as there is a 59% drop in demand for new property units. Investors in the property sector fear  another situation like that of property developer Evergrande's collapse.  Similar to Japan by 2000 a lot of the government infrastructure for roads and rail and automobiles has already been built leaving less room for this sector to kick in. Investments are possible in AI, renewables, electric cars, and advanced technologies, with limited potential to tackle loss of jobs in other sectors such as construction and government financed infrastructure spending and in retail stores. Retail sales are hit by inflation and high gas prices. The result is that China's GDP may fall by 1% according to one estimate for this quarter from the previous year. For growth and foreign investment look to India where a surge in government financed infrastructure in construction of roads and rapid transit, fast rail, construction of housing, and rapid increase in use of mobile phones, automobiles, and appliances is taking place. A new logistics system is being built with a Master plan for the whole economy under Gati Shakti creating a whole new place for foreign investment in a country of 1.3 billion. With Indonesia and Bangladesh closely related to India this is a market of 1.8 billion people far surpassing China and built on values of democracy ingrained over 100 years since the experiments under the British of elected state assemblies. This happened under limited Hind Swaraj since 1930's when India was led by Mohandas Gandhi in these early experiments with democracy. Germany, France and the US have a lot in common with India and the ground is being prepared with improvements for extensive German, US foreign investment by the Modi administration.  ...

LyrArc Article Gist
This WSJ report shows how a record 4.4 million American workers resigned from their jobs in September 2021 alone. WSJ shows map of US with the states where this is happening marked with "I Quit." States with the largest quit rates have large share of employment  in food, restaurant, hotel and entertainment industries- Hawaii, Montana, Utah, Oregon, Colorado, New Hampshire, Louisiana. In the northeastern states the education sector which accounts for a larger share of employment the quit rate has risen at the fastest pace since January as shown in the Labor Department numbers. For years wages, benefits and working conditions in the food, restaurant, grocery store, hotel and entertainment industries, supply chain logistics, lagged behind, exacerbating inequality and widening the income gaps between working class Americans and the professional and other classes. Increases in minimum wages lagged behind the cost of raising families, rent and grocery bills. Professions such as nursing, children's education, critical to the nation's health were also left behind in wage increases as the tech boom rewarded different sectors in outrageous ways worsening the social divide and creating pools of income scarcity and income abundance in indiscriminate ways. The pandemic is changing all this. Workers in states with higher proportion of workers in these sectors of the economy are saying "I Quit," as they seek better opportunities elsewhere and better working conditions. The checks to working class Americans in 2020-2021 as aid for the pandemic, the child credits, investments in affordable housing, child care, early childhood education, and other aid in the Biden Families and Workers plan are giving workers for the first time in decades the right to choose better working conditions and incomes over worse working conditions and incomes that were set without regard to their role and contribution to the welfare of the whole country and people.  After the lockdowns in the northeastern states, States such as New York, Massachusetts, New Hampshire, Rhode Island,  with higher vaccination rates and rebound in the economy are seeing higher job openings. This is making it possible for workers in the northeastern US to quit jobs in educational services and other sectors  for better paying jobs, better working conditions, remote work options, and improved work-life balance. ...

LyrArc Article Gist
The protest vote in Uttar Pradesh is just that a protest vote intended to get a message that the work of the Modi government to modernize and industrialize the economy needs to be accelerated to see its effects felt in rural agricultural areas of Indian states. Modi said yesterday- "If you work for ten hours I will work for 18 hours" showing that he sees the need for acceleration, even harder work ahead to modernize and industrialize India.  Disconnect with lower caste untouchable voters called Dalits and economic distress felt from the effects of the pandemic, decades of neglect that take time to correct in one of India's largest and least industrialized states Uttar Pradesh, led to prime minister Modi failing to get most of the 80 of 543 seats as it had done in three previous elections. Lower caste Dalits form 20% of the population, other lower castes another 40% of the population and 20% are Muslim voters. With this mix of voters and the time it takes to modernize and industrialize its economy in a state that was neglected for over 60 years the Modi government's best intentions have not delivered election results in the state in 2024 after the pandemic. Delivery on schemes for sanitation, clean running water, affordable housing, cooking gas for poor households, that have brought 250 million out of poverty nationally and about 40 million in Uttar Pradesh alone, was overlooked by voters, and younger voters. This does not change the path of modernization that countries such as China have taken and which require a strong administration with full public support working with industry and all parts of society to build infrastructure and manufacturing rapidly over 15-20 years. In China this happened from 1990 to 2010. In India this will take 2014- 2030 to achieve. In Bihar, UP, Orissa, Maharashtra, Andhra Pradesh, in all these states with large areas of backwardness in development the only path to realize the aspirations of the people is the path offered for modernization by prime minister Modi. The protest vote of 2024 is then a way of saying to prime minister Modi that the level of development needs only to be accelerated to see its benefits for hundreds of million of people in rural agricultural areas. ...

LyrArc Article Gist
See Tim Walz's full speech at the Democratic National Convention in Chicago, August 21, 2024 in his video from CBS News. Lyrarc has selected excerpts from Tim Walz's speech above showing what the Trump Republican party plans to do that will gut Social Security and Medicare, and kill the Affordable Care Act, gut efforts to lower exaggerated cost of medical drugs and healthcare. This excerpt shows what Harris will do to build a better life for workers and families and people across all 51 States, in education, childcare, healthcare, cost of living, and housing costs- "We’ve got something better to offer the American people. It starts with our candidate, Kamala Harris. From her first day — as a prosecutor, as a district attorney, as an attorney general, as a United States senator, and then our vice president — she’s fought on the side of the American people. She’s taken on the predators and fraudsters. She’s taken down the transnational gangs. And she’s stood up to powerful corporate interests. She has never hesitated to reach across that aisle if it meant improving your lives. And she’s always done it with energy, with passion and with joy. Folks, we’ve got a chance to make Kamala Harris the next president of the United States. But I think we owe it to the American people to tell them exactly what she’d do as president before we ask them for their votes. So this is the part — clip and save it, and send it to your undecided relatives so they know: If you’re a middle-class family, or trying to get into the middle class, Kamala Harris is going to cut your taxes. If you’re getting squeezed by prescription drug prices, Kamala Harris is going to take on Big Pharma. If you’re hoping to buy a home, Kamala Harris is going to help make it more affordable. And no matter who you are, Kamala Harris is going to stand up and fight for your freedom to live the life that you want to lead, because that’s what we want for ourselves, and it’s what we want for our neighbors."       ...

LyrArc Article Gist
Blair gets $500,00 for a 3 hour trip to a luxury housing development project. Extravagant expenditures by developers in China.

LyrArc Article Gist
Efforts by homebuyers in China to evade government restrictions designed to control rising prices.

LyrArc Article Gist
Feldstein wants to see a stronger dollar, that is less inflation eroding the value or purchasing power of the dollar at home. Abroad he wants to see a weaker dollar in relation to Europe, Japan and Canada where about half of US imports originate. And a weaker dollar in relation to lower wage Asian countries to improve America's trade balance. Better to do this now than to wait a few years when the adjustments needed would be greater. America needs to export more and import less to improve the trade balance. A competitive dollar in relation to trading partners in Europe and Asia would provide the improvement in the trade balance that the U.S. needs for keeping economic growth. With the risks to the economy from declining housing prices improving the trade balance becomes important. During the 1985-1988 period the dollar declined in value significantly, falling 37%, but the inflation rate averaged 3.1%,says Feldstein. This is what he means by having astrong dollar at home, which is to say not eroding its purchasing value, while at the same time increasing exports and reducing imports. During this period merchandise exports increased by 40% while imports increased at half that pace. A repeat of that experience is possible and necessary to maintain growth, according to Feldstein. See the link to McKinnon, at Stanford, The Yuan and the Greenback, WSJ, August 29, 2006, which cautions against anything but a very gradual and carefully managed appreciation of the yuan, giving importance to inflation and interest rate differentials between the US and China. One point to note narrowing of interest rate differentials between the US and China is seen as backdrop for dollar weakening on exchange rate basis. McKinnon appears to consider a smaller interest rate differential as a cue for an even lower appreciation of the yuan, see his example of 2% inflation in the US and 3% interest rates. Interestingly the two approaches may complement each other. Offering a perspective of China maintaining its growth and not risking deflation or slowdown, and of the US maintaining its growth and not risking a slowdown from the housing market collapse, by strong domestic investment and exports. How to keep both economies going may be the policymakers challenge for strong global economic growth....

LyrArc Article Gist
China's urbanization has proceeded to the point where the urban population now exceeds 50%. Urbanization as helped in the process of industrialization as young people went from rural areas to cities to work on the production lines. But further urbanization is running into problems as cities get congested and providing benefits such as affordable housing and schooling to migrant workers means raising taxes. The hokou system which classifies residents as urban or rural persists and efforts to reform it have run into difficulties in places like Chengdu and Chongqing. These efforts were abandoned earlier in Guangzhou and Zhengzhou because of the cost. The hukou system acts as a discriminatory system as migrants from the countryside are not allowed welfare benefits in the cities. They have only temporary status in the cities. And people from farming communities who migrate to the cities also have an interest in keeping land and homes they can go back to in the countryside. As they get into their 40's and 50's and no longer want to work on the production lines they can go back to the countryside. The government also sees the advantage of this as this acts as a safety valve for stability- during the 2008 global financial crisis about 20 million migrants went back to the countryside. The actual number of urban hukou holders in China is about 35% according to researchers at Peking University. Efforts to integrate rural hukou can be costly- the effort in Chongqing is estimated by local officials to cost $30 billion or 200 billon yuan to convert 3 million people. It has given 1.7 million people urban hukou in the past year with the conditions that these migrant workers must have worked in urban areas for at least 3 years. Migrants get to hold onto land entitlements in the countryside. But the urban hukou status would be limited to Chonqqing only. Nationwide the prospects for migrants obtaining the kind of urban hukou staus that gives them benefits of affordable housing and schooling are not good. The World Bank's Kuij's says local governments do not have the incentives or the resources to carry out the programs that are being tried in Chongqing. As the process of urbanization becomes more difficult, the rate of growth in China will be affected....

LyrArc Article Gist
Now in March 2008 it appears that defaults on construction loans by smaller regional and local banks to single family home builders is spreading across the nation to the point where it may bring the credit squeeze for home, auto and credit card loans to local communities in smaller towns across America. This will be further slowdown not just housing but consumption at the local Walmart and retail stores. Loans to single family home builders went down from a peak about 2 years ago of $350 billion to about $250 billion in 2007. now the delinquencies on these loans is 8% in the 4th quarter 2007 according to Foresight Analytics. Its much higher at 14% in states like Ohio and Michigan. The Atlanta afffiliate of National Home Builders Association says that 20% of these builders are late in payments in that area. In states like Florida, Arizona and Arkansas, and Minnesota the delinquencies is at 10%. Note that the highly reputed ones like the Levitt and Sons that built Levittown in the post war period are also taking bankruptcy as banks are calling in their loans to be paid in full when they see builders losing money. What first appeared as signs of trouble in the Cleveland area is now spreading across the nation. Mr Whitlatch who studied planning at the University of Pennsylvania and went into building homes in the Clevelad area since 1969 is one of the home builders who is declaring bankruptcy after 9 million dollars in debt and using up $2 million of his own money and now selling off his family home. Fannie Mae and Freddie Mac have been authorized by the Bush Administration to put $200 billion into the mortgage market to keep things from getting worse in the housing market but much of the damage is already underway. How else will this affect local economies the local banks will be in trouble. Analysts estimate that about 150 local smaller and regional banks will go under in the next 3 years. Compared to this about 900 local banks went under in the S&L crisis over 5 years. It will put new stress on the local communities and their economy in coming months and years as the economic crisis goes from big cities to smaller towns and communities throughout America. ...

LyrArc Article Gist
Gasoline prices vary widely in the U.S. with California gasoline prices at around $5.00 almost twice the national average of $2.60. This affects seniors and other people with higher cost of living for basic expenses such as gasoline for cars and housing in California.