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The U.S. Federal Reserve's decision to extend Operation Twist beyond June to the rest of the year after the June 2012 FOMC meeting. By extending Operation Twist the Fed will buy $267 billion in long-term Treasury bonds and notes and sell short term Treasurys.

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Anat Admati, is a professor of finance and economics at Stanford University School of Business. He says banks should depend on generating 30% of their assets from equity, something the banking industry of today in the U.S. and Europe considers heretical. More of the bank's assets should come from equity and much less from borrowed funds. Outside of banking healthy corporations in the U.S. carry debt at about 70% of assets and there is no reason banks should not do the same. In 2013 says Admati, the situation is not much different from that after the 2008 global financial crisis- large banks carry liabilities and debt at over 90% of their assets. The $2.2 trillion in debt at JP Morgan Chase bank is about 91% of assets of $2.4 trillion. Basel III regulations allow banks to borrow upto 95% of assets, and proposed banking regulations in the U.S. put this at 95%, with the way this is measured still being debated. At such high levels of debt the margin of error is small, and systemic risk which is high in a globally interconnected banking system means the whole banking system can freeze from one large bank going into failure such as Lehman Brothers. This happened in 2008 and the margin of error is still small, which is why global banking is such a high wire act with the U.S. Federal Reserve, the ECB and other central banks issuing regular warnings and regulators faced with the task of keeping the banking system in check through vigilance and investigations of banks violating laws. How much difference has Dodd-Frank legislation in the U.S. made after 2008? Jason from Atlanta says in response to Admati's article, that the Glass-Steagall Act of 1933 was 37 pages and the banking system did not freeze up in the way it did in 2008 for the rest of the twentieth century until its repeal. The 879 page Dodd-Frank legislation of 2011 is overly voluminous and still leaves 243 rules to be written by regulators in consultation with the financial industry. Banks are larger now than they were in 2008 and have an outsized influence in shaping the rules, leaving the U.S. Federal Reserve's supervisory committee and Fed Governor Daniel Tarullo with the job of somehow keeping banks out of trouble. JP Morgan Chase, Admati reminds readers, has $2.4 trillion in assets as of June 30, 2013, and debts of $2.2 trillion, with $1.2 trillon in deposits and $ 1 trillion in other debt owed to money market funds, other banks, bondholders and the like. ...

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Brazil's oil company, Petrobras, has 55.7% of voting shares controlled by the government. Petrobras's nonvoting shares make up most of the widely held stock, which has increased significantly in recent years. Petrobras is Latin America's largest publicly traded company with market value of $96.9 billion. Oil production by Petrobras is 1.9 million barrels a day, larger than Brazil's expected consumption of 1.85 million barrels a day for 2006. The policies of former President Henrique Cardoso are credited with making Petrobras competitive. Cardoso passed a constitutional amendment that allowed foreign companies to compete against Petrobras. And he put new managers from banking in charge of the company, leading to significant changes in how the company was run. With new deepwater drilling oil production increased by 12% a year during the Cardoso years 1997-2002. Under the Lula administration Petrobras has also reflected the government's social goals by delaying passing on price increases in gasoline and cooking gas and limiting the price increases. Under President Lula the CEO and senior managerial appointments for Petrobras have come from the ranks of his political party, the PT. Jos Eduardo Dutra, and Jos Gabrielli are members of PT. Under the Lula government Petrobras faced little competition from foreign oil companies and Petrobras dominates the Brazilian oil sector....

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Adam Nossiter of the NYT describes the clearly presidential nature of Macron's appearences during the first month in office. First at the Louvre during the night election results showed him winning easily, and later in appearances at the G 7 summit meeting and at Versailles with the Russian president. This is in sharp contrast to the chatty, "little jokes" and other efforts of president Hollande that left people with the impression that he was not decisive and strong. The French presidency from the time of Charles De Gaulle by its very nature compared to the prime minister's position of England, requires a strong presence and decisive personality. Macron shows every intention of fulfilling that role. Observers have traced this to Macron being a research assistant to French philosopher Paul Ricoeur. Macron acquired a training at the end of the 1990's from Ricoeur, which emphasized the need for and virtue of a middle ground- that sees even the events of the French revolution in a different light, with the death of the king Louis XVI in 1793 as unnecessary. ...

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Larry Saboto, director of the University of Virginia Center for Politics, and editor of the crystal ball newsletter, www.centerforpolitics.org/crystalball says a few states will determine the outcome of the U.S. presidential election of 2012. In the midwest and east the states are Michigan (16 electoral votes), Ohio (18), Pennsylvania (20), and Wisconsin 10), Iowa (6), Virginia (13). In the west and south the states with large Hispanic votes are Nevada (6), Colorado (9), and Florida (29).

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Sales of passenger cars in India have increased from 675,000 in 2002 to 1.4 million, with 200,000 exports. The study by IBM and the Transportation Research Institute of the University of Michigan forecasts that sales in India of passenger cars will double again by 2010 to 2.8 million and reach 4.2 million by 2015. Auto loans are more prevalent in India with banking consumer credit better established than in China. The minus side is the bad condition of roads which will take a lot of resources and effort to fix but is likely to be accomplished in te next ten to fifteen years. One advantage for the auto industry is that the government fully supports the auto industry and even has a plan with targets to be achieved by the auto industry. With manufacturing lagging behind in India the hope is to build a manufacturing base for automobiles and auto parts that will generate jobs and expand manufacturing capabilities.

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A shakeout for manufacturers in the solar industry is developing in 2011-2012, as prices of solar components drop sharply. There is slowing growth for solar products in 2012. Seven solar power manufacturers have filed for bankruptcy or insolvency in 2011, including two German companies Solar Millenium and Solon SE, and Solyndra LLC of the U.S. Debt exceeds market capitalization for the 10 largest publicly traded solar companies. A major reason is the subsidies offered by governments in Europe, the U.S. and China, which resulted in a glut in manufacturing capacity and falling prices. Chinese banks encouraged by the Chinese government have given $43 billion in credit facilities to Chinese renewable energy companies, according to Bloomberg Energy Finance. Prices of solar panels at $1.60 per megawatt in 2010, dropped to 90 cents per megawatt in 2011. Another problem is slowing demand. In Europe banks are reducing funding. Installations doubled for solar energy in Germany in 2010, and dropped 29% in 2011, according to Jefferies. Germany is the largest market for solar energy in the world....

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Reports suggest voter turnout of young people 18-24 was close to 70%. With most of the new voters, about 2 million 19-34 year olds registered to vote in the weeks before the election according to the Electoral Commission, drawn into politics by the simplicity and style of Labor leader Corbyn. One voter says young people voted because Labor did not sneer at them, recalling the negative tactics employed in the campaign and the likability of Labor leader Corbyn because he refused to respond. The National Union of Students and organizations such as UpRising, Hope Not Hate, Bite the Ballot, pushed young people into involvement. The election for students was more about the impact of Tory cuts to education, health, and other services, and about the future for generations to come. Students were deeply upset about the results of the EU referendum. The result is that in places where students were predominant such as Newcastle East and Central, Manchester Withington and Central, Cambridge and Canterbury, the turnout jumped  to give Labor wins in the north of England, and in London. ...

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Email exchanges between OMB staffers and Obama administration officials, released exclusively to the Washington Post, show the Obama administration urging the OMB to speed up its decision on the half a billion dollar loan to Solyndra. This was part of stimulus funds to the solar industry. Solyndra was a favorite of the Obama administration according to the Washington Post, and aides to Rahm Emmanuel and other officials sent emails urging speeding up approval. OMB officials in their replies stated they were under pressure. One email by a senior OMB staffer sent to McSweeney, Biden's domestic policy advisor, Aug 31, 2009, said: "we have ended up with a situation of having to do rushed approvals on a couple of occasions (and we are worried about Solyndra at the end of the week)... we would prefer to have sufficient time to do our diligence reviews." Other emails referred to "the time pressure we are under to sign-off on Solyndra," and indicated "there isn't time to negotiate." Solyndra had large investments by the funds operated for the family foundation of George Kaiser, an Obama fundraiser....

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French president Macron is skipping attending the Swiss Davos conference in 2019, as he attends to pressing problems at home. A year ago after attending Davos Macron appeared as a champion of globalization and took some risky actions in the euphoria over his win- stripping job protections at a sensitive time of rising inequality, and abolishing a decades old wealth tax. The election showed a regional and urban-rural divide in France even though Macron gained a large majority in the Assembly. The yellow vested protestors showed no particular allegiance to parties, only showing a sense of dissatisfaction with neglect of working class struggling to make a living. All that is changed now after yellow vested protestors rioted week after week over neglect of working class issues.Macron has resisted pressure to reinstate the wealth tax. He has suspended plans to increase fuel taxes and introduced 10 billion euro worth measures to boost purchasing power of working class French people, a major demand of the yellow vests. A series of town hall meetings are planned for Macron to listen to the voices he has not paid enough attention to before in his aloof style of governing. ...

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Jim Tankersley of the Washington Post looks at the myths and realities of trade following incorrect statements made by Donald Trump about international trade. For example Trump suggests that Japanese automobiles imports are a big problem, though the imports have been cut by over 50% since the 1980's with Japanese companies Toyota and Honda making cars in the U.S. in Kentucky and Ohio. Detroit faces competition from foreign manufacturers based in southern states, including Alabama for Mercedes Benz and Tennessee for Nissan. Mismanagement including lagging in fuel efficiency and quality, and higher health costs for older workers were problems facing Detroit in the past decade. The Obama administration provided support to the auto companies to make the recovery following two bankruptcies in the U.S. auto industry, showing the U.S. has intervened as needed and the auto companies have made transformational changes. A big problem says Trump is the trade agreement with China which he promises to renegotiate. Tankersley points out that no such treaty exists. The U.S. agreed to China's entry into the WTO. This is not something the U.S. can renegotiate as the WTO sets rules for trade for all countries. The likely result of a shift away from Chinese imports would be more imports from countries such as India and Vietnam which are lower cost producers than China. Trump says some of the 2 million jobs lost in the past 2 decades will come back, yet the shift may be towards lower cost countries from China, with fewer jobs coming back to the U.S. High tariffs would not lead to the growth Trump predicts. A study made by Moody's Analytics at the request of the WP shows a Trump move for high tariffs would lead to a recession and lead to mass layoffs as other countries imposed their own tariffs, leading to large loss in U.S. exports. Trump has made claims such as telling the Post that $19 trillion in federal debt could be paid off in 8 years without raising taxes by fixing trade. No grounding on facts is provided by Trump. One of the failures of the media in the 2016 election campaign is the failure of the media to provide scrutiny for candidates claims and wild exaggerations, which have gone uncontested or unquestioned, or without the persistence till satisfactory answers are given by the candidates making them. Especially when the stakes are so high, for the U.S. and for the global economy. ...

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Three NBC reporters talk to people in areas in southern France, including Cogolin, which voted in a National Front mayor. This report describes the contrast between the National Front under Jean Le Pen and his daughter, Marie Le Pen. Marie took over the party leadership in 2011, and has downplayed her father's more racist ideology, even calling her self Marine dropping her last name. About 22% of French women are expected to vote for Marine, according to Elabe polling agency. In previous elections only 12% of French women had supported Marine's father because of overt racism. Yet recent remarks by Marine about Vichy regime shootings have revived some of the old memories of the National Front among some women. High unemployment and sense of neglect has led to a search for alternatives, and the terrorist incidents in Nice and Paris have added to the momentum for the National Front that calls for tougher measures. The Republican Party candidate Fillon, now has the support of Alain Juppe of Bordeaux, and former president Sarkozy. Fillon is also advocating tougher measures, and it is not clear how many votes would shift from Fillon on the right to Le Pen.  ...

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Max Fisher of the NYT points out the unique approach taken by Canada in the U.S.-Canada relationship - to cultivate a grassroots network of Americans in legislatures, business, and at different levels of government. This has enabled the Trudeau government to build a relationship with president Trump, and at the same time have relationships at different levels of government and with business in the U.S. to tackle issues where the Trump administration has acted in ways unfavorable for Canada. Provincial governments in Ontario and Quebec lobbied against a New York state government provision for Buying American on state contracts worth over $100,000. By emphasizing the $10 billion in exports from New York to Ontario this lobbying persuaded the New York legislature to cancel the provision. Premier Trudeau's popularity helps and the proximity to the U.S. means Canadians can visit quickly and understand the U.S. as a close neighbor. Still Premier Kathleen Wynne of Ontario says Canadian businesses are nervous about the uncertainty from the Trump administration.   ...

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Unemployment in Fort Wayne, Indiana, is 6.8%, and 14,600 workers are looking for a job. Peters and Wessel talk to employers in this midwestern U.S. city and find that employers are looking for people in manufacturing with just the right set of skills, in other cases the benefits and parttime local school system jobs paying $8-$12 per hour with no benefits go unfilled because of the lower wage.

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Mexico's GDP increases at 3.9% compared to 2.7% for Brazil in 2011. Foreign investment is increasing in Mexico especially in the automobile industry and in industries where Mexico is favored over China as a production location. The G-20 meets in Los Cabos, Mexico in June 2012.

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Fomer U.S. Census Bureau officials Gordon Green and John Coder released a study by the firm Sentier Research. The study looks at two groups of Census data from 2005-2007 and 2008-2010, which has information on interviews with 3.5 million households for each period. The study shows 38 states with household income declining. The losses in income are greatest in the midwestern states affected by the loss of manufacturing industries. Incomes fell by 5.7% in the midwestern region of Indiana, Illinois, Michigan, Ohio and Wisconsin. Oil, shale and other energy producing states- Louisiana, Oklahoma, Texas- saw incomes rise by 0.3% from 2007 to 2010. This report looks at pretax income levels in 2010 dollars for all 50 states and 297 metropolitan areas. Michael Greenstone, professor of environmental economics at MIT, says the regional shocks from the economic crisis can last for a couple of decades. The Midwestern states showed median annual household household income decrease by 4.7% to $49,710 and the Southern states showed a drop of 2.5% to $47,389. Nationally for the U.S. the drop in annual median household income from 2007 to 2010 was 3.5% to $51,287. Another finding of the study was that of the top ten metropolitan areas with the highest percentile of incomes, nine were in Connecticut, New York and New Jersey, a region where the financial industry is based. Silicon Valley in California comes in at No. 10 in this list of metropolitan areas. In terms of growth of households reflecting migration patterns and new families the Mountain States of Arizona, Colorado, Idaho, New Mexico, and Nevada did as well as the oil patch states of Texas, Louisiana and Oklahoma, showing an increase in households from 2007 to 2010 of 5.8%....