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Major decline in oil prices in Oct. 2014 as prices drop to $81 per barrel and are forecast to reach $70. U.S. oil production increased by about 56% or 3.1 million barrels a day since 2004. U.S. demand for gas and fuel declined 8% compared to 2004. Initially instability and wars in the Middle East sustained high oil prices in 2012-2013. Yet with growing output from shale and other sources in N. America and slowing economies of Europe and China, the situation reached a point in 2014 where supply exceeds demand. This shift more than offsets any instability in trouble spots. The situation affects the U.S. consumer favorably with an estimate of $1 billion in savings for American consumers with every one cent drop in price at the gas pump, by one estimate from Deutsche Bank analysts. Typical American families gained an extra $50 a month from the decline June to October 2014, according to analysts at Gasbuddy.com. The declines are a boost for the slowing economies of Europe, Japan, China, S, Korea and India. China's imports for 2015 are estimated at 61% of oil consumption, using official estimates. In the current slowdown the lower prices offer relief. India which imports 75% of its energy benefits signficantly, as this helps lower inflation and reduces cost of fuel subsidies for state run companies. Russia is adversely affected by the declines as it depends on oil and gas exports for 50% of the nation's budget. Estimates by AFK Sistema economists show the Russian economy contracting in 2015 with oil at near $90 per barrel (Brent crude is at about $85, and WTI at $81 in early Oct. 2014). Russia's former Finance Minister Alexei Kudrin reflects opinion among Russian executives and politicians, when he told state television that Saudi Arabia may be pushing prices lower to target Russia's oil resource based economy and Mr. Putin, in an effort to broaden the effect of sanctions. (The Saudis have strongly protested the Putin intervention in Syria.) Venezuela has used $120 per barrel and Angola $98 for its budget, leading to a strong hit for the economy. ...

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Huge inflows of capital into emerging markets because of low interest rates in the developed world, and the bubble effects this causes. Risks for emerging market countries as bubbles develop.

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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....

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International Energy Agency estimates show the U.S. surpassing Saudi Arabia as the world's largest oil producer by 2020 because of the boom in shale oil production. The estimates are for 11.1 million barrels a day from the U.S. in 2020.

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This article in the NYT explains why the loss of jobs particularly in the auto industry to Mexico, with the experience of NAFTA passed by president Bill Clinton, has caused widespread opposition to the TPP trade agreement proposed by president Obama. Both Hillary Clinton and Donald Trump in 2016 oppose the TPP.

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Denning says that because of the enormous repercusions on Iran's economy of a war in the Persian Gulf, a more likely scenario is not the cutoff of supplies of Iranian oil altogether but a smaller list of buyers for Iranian oil, making Iran sell the oil at a discount. Saudi Arabia's and Libya's added production would bring more oil to the market. The impact will be larger on Europe because of the decline in the value of the euro, with Brent crude on a 12 month average basis costing 14% more now than in the peak price in 2008. By comparison in dollar terms the comparable figure is 4% higher for the U.S. At a price of Brent crude of $120 in 2012, according to Citigroup, energy costs would take up 9% of world GDP, putting pressure on a economic recovery in Europe and the U.S.

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This Reagon Memo from 1980 was written by his advisors George Shultz, Milton Friedman, Paul McCracken and others before his first inauguration in 1980. It provides the new president with prudent advice on policy and methods to deal with soaring inflation and a stagnant economy. Its relevance today lies in the emphasis on charting out a long term plan for growth by encouraging private investment in the economy and providing a sure framework for the private sector to generate expansion.

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Administrative costs are one of the key reasons tution costs have increased to excessive proportions in the U.S., putting a heavy burden on the middle class, reducing social mobility that is an important aspect of postwar progress in Europe and the U.S. by putting college out of reach for millions of young people. This also creates a heavy debt burden for young people- U.S. student loan debt passed $1 trillion in 2012- who are less likely to buy a first home because of years needed to repay student loans. The market pressures to control costs do not exist in the same way as industries such as automobiles, because of the demand for college education in a modern globalized economy. Douglas Belkin and Scott Thurm have provided an indepth look at the University of Minnesota to show the spending surge and internal tendencies for faculty and bureaucracy to increase spending on hiring, building expansion to compete with other schools, and salaries to support their own within the college and university system, with a passive student community, and passive parent community, and lack of other outside pressures. Tution and fees for state residents doubled in the last decade at the University of Minnesota to $13,524. The figures tell the story- total debt with borrowing for building construction at U.S. 4 year public colleges tripled to $88 billion between 2002 and 2011, according to the Department of Education. Debt servicing costs doubled at the University of Minnesota to $106 million in that period. Minnesota's government provided $570 million for university operations in 2011, same as 2003-2004 school year even with inflation and 10% higher student enrollment. Yet analysis by the Department of Education and the Wall Street Journal shows in that period the spending increased disproportionately compared to inflation, student enrollment and teaching activity, with little restraint. WSJ analysis showed the University of Minnesota system added 1000 administrators between 2001-2011, with administration hires increasing 37%, double the increase in the students and double that of teachers. During that period the number of employees to manage people, programs and regulations went up 50% faster than the number of instructors, according to the Department of Education. Bureau of Labor Statistics cites this as the reason tution costs went up faster than health care costs. The 19,000 employee payroll at the University of Minnesota means one employee for three and half students. The new university president in 2011, Eric Kaler, interviewed by WSJ's Belkin and Thurm, says no one knew what it cost to run the school when he started....

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Jennifer Rubin of the Washington Post cites the Pew poll of September 3-7, 2015, on the Iran nuclear deal of July 2015, showing increase in skepticism about the deal's provisions by people who are informed to some extent (a little or a lot) about its details- 57% opposing to 27% supporting. The strongly partisan opinion on the issue, and the lobbying on both sides, including bringing Iraq WMD into the picture as noted by Dana Milbank in another column in the Washington Post, overstates each case. This draws attention away from the actual provisions. About 30% have no opinion it appears because the issue of this magnitude involving nuclear weapons proliferation has become politicized when it should be examined only on its merits, where public opinion would be shaped by the details of the deal itself, not who has negotiated it. The Pew Research Center poll shows 21% support the agreement negotiated with Iran, 49% disapprove, 30% offer no opinion. This compares with a poll taken 6 weeks before in July 2015 showing 33% supporting it and 45% opposing it. ...

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Two weeks after his election Donald Trump says the U.S. will not join the Trans Pacific Trade Agreement during his term in office. Barack Obama took seven years to negotiate the trade agreement which was opposed by trade unions, the auto industry and was unpopular in the midwestern U.S. because of the impact of trade in hollowing out the manufacturing sector. Here Frank Sieren of the DW.com points out that the agreement was not really about trade, as most of the gains of trade had already been realized according to experts. It was part of the "pivot to Asia" to maintain American dominance in the region, says Sieren. After China pulled together some Asian and European countries into its trade agreement, the Regional Comprehensive Economic Partnership (RCEP), the U.S. pushed for TPP as a counterweight to the China sponsored trade zone. China says it will try to integrate the countries in TPP into the trade zone it has sponsored. President Trump has said that the U.S. is better off negotiating agreements with each country and not getting into multilateral trade agreements. He fought the election campaign on the basis of the opposition to TPP and trade agreements that unfairly hurt American workers. This could have provided the 110,000 margin of victory in the states suffering from the hollowing out in manufacturing such as Michigan, Wisconsin, Ohio and Pennsylvania. A similar hollowing out in Ontario favored Justin Trudeau's Liberals against the Conservatives in Canada's election. ...

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John Taylor on the dangers of a loose U.S. monetary policy and the effects this had in fueling a housing bubble in Spain, Ireland and other EU countries. Taylor points to the bubble ocurring in emerging market economies from low interest rates. Taylor says the ECB's interest rate moves in 2003-2005 were affected by the Fed's low interest rates. He estimates the ECB set rates about two percentage points too low leading to housing bubbles in EU countries. A similiar process is taking place today with the Fed's near zero interest rate policy. Taylor points to interest rates in a group of 18 emerging market economies- including Brazil, China, India, Mexico and Turkey, which have held interest rates on average about 5 percentage points below widely used benchmarks fueling a doubling of global commodity prices between 2009-2011. The U.S. Fed's policies make it harder for central banks in emerging market economies to take aggresssive action against bubbles developing in these countries. Taylor says his does not mean that the Fed should not pay attention to the U.S. unemployment rate and long term unemployed, but should keep in mind the negative effects of slowing demand in emerging market economies and in the EU as a result of its monetary policy of keeping rates at near zero for long periods of time. This feeds back to the U.S. economy at a critical time....

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How will countries like India generate jobs when technology enables manufacturing and other activity to do work with fewer and fewer people. Even Hon Hai in China is shifting work to robots. Technological progress is leaving more people unemployed and widening income gaps with the benefits going to a few people, says the Economist in this research based essay. It will require carefully managed governance to invest in infrastructure, raise skills of less skilled workers through education, and wage subsidies for those left behind to ensure our current system works in the future.

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Much of what is written here about Xi Jinping pursuing Chinese socialist vision was known since he became president in 2013 when China's Communist party was losing its appeal, and efforts were made to seize power within the communist party by a leader in the western province of Chongqing. Bo Xi Lai attempted to take advantage of the situation with appeals to the working class and without any genuine commitment beyond a power grab. It was well known that Xi Jinping is a son of one of the veterans of the Communist party under Mao, Xi Zhongxun, unlike leaders who followed premier Deng Xiaoping such as Jiang Zemin. Zemin was a relatively unknown figure who was in university during the crucial period of 1947-49 when Mao came to power in mainland China. It would not be correct to say that little was known about Xi's own ideas about socialism as the long term answer to China's problems. Xi also came in as president at a time when the Communist party was losing its appeal to working class people after three administrations that followed premier Den Xiaoping. These three administrations followed a form of state capitalism that allowed companies to pollute the environment, compete without any regulations, and allowed to operate without any controls as long as they pursued growth aggressively and expanded the economy.There was an effort by Communist party regional leader in western Chinese province of Chongqing, Bo Xi Lai, to use this as an opportunity to grab power in China. During his first year as president Xi had to resolve this issue by having a court trial after revelations of corruption and misuse of power by Bo Xi Lai.  Xi's father Zhongxun's role in the revolutionary movement offers clues to Xi's own convictions and faith in the party. Zhongxun was a communist soldier who set up the revolutionary base areas in Shanxi-Gansu northwest border region of China that provided a refuge for Mao's army following the Long March. Other clues come from Zhongxun's role as head of propaganda during the period after 1944 and in 1952. Xi's family background particularly on his mother's side shows a fervent commitment to Chinese socialist vision during the chaotic years when the Japanese invaded China and Chiang Kai-Shek's nationalist forces failed to defend China's sovereignty. One reason Xi has been less understood is that little attention is paid to Xi's mother, Qi Xin who was highly educated and fervently believed in Chinese socialism and nationalist spirit during the Japanese invasion in 1938. In fact Qi Xin had to leave middle school after the Japanese took over Beijing. She joined the Counter Japanese Political and Military University to continue education and in 1941 attended the Central Party school. She met Xi's father Zhongxun in 1944. In 1953 she enrolled in the Marx School of Communism, and it was her position at the school that offered her husband added protection during the Cultural Revolution that affected Deng Xiaoping and others. With such a history in the 1930's, 1940's, and 1950's it is likely that Xi was profoundly influenced by his father's role in the revolutionary movement, and his mother's faith in socialism with national spirit as the way to protect against the foreign invasions. It would now appear that by the time Xi joined the Politburo in 2003 there was no question about the future course China would take given the role of his parents, and the events of 1938 the fall of Beijing, his mother having to flee, and the events that followed. Xi showed resilience during the period of the Great Proletarian Revolution when he was sent to the villages at a time when he would be studying in school and college. He was sent to an agricultural commune in largely rural Shanxi province where he worked as a manual laborer alongside other people and developed a relationship with the local farmers. Unlike other leaders during that period which could even be said about premier Deng Xiaoping in 1989, Xi took a different lesson from this experience largely because his father and mother were committed to the socialist vision for the long run. His father was still not fully rehabilitated by premier Chou en-lai when Xi was allowed to enter Beijing's Tsinghua University in 1975. He studied chemical engineering at Tsinghua graduating in 1979. Upon graduation he worked as a assistant for 3 years to a vice premier who was minister of defense. He then left Beijing for Hebei province to work as a deputy secretary of the provincial CCP. He was made Mayor of Xiamen, then governor of Fujian province in 1999 where he tackled environmental conservation before moving to Zheziang province. His father passed away in 2002 and it would appear that he was carefully trained in different provinces instead of staying in Beijing, for a position of national leadership. Xi got his break in 2007 when the upper leadership of Shanghai city was tainted in a wide ranging pension fund scheme. He was made party secretary for Shanghai. This was the position Jiang Zemin had held before he succeeded premier Deng Xiaoping. In only a few months in October 2007 Xi was made one of the 8 Politburo members, ready to succeed Hu Jintao as president. Xi's perception of being sent to the villages and making it to university education was that it was part of the long run socialist struggle, with pain that his father had also endured as simply a phase in which things would be right in the end. Xi's mother comes across as a resilient figure and one who had herself gone through the struggles of the 1930's and aided her husband on one occasion. Some of this resilience could have been passed on to the son. Xi's wife is a zealous participant in Chinese dance and music performances that created enthusiasm for the Chinese socialist revolution from the 1930's period. In his conversations  with colleagues in the party, in culture and temperament, Xi has been forthright about this background and his style of work.  Xi is unlike premier Deng and the presidents who succeeded him such as Hu Jintao mentored by a former mayor of Shanghai Jiang Zemin who came to power in 1989. Xi is more in line with the leaders around Mao like his father in his outlook and thinking, with a cautious temperament that comes from years going through ups and downs of political struggles. He is once said to have responded with dismay about being in a top position in the government knowing how precarious this had been for his father. The education at Tsinghua, his engineering background, and his easy familiarity with farmers in the provinces, mean that he understands China and its history well enough to have the confidence to shape Chinese policies in a way that none of his predecessors had except Mao, premier Chou-en-lai, Liu Shao Chi and a few veterans from that time in the 1930's. That Xi waited patiently for so long to gradually assert his ideas about socialist vision for China may be the surprising part of his behaviour till 2021.  It may be that he wanted to make the changes only after he could persuade party leaders and colleagues of his vision and long run goals. And because the Chinese economy had grown so large that it would take time to steer the ship in a different direction for the long term. In most of the negotiations with president Trump he cautiously let trade negotiators handle the situation, all the time learning about how to tackle problems of China's relationship with US and Europe. US president Biden also has a vision that is veering towards a socialist perspective in terms of bringing gains of progress to workers and families. So does Mr. Trump, Mr. Boris Johnson in UK, and Social Democrat's Scholz in Germany. It is both economic and political as Mr. Xi is quoted as saying in this WSJ report. The necessities of such action are both economic, social and politically driven as capitalism has veered way off course.  In this report it is mentioned that Soho China 40% stake was taken by a large capital markets firm in New York in the hope of large gains, as Soho China developer was a tycoon who wanted to leave China. Seeing it as not favorable to his company following events in Hong Kong. This behaviour of capital markets groups in New York and tech companies in Silicon Valley, driven by profits and not aware of the social and economic problems of working class American families is a problem in the US and in Europe. It is also what has driven so many large tech companies to expand manufacturing operations in China, that hurt US manufacturing capabilities and American workers jobs- an issue raised by president Trump and taken up by president Biden. Biden has already moved to make Intel Corporation change its plans and invest in American manufacturing technologies in a quietly implemented U turn. US president Biden is left with the unenviable job of solving this huge problem during the pandemic. He has also committed to a somewhat socialistic vision with a $3.5 trillion plan for workers and families, as has vice chancellor Scholz in Germany with his own version of programs, after the failures of unregulated forms of capitalism. Scholz goes so far as to say his mission is to show that there is really no such thing as a self-made man, that it is help from society, his fellow citizens, and government, that makes it possible for him to do his work. In a sense the world is shifting away from Reagan forms of capitalism without regulation after seeing disastrous results during the pandemic. Not just China. Some form of government guidance and regulations are now seen as essential in China, the US, UK, Germany and India for a better society and a better, healthier life, and for opportunity for all in each country.   ...

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With inflation running at 6.7% in Russia, the central bank has decided not to increase interest rates following the U.S. Fed's bond purchase tapering decision in Jan 2014. The ruble declined by 6% in Jan 2014 and 15% for the last year. With the economy slowing the central bank finds it difficult to raise interest rates, and with inflation the bank has less flexibility to lower rates and increase credit availability. The ruble's lower value is a result of a shrinking current account surplus, with the added effect of capital flight from markets seen as riskier by investors. Currency collapse is a sensitive issue for many Russians after the 1997 crisis and collapse of the ruble. Central bank chief Ms. Nabiullina was on television explaining the decline to ordinary Russians, saying- " It's not that the ruble is weakening but the dollar and the euro are rising in price." Economists say the ruble's weakening won't add as much to inflation as slowing demand will make it harder for retail chains to raise prices....

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The documentary "Last Train Home," directed by Lixin Fan, shows the life of migrant workers and their families in China. Fan sporadically spent 3 years with one family, Zhang Changhua and Cheng Suqin, to capture glimpses of this family's life as one of China's 130 million migrant workers. The family left a village in Sichuan province, to work in a factory in Guangzhou, which manufactures denim jeans. For 7 days a week -once working 15 hours a day for 29 days straight- the Zhang family works continuously, just to send money back home to the grandmother who raises 17 year old Qin and another child. The daughter is rebellious as she is resentful of the parent's absence. This is the story of migrant families throughout China, the quiet hidden ordeal, that is behind the cheap products available in western countries. And Fan documents this well with scenes at the railway station, as the family catches the last trains back to Sichuan, for the yearly trip back to the village. There is a whole society in transition, and there are many sides to this story, this is the human one of families caught up in this transition. Lack of farm subsidies and taking over of farmland for building and construction has hurt life in agricultural areas. The Communist party has made dissent difficult. And the imposition of a decades old registration system that denies education and social services to migrant workers from the villages, creates huge strains on family life. Fan says- before the showing of this film at the IFC Center in Greenwich Village- that he hopes to raise questions in the minds of viewers. Does the blame for this go to the government, the factory owners and companies, or the West, something Fan says he is not able to answer. That there is little official opposition to the film- in the same manner that the suicides at Hon Hai, and the factory conditions there and in other factories across China, are being freely reported- suggests that China is coming to terms with the different angles from which to view the economic transition that has taken place over the last two decades. It is also a belated recogniton of the whole range of questions raised by a singleminded policy of manufacturing for western markets, especially when these markets with debt-laden consumers may present huge uncertainty in the future....

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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.

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Krugman points out the gains on three fronts evident from the Census Bureau report of 5.2% gain in median income of households in the U.S. He says the first is the growth in incomes of ordinary working class and middle class families, second the large decline in the poverty rate, and third the further rise in insurance coverage in 2015 for people without health insurance. He points to the steady efforts of the Obama administration to improve lives of ordinary families as working based on the Census report though results have taken time, and could have been better. The Stimulus, says Krugman could have been larger following the blow of the 2009 financial crisis and increased unemployment at the time. Janet Yellen at the inequality conference of the Boston Fed in 2014 pointed out the problems of 62 million households having net worth of about $10,000, and why this was running against the American idea of a better life for all Americans. In that sense the Census report is a movement in the right direction but a lot remains to be done.   ...

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A study by the National Employment Law Project shows most of the job creation in the economic recovery to 2014 in the U.S. is replacing the better paying jobs with lower paying jobs in fast food retail and similiar low paying industries.

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A Peterson Institute of International Economics study on the TPP trade agreement shows it would reduce growth in the U.S. manufacturing sector by a fifth, according to this report in the NYT. Workers incomes and job losses in manufacturing are a key concern for voters and account for the surge in polls for Trump and Sanders in the U.S. presidential election of 2016. All four leading candidates Clinton, Sanders, Trump and Cruz oppose the TPP agreement. Congress will wait till after the election to decide. This is a big issue today because about 5 million jobs have been lost in 1977-2014, according to the Alliance for American Manufacturing. The Peterson study predicts job losses of 50,000 a year, yet another study by Tufts University predicts job losses of 450,000 a year. Another study by the Economic Policy Institute study shows other damaging effects such as labor's share of national income declining from the TPP.