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U.S. Federal Reserve governor Daniel Tarullo tells the Council on Foreign Relations that so much remains to be done four years after the financial crisis. The law firm of Davis Polk says 67 percent of deadlines were missed for new rules required to be set in place by the Dodd-Frank legislation, including the Volcker Rule. Tarullo said: "It is sobering to recognize that more than four years after the failure of Bear Stearns began the acute phase of the financial crisis, so much remains to be done." Tarullo fears that crucial momentum may be lost because of the long delays stemming from resistance by the banks. Tarullo met with bank CEO's in April 2012. Banks have protested that Fed stress tests have not revealed the parameters for the testing. Tarullo's response given at a recent Fed conference in Chicago were that this would let banks game the exercize by running the Federal Reserve model and not improving risk management and capital planning, making this a mechanical compliance exercize. Banks have particularly opposed a requirement that limits the risk in business between two banks to 10% of their credit risk....

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Former Defense Secretary in the second term of the Obama administration, Chuck Hagel, says U.S. president Obama hurt his credibility when he failed to act on his own comments of a "red line" being crossed following the chemical attacks in Syria by the Assad government. Hagel was critical in an article in Foreign Policy magazine of the way the national security advisor, Susan E. Rice, ran discussions on foreign policy issues, with too many meetings and discussion followed up with deferring difficult decisions.

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The mortgage interest deduction mostly benefits wealthier people with larger mortgages who need it least, and who are likely to buy homes regardless of the deduction, say experts. Both the Brookings Institution and other experts such as Moody's chief economist, Mark Zandi, see the deduction as part of the negotiations for deficit reduction. The Brooking Institution's Ted Gayer, says the deduction subsidizes acitvity such as borrowing large amounts of money to buy larger homes which the U.S. should not want to subsidize in the current state of the country's finances. The Simpson-Bowles plan and the Feldstein-Romney plan sought to put unnecessary tax expenditures and deductions on the table for negotiation. The deduction was not part of the last tax reform in 1986 under president Reagan. Zandi says any changes should be phased in over a number of years so that housing sales ar not affected in the current recovery. David Stephens, CEO of the Mortgage Bankers Association says any changes should be implemented gradually. ...

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Washington Post editorial on the Obama Georgetown speech of April 13, 2009. It questions whether President Obama has the candour and courage to tackle the tough issues of deficit reduction and entitlement reform. New healthcare spending for coverage itself will add to entitlement, and it says some of the savings mentioned by the President are phony or already needed for new spending for the economic recovery and health care. At the same time the paper gives Obama good marks for his clarity and grasp of the crisis and steps for recovery, and the policy agenda in the areas of health care, energy and education. The questions about courage and candor also raise all the questions about facing upto the facts about insolvent banks that Krugman, Rosenfeld, the Economist and others have raised. Is Obama dodging the hard choices, is he dithering? On the toughest issues like foreclosures, insolvent banks, global regulation pushed by the Europeans, will he end up making inadequate or faulty choices, and when he comes around to making the tough choices, will he have lost so much valuable time as to prolong the crisis and stretch it out to many years....

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U.S. Treasury Secretary Geithner says Republicans are working to thwart the Dodd-Frank legislation- by slowing down and diluting the impact of rules required to be written under Dodd-Frank, crimping the resources of regulatory agencies, and blocking the nominations of heads of regulatory agencies such as the Consumer Financial Protection Bureau.

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How the Simpson-Bowles Commission recommendations on reducting tax expenditures and the Romney, Feldstein proposals to limit tax deductions and loopholes to make the rich pay more- at the same time as the tax code is simplified with lower rates- offer a basis for moving towards a deficit reduction plan that has support on both sides of the aisle in Congress, of Democrats and Republicans. Jeb Hensarling and Pat Toomey are the Republican members on the Supercommittee to address deficit reduction, who support a balanced approach to raise revenue from taxes and spending. Obama advisor, Chrisitina Romer sees the Simpson-Bowles approach to limting tax deductions as a good starting point for building an agreement. Romer goes so far as to say let the Republicans in Congress decide on infrastructure project selection as there so many worthy infrastructure improvement projects that getting started would be the main objective.

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Mark Landler's interview with Hussain Haqqani in Oct. 2013 provides insights into the misperceptions on both sides of the U.S.-Pakistan relationship since 1947. Particularly the way Pakistan cannot shake free from seeing everything through the prism of India. He points out that Ambassador Holbrooke had a forward looking approach to the South Asian region, but failed to get the support of president Obama and the weak leadership of president Zardari, resulting in a squandered opportunity for the region to look beyond the twentieth century's conflicts towards a brighter future.

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Prof. Peterson of Harvard and Hanushek of the Hoover Institution, authors with Woessmann of the book "Endangering Prosperity: A Global View of the American School," offer some startling reminders about the importance of education to economic growth and incomes in countries. Simply by raising the math standards in the U.S. to the higher standards in Canada would raise GDP by three fourths of one percentage point. One advantage that the U.S. enjoys comes from its good university systems, open markets, rule of law, tax rates, and open immigration policies, which give it about two thirds of a percentage point in higher GDP growth per year. The estimates are from the authors calculations. For the period 1960-2009, a period of rapid growth in Asian countries Korea, Taiwan, Singapore and Hong Kong, higher test scores in math and reading compared to the wrold average as measured by NAEP test and PISA, have led to 2% higher GDP growth. NAEP shows only 32% of U.S. high school students proficient in math compared to 45% in Germany and 49% in Canada and 63% in Singapore. By contrast to Korea and Taiwan, Peru, Argentina, the Philippines and S. Africa have about 2% less in GDP growth because of lower scores compared to the world average....

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About 680,000 homeowners applied for the Home Affordability Modification Program, or HAMP, and had their loans modified so that their mortgage payments are reduced. This is only one in four of the 2.7 millon homeowners who tried to to join the program. This according to a Wall Street Journal analysis of data released by the Treasury Department. In 2009 the Obama administration launched the program to reverse the rising home foreclosures in the U.S., by reducing the monthly mortgage payments through lower interest rates and extending the term of loans. About $75 billion was estimated as the cost of the program at the time. Only $1 billion of this has been spent by the Obama administration. The program offered payments to 100 mortgage servicers as inducement to complete loan modifications. About half the applicants or 1.3 million were declared ineligible from the beginning, and the program used stricter qualification criteria than loan modification programs offered by individual banks. Applicants were rejected because the necessary paperwork was not submitted or it was lost by the mortgage company- 266,000 falling in this category. An additional 770,000 homeowners who started the program were later disqualified mostly for the paperwork and eligibility problems, with only a small number rejected for failing to make trial payments. Mortgages less than 31% of pretax income were considered affordable and considered ineligible-255,000 were in this category. Over 80% of homeowners in the southern states of Arkansas, Louisiana, Oklahoma, Texas, Alabama, Kentucky, Mississippi, and Tennessee, received no loan modification....

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The WSJ's Laurence Norman talks to Yukiya Amano, head of the UN agency, the International Atomic Energy Agency (IAEA), which has the responsibility of verification and inspection of Iran's nuclear development and facilities. Amano describes the issues raised by a 2011 report which outlined 12 sets of concerns to which Iran has to explain, a condition included in the final nuclear agreement. Iran has to respond by mid-August, IAEA then responds, and does work in Sept and Oct, and submits its report by Dec. 2015. Yamano says he has to fill in all the missing pieces in this jigsaw puzzle to get a full picture of Iran's nuclear development. Iran has denied access to military sites and Mr. Amano couldn't say if he has access to the Parchin military site. A concession that was made in the agreement is the long interval of three weeks before access to a particular site that arouses suspicions-the agreement gives Iran the right to appeal an IAEA request to visit such a site to a special commission. The U.S. and its European allies have a majority on the commission yet three weeks are allowed in which Iran could move material to some other location. For critics the question will be why such a concession was needed if Iran truly has decided not to develop nuclear weapons technologies. The U.S. president's response at a news conference on July 15, 2015, was that with the laws of physics the U.S. monitoring tools would detect nuclear activity at that site. The agreement also gives Iran an earlier than planned lifting of a ban on sales of arms and missiles and missile parts if the IAEA says Iran's nuclear activities are peaceful. Iran could conceivably wait till the ban is lifted and its economy in a much stronger position to withstand any future limited sanctions to pursue nuclear weapons development. This would have delayed development for a few years during which time the hope is that Iran has changed into a more peaceful nation pursuing economic development in its region, yet even if this is the case as as happened with India and Pakistan it could still pursue nuclear weapons development. The alternative is a status quo till a better agreement is reached with the leverage of tight economic sanctions and continuing dialogue during which time Iran continues to get closer to a nuclear weapon, or the use of force to prevent this. Iran added the arms embargo issue during the last weeks of the negotiation in June, a controversial move on Iran's part, as this may have complicated the picture with ballistic missiles technology exports to Iran approved after 8 years in the final agreement, compared to the agreement reached in April 2015 which made no mention of the lifting of the arms embargo. Iran played on the notion that if Zarif returned to Iran without an agreement hardliners including Khamanei would veto any agreement, yet this could just be the Iranian negotiating strategy. U.S. president Obama stated at the July 15, 2015 news conference that it would be hard to hold sanctions for longer. Critics might argue that China was already benefitting from the small easing of sanctions by increasing Iranian oil imports by 30% in 2014, and would have less incentive to withdraw from sanctions, as it is dependent on the U.S. and the EU, major markets for its exports and access to technologies. A WSJ/NBC poll in July shows almost half of the people polled in the U.S. saying they do not know enough to express an opinion, a steady 36% support an agreement, showing that the public has not been educated and taken along during the different steps in the largely secret negotiations....

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This New York Times editorial says the U.S. Obama administration and its Housing Secretary Donovan should stop pretending that its settlement is the best way to help homeowners under water. The editorial asks the serious question- how far would the $20 billion settlement the banks would provide under the deal help, when 14.6 million homeowners owe $753 billion more on their mortgages than the value of their homes? The Obama administration is pressuring New York Attorney General, Eric Schneiderman, to accept the settlement with the largest U.S. banks for questionable foreclosure practices, including robo-signing. It asks Schneiderman to resist these pressures and not support the settlement. Schneiderman has resisted this pressure because he and other prosecutors would be restricted from pursuing their investigations into wrongdoings in housing mortgages. The proposal from the Times to the Obama administration is to make principal reductions for underwater homeowners who are currrent in their payments through Fannie Mae and Freddie Mac. The proposal to help homeowners uner water on their mortgages was first proposed by Martin Feldstein during the mortgage financial crisis in 2008-2009 with repeated op-eds in leading newspapers including the Wall Street Journal. Paul Krugman called attention to the failure of the Obama administration on this issue in recent op-eds. Peter Coy of Business Week pointed to some form of loan forgiveness as an essential part of restoring the economic health of the U.S. and Europe in the August issue of Bloomberg Business Week. Higher unemployment has made the foreclosure crisis worse, and has created a strong headwind for the U.S. economy by erasing chances of an early recovery in American housing markets. The Obama administration's Home Affordable Modification Program has been a dismal failure in helping homeowners facing foreclosure and was a huge missed opportunity to take the correct action early....

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This WSJ editorial says president Obama's inaction, including the smaller step of not putting in place a safe zone in Syria, comes at a price for Liberals. The recent action by Governors in Michigan and other states turning down Syrian refugees, it says is one of the moral consequences of Obama's policies. For Liberals it says a policy of inaction and turning America's back to the needs of ordinary Syrians during the Arab Spring is not neutral, it also has consequences. The consequences for Liberals is the steady stream of refugees to Europe, and the greater intolerance in western societies as the safe havens created by these policies in the Middle East lead to terrorist actions in Europe or the U.S. In short doing little or nothing carries risks for the kind of society liberals want to see. Through developing policy in response to the Bush Administration's policies the Obama administration makes a series of errors of its own that compromise liberal values, including the collapse of the Arab Spring without American and western support, and the creation of a huge refugee crisis in Syria, Iraq, with a spillover to Jordan and Turkey, and further spillover to Europe. Liberals in Europe also face a similiar situation, including Liberals in France....

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This Journal editorial on Oct 5, 2012, says that by not offering leadership in the Syrian conflict beause it would lead to a wider conflict the U.S. and the European Union face a wider conflict. The current crossborder shelling between Syria and Turkey is the latest evidence of this. Turkey and the Saudis cannot handle this on their own. Without U.S. leadership the costs of this conflict will be even greater, and even poses risks for the Turkish economy if handled badly.

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This article by General James Jones is the second from the highest ranks of the Obama administration, saying the entire Middle East policy of U.S. president Obama was flawed and could lead to dangerous consequences. Gen. Jones, former National Security Advisor to Obama 2009-2010, says the situation today is worse than in 1991 when the U.S. launched Operation Provide Comfort to protect Kurdish refugees in Northern Iraq from Saddam Hussein, with an engagement of about 5 years and 25,000 Allied troops. Jones says the crisis in Iraq and Syria is of an order several times worse than 1991 and at any time since the 2003 invasion, as it involves the setup of a terrorist ISIS state in the heart of the Middle East. What went wrong? Jones says all the warnings from other Middle East nations about Maliki's corrupt policy and sectarianism used to stay in power turned to be true. Even Maliki's own advisors and colleagues say in a separate report by Matt Bradley that Maliki battled not for the Iraqi state but only to preserve his own power. Jones calls the U.S. president's decision not to act in Syria when the "red line" of use of chemical weapons was crossed, the failure to maintain a limited military training presence in Iraq after 2011, and not insisting that Mr. Maliki arm the Kurds, as having gravely aggravated the problem in 2014. Jones calls for arming the Kurds directly with sufficient weaponry for defending their region and providing immediate expanded aid to the Abadi government, appointment of a special envoy to ensure direct and immediate communications with Baghdad and with Kurdish, Sunni and Shiite leaders. He calls also for close air support of Iraqi and Kurdish operations, and an aggressive diplomatic effort to unify the Middle Eastern nations to remove ISIS from the region. Jones says this is the right thing to do in the name of all the Iraqi people yearning for peace, for the U.S. service personnel who made sacrifices in Iraq for 23 years, and for U.S. national security....

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A slight shift in American opinion favoring a deal with Iran is shown in a WSJ/NBC poll in July 2015 compared to the poll in April 2015. Support for reaching a nuclear deal with Iran remains stable at 36% in both polls, the opposed drops by 6 percentage points to 17% from 23%, and the percentage of people who say they do not know enough to formulate an opinion goes up to 46% from 40%. The intricacies of a nuclear technology deal and the sites involved lead to a high percentage of don't know enough to give an opinion. Factors hindering a deal include inspection of military sites, and Iranian intentions. Factors favoring reaching a deal now is the risk that this would mean Iran would go back into isolation and the opportunity to work with moderates might be lost. The Rouhani administration was an effort by voters to elect a government that could ease or remove sanctions to improve the economy and living conditions- its failure would lead to Iran losing an opportunity to open up to the world. The pressure from the U.S. Congress and Israel served to push for a verifiable and effective agreement to control development of nuclear technology for weapons systems. Behavioural factors involved are the very young population in Iran which has no memories about the period before the revolution in 1979- 70% of the population of 74 million are people under the age of 35. This group is eager for ties to the outside and could change Iran's outlook and policies int the future towards moderation. Risks in not reaching a deal also include the possibility of the Saudis developing nuclear technology and nuclear proliferation. Winners from a deal because of the flow of Iranian oil to world markets and a period of extended low oil prices are the U.S., Europe, China and India. Germany gains new markets to replace the growth in the Russian market after sanctions. Lifting of an arms embargo, an added risk in the last days of the talks, would be mitigated by making the lifting of that embargo very gradual....