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Lt. Gen Trainor and Michael Gordon describe the situation during the last months of U.S. presence in Iraq. President Obama is ambivalent about the size of the military presence he would like to leave, settling for 3000 troops and a few F-16's from a inital figure of 10,000. Obama sees the presidential election approaching and sets an objective of keeping it minimal. The military cooperation treaty with Iraq has to be approved by a Iraqi parliament with different factions in parliament not likely to approve it. Prime Minister Malliki decides not to move ahead. In the end no military cooperation treaty is signed after 8 years of war and a date is set for a complete withdrawal. Iraqi airspace is used by Iran to ship supplies to Syria's Assad regime, and the U.S. has less leverage in the region as the Arab world goes through a transition to popular government and elections. The Obama administration shifts most of its attention to Afghanistan where the U.S. has no vital stake in the long run compared to the Middle East region, with its large population, growing economies, move towards democracy and meeting the aspirations of hundreds of millions of young people. One Middle Eastern leader says the U.S. had no long term policy under the Obama administration for Iraq, and this applies also to the rest of the Middle East region, and mostly reacted to events as they happened. The Obama administration's committment to the war in Afghanistan, just as it focussed on winding down the war in Iraq, responded to the American public's waning support for the war in Iraq. It did not reduce the total cost of the conflicts because of the initial escalation of the war in Afghanistan and later slow progress towards a negoiated settlement to that conflict. A negotiated settlement is the best the U.S. could achieve, and the best desired objective considering the limited interests in Afghanistan. In Afghanistan most of the dynamics would be determined in the long run by the situation in Pakistan, and India-Pakistan relations, which the U.S. could influence constructively only through dialogue, promoting cooperation between the two countries, and economic relations....

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Jeremy Stein tells Eisinger that it is important for the Fed to recognize when a bubble is taking place and take action including jawboning and regulatory action to limit bubble behaviour in capital markets. Fed chairman Yellen did this for social media stocks and bio tech sector stocks in 2014 by pointing out that that the rise in stock prices were excessive, resulting in a pullback.

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The US needs 100,000 jobs a month just to keep up with population growth. And 7.2 million jobs have been lost since December 2007. Where will the new jobs come from to replace lost jobs in retail, banking auto and other job losing sectors and when, and will some jobs never come back. Global Insight forecast show 8.1% unemployment in 2013, suggesting that jobs needed for population growth and some jobs from the pool of job losses will not be recovered for some years.

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This article in the Economist magazine points out that official data do not accurately show the health of the banking sector, with large number of bad loans at smaller banks. Bank shares it points out are priced in a way that reflects bad loans at 5-10% of loans.

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Difficulites facing Chinese auto manufacturers making for export include safety, styling. In manufacturing it includes systems integration, getting the car to come out just right for western customers. And the low end of the market is disappearing compared to where the Japanese found it 40 years ago, as greater reliability keps small cars on the road longer and the time to make is also shrinking as other joint venture models such as Honda are already being manufactured in China for export. All this means exports to the states by companies like Geely will take a few yeas longer maybe 2009-2010 and it gives Detroit car makers on less thing to worry about.

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A professor of sociology at the University of Basel describes the growing inequality in Germany, in graphic terms. For the lower middle class the efforts to gain upward mobility are like trying to move up on a downward escalator. About one third of jobs are temp jobs which lack the protections of permanent jobs which were at one time 90% of all jobs. Her book is titled- "The Hidden Crisis; German Social Decline at the Heart of Europe." Nachtwey says on the surface Germany has become competitive and has maintained its growth rate, benefiting from the strong manufacturing sector with trade surpluses, low unemployment. Yet this conceals the underlying crisis of the cost which this has come at- a persistent erosion of the social compact of one elevator where everybody moved up together that was the norm in the early postwar period, fulltime employment, a strong welfare state. Job protections weakened, and while manufacturing sector pay remained stable or rose, less skilled and low wage workers suffered. This has also led to the fracturing in the vote with the fragmentation of political parties following the refugee crisis and the weakening of centrist parties. Voters are now open to different messages after the increase in inequality and uncertain economic future for the lower middle class. ...

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Friedman reviews Acemoglu and Robinson's new book, "Why Nations Fail." Acemoglu says that nations fail when wealth and opportunities are concentrated in the hands of few people, that a condition for societies to succeed is to create opportunities for more people. For this to happen it is important to create inclusive political and economic institutions. This is an important insight, but for Western society this is an insight as old as Adam Smith when he pointed out the importance of this aspect of western societies after the feudal period in his "Wealth of Nations." For Smith it was the failure to create inclusive societies that led to the gradual unravelling of societies in the river valleys of the Yangste and the Ganges, in China and India, of increasing poverty and the gradual disappearance of what constituted the middle class in India and China. Chapter 8 titled "Of Wages and Labor" in the "Wealth of Nations" makes specific reference to this.

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Air pollution concerns are leading China's National Development Reform Commission to set a higher goal for cleaner energy. The NDRC plans a 52 gigawatt increase in installed capacity for green energy in 2013, an increase from 36 gigawatts in 2012. This includes 10 gigawatts for solar energy. Clean energy will take up 57% of additions to installed capacity in 2013, compared to 35% in 2010, according to Tian Miao, an energy anayst at NSBO.

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This WSJ editorial points out a big concern in the third quarter 2012 economic growth figures- the figure showing non-housing related investment contracting by 1.3%. It says the U.S. borrowed $5 trillion and all it got in return was 1.7% economic growth- 1.7% being the growth in U.S. GDP for the first 9 months of 2012. It also points out that the growth came from consumer spending and the Federal Reserve's money printing. The consumer spending would be hard pressed to continue if incomes remain stagnant without the capital investment and hiring from the private sector. Government spending accounts for 0.7% of the GDP growth, and estimates for private sector growth in output is about 1.3%.

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David Stockman, Director of the Office of Management and Budget under President Reagan tells Tom Keene that the first step to deficit reduction is to means test the 2 milllion to 5 million or 10 million people who are very affluent, and have the benefits of some part of this population eliminated entirely. The next step he suggests is for spending much less on defense. A defense budget at $800 billion he says does not make sense today, because it is 35% larger in real terms than the budget when Reagan was President and the U.S. faced the Soviet Union. The U.S. does not need to be the world's policeman.

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The Washington Post-ABC News poll of August 29- Sept 1, shows 60% of respondents disapprove of the way the Obama administration has handled the U.S. economy. Of these 60%, half "strongly disapprove." Two to one the respondents say they are worse off today financially than at the beginning of Obama's term in 2008. This is the response to the famous Reagan question for Jimmy Carter- "are you better off today?" On the issue of the size of government and services, only 38% of respondents say they want to see a larger government with more services, and 56% say they want to see a smaller government with less services.

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Moody's downgrades the credit ratings of 26 Italian banks in May 2012. Italy's largest retail bank Intesa Sanpaolo SpA, showed net profit of 804 million euros, up 22% from the prior year. Of this 183 million euros was from capital gains made using the ECB low cost loans under special ECB financing to buy government debt. The ECB financing was through the Long Term Refinancing Operation launched by the ECB in December 2011, which benefitted Italian and Spanish banks.

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How the Bush presidency started with hopes in domestic policy that were never to come to fruition. Jacob Weisberg, editor of Slate, reflects on the promise of the Bush State of the Union address of Feb. 2001, and the compassionate conservatism it evoked- the Bush priorities of education, setting higher educaion standards, immigration reform, helping needy and at risk children, health care access. He recalls the words used by Bush in Spanish: "Juntos podemos," we can do it together. As governor of Texas Bush had focussed on racial disparities and gaps in education, winning 27% of black votes and a third of Hispanic votes. Then came 9/11 (2002), weapons of mass destruction (from 2003 onwards), which soon overshadowed the education efforts, grants to extend health insurance coverage, initiative to encourage mentring of at-risk children. The $10 billion program to fight AIDS in Africa and the Caribbean is a part of the Bush legacy, other areas were overcome by the distraction of wars in the Middle East....

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An internal IMF document that estimates Europe's banks are short of capital by $273 billion. IMF managing director, Christine Lagarde, tries to downplay the report by saying this is not from a stress test that the IMF conducts. In August, Lagarde, called for an "urgent recapitalization" of European banks. As France's finance minister, Lagarde, steadfastly insisted French banks were well capitalized. France worked hard to prevent requirements for significant capital reserves under the Basel III rules. The higher capital requirements were supported by the U.S.. Simon Johnson said in his blog, that as long as European banks had inadequate capital to act as a buffer against losses, European countries had no safe route for restructuring their debts.

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The Washington Post points out the damage to civil society and the rule of law in Egypt in 2014-2015.

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The author Li Congjun, is head of the Xinhua News agency, official press agency of the People's Republic of China. He calls for rebalancing the global economy with China depending more on domestic consumption, efforts to restrain the excesses of property and asset price bubbles, and renewed focus on technology and investment.