LyrArc Article Gist
Of 21 reader comments to this piece on banker pay, all except for 4-5, were very critical of the bankers behaviour, including many of their colleagues in the financial industry who commented. The lack of any response from the FSA on the grounds that its not the FSA's job, or from the Treasury, is disconcerting. Treasury is said to have not said a word, when RBS hired a head trader for a rumored 7 million pounds. All this coming on the heels of the RBS and Lloyds debacle, makes the Labor government open to attack from the Conservatives under Osborne and Cameron. and from Mervyn King of the Bank of England. They have expressed strong disapproval of the busines as usual attitude of bankers.

LyrArc Article Gist
Frank Portnoy of the University of San Diego law school says it would be a serious mistake for the Obama administraion not to have the same rules for all derivatives, rather than the preferred financial industry option of leaving unregulated privately negotiated derivatives or "swaps" between two financial organizations. Under the current Geithner proposal only the public derivatives or standardized instruments would be traded on regulatory exchanges and required to have cushions of capital in reserve like banks do. Previous efforts of regulation were defeated in the same manner says Portnoy, as when Sen Graham and Wendy Graham head of the CFTC, both worked to get this exception. In December 2000 this lobbying effort paid off with Bill Clinton signing into law measures that largely deregulated derivatives.

LyrArc Article Gist
Britain's prime minister Johnson has gained approval for 16 billion military buildup for naval and other buildup for the next 4 years. It was apparent for some time during the administrations from Blair through the financial crisis driven by banks under Cameron, that Britain had lost its resolve to have a strong military capability. This was evident in its handling of Hong Kong, from the transfer to its weak response to the situation in Hong Kong as participatory democracy failed in Hong Kong. During the period after the second world war Britain failed to bring participatory democracy in Hong Kong under its rule. Labour and Conservative administrations made no effort even as participatory democracy was brought to large parts of Asia and Africa through independence, following democratic elected legislatures in the period between two wars in India and Ceylon. No such effort was made in Hong Kong leading to questions about its own commitment to the principles when China introduced its own government in Hong Kong by changing legal structures.  Britain lacked the military capability and its partnership with France and the U.S. was also weaker because of other distractions from middle east conflicts and internal problems. This is now changing with the military capability buildup for the next 4 years. This is happening as France under Macron takes a new posture in its battle to defend the ideals of its Republic, and rebuild its manufacturing capabilities. ...

LyrArc Article Gist
The Labor Department's rate of labor underutilization is 14.8% of thepotential workforce, much higher than the 8.1% unemployment rate. Which means that a lot of workers are not able to make the fullest use of their skills. If unemployment stays high for a very long period some workers lose their skills and become less employable. THat could leave the floor for unemployment at amuch higher level. Something like this is happening now and stay with us as the unemployment rate grows and the underutilization of labor rate with it. Physiscists call it "hysteresis"., a kind of laggard impact of some sustained force. An example is if you squeeze a nerf ball for so long that it doesn't bounce back when you release it. Higher underutilization of labor which could hit 20% by 2010 at the rate at which job losses are ocurring of half a million a month, would mean pressure on wages and fears of deflation, lower tax revenues and fears of persistent deficits, less cash to invest and companies having less capital to invest leading to lower earnings. And falling behind the curve is what Krugman fears could be happening now, even with the large stimulus and budget of the new President, because of a series of problems ocurring at the same time and reinforcing each other. And the efforts of the government still not large or effective to meet the scale of the challenge. See the link to this. ...

LyrArc Article Gist
The effect of Russia's economic problems in 2015, including the drop in oil prices to below $50 a barrel, would cost Russia about $200 billion, according to Russia's finance minister Anton Siluanov. In addition to lower oil prices, Russia faces higher inflation from the decline in the ruble to 67 to the dollar on Jan. 28, 2015, western sanctions, capital flight, credit downgrade and reduced access to financing for Russian companies. Siluanov says $35 billion will be spent in 2015 for anti-crisis measures to stabilize the banking system, financing for companies with lack of access to financing in capital markets, and cushioning the impact of the crisis. Russia's economy is forecast to decline by 4% in 2015, by the Bank of Russia, with double digit inflation from a weaker ruble.

LyrArc Article Gist
A 15% minimum corporate tax on large, profitable corporations is part of the global minimum corporate tax proposed by US central bank chairwoman Janet Yellen, and the tax proposed by US president Biden. The tax would not apply to companies making $100 million as earlier proposed. The threshold has been raised to $2 billion and affects the companies that have avoided taxes the most. This report says there are 45 such companies in the US.  A US Treasury report on the tax says "the 15% minimum tax is a targeted approach to ensure that the most aggressive tax avoiders are forced to pay meaningful tax liabilities." The Biden agenda on corporate taxes would raise more than $2 trillion over 15 years to pay for essential infrastructure renovation to replace decaying infrastructure in the US. This means roads, bridges, airports, ports, transit systems, electricity grid, broadband systems, school systems, health systems, would all be targets for investment for the first time in 50 years in a concerted drive. The tax drive would partly reverse the Republican Congress's 2017 reduction in corporate tax rate to 21% from 35%, boosting it to 28%. European Union countries such as Britain are also following similar policies after decades in which a race to the bottom led to the lack of funds to finance essential infrastructure rebuilding. As a result China which was a nation of bicycles back in the 1980's now has some of the newest infrastructure, while the US and the EU countries have what might be considered crumbling infrastructure badly in need for renovation. As the shift in mood to a competitive world not only in technologies but in infrastructure and ease of living happens there is more and more awareness of what has been lost in the last 40 years.  ...

LyrArc Article Gist
Meltzer says the northern European countries France, Germany, Netherlands, and others should form a new currency union, and leave the euro currency to Portugal, Ireland, Italy, Spain, and Greece (the PIIGS countries). This way Greece can devalue its currency to bridge the gap of 20% between wages in Greece and the productivity of workers in Greece. The new currency union would follow fiscally binding rules. After the adjustments in currency were made by Greece, Portugal, Italy and Spain, these countries could be admitted to the new currency union of the northern countries. This would be conditional on acceptance of financial discipline and enforceable sanctions by these countries. Meltzer says clever agreements designed to protect the bankers are not the solution, as they only shift the responsibility and the burden for wasteful and reckless behaviour to taxpayers. Bondholders would take losses in a devaluation, and banks that are at risk should be either allowed to fail or given loans on strict repayment conditions. ...

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
The new EPA rules for auto emission standards were setup under the Obama administration in 2012. The rules are a major part of the effort to meet the challenge of pollution and clean air. The Trump administration and EPA chief Scott Pruitt plan to reverse the higher standards. The new standards which had the support of automakers when enacted require that average fuel economy be doubled to about 54.5 miles per gallon by 2025. This would cut oil use by 12 billion barrels over the lifetime of the cars and reduce carbon dioxide pollution by about 6 billion tons.  The EPA under president Trump does not say how much the standards will be rolled back. This also leads to one more tension between California and the Trump administration. California plans to vigorously oppose the rollback. Under the Clean Air Act of 1970 California has historically made its own rules and was followed by 12 other states making up one third of the car market in the U.S. If the Trump administration is able to to this it would create two markets for automobiles in the U.S. which is not in the interest of automakers who are having second thoughts about the change. Amazingly a suburban Virginia Chevy dealership has vigorously opposed being used as the location for the EPA under the Trump administration making an announcement on this issue. Chevy dealerships are saying the Trump administration does not have the facts, that the auto industry has done very well in the last 4-5 years. Chevrolet and GM do not want to be associated with the politics on this issue. California has historically acted as a pioneer in automobile standards with the rest of the nation following. The Trump administration move would be an effort to break this precedent.  ...

LyrArc Article Gist
The US Fed under Jerome Powell stress tests of 31 banks for 2024 shows the banks can withstand a rise in unemployment to 10% and 36% drop in house prices. This is relevant now that the new administration of DJT makes another effort to correct the huge trade imbalance with China, Mexico and Canada, which itself is destabilizing in the long run and needs to be addressed. The first term of DJT failed to correct the imbalance with new tariffs kept in place by the Biden administration. This is not just one's imagination, reports suggest China has poured $230 billion of subsidies into its EV industry since 2003 mandate given by premier Jen Biao to dominate that industry. And now has capacity of 20 million car production a year, twice the domestic demand in gasoline cars, wanting to send the surplus production to the US and Europe. This isn't the 1930's type of tariffs, it is simply to get a fair even playing field for trade, where no one side is massively subsidizing and dumping which is one of the principles of WTO free trade that is being broken by China and Mexico. Specifically the anti dumping clause in Article 6 of the 1994 GATT agreement on free world trading mechanism to ensure free and fair trade. ...

LyrArc Article Gist
Jimmy Carter comes back to us from a different era. He was born in a tiny town of Plains, Georgia, in 1924 and grew up on a family farm in a home that lacked plumbing, electricity, as a boy.  Jimmy Carter attended college for 2 years in Georgia, then enrolled at the US Naval Academy graduating in 1946. It shows the changes happening in the US with Franklin Roosevelt and Harry Truman in the efforts to industrialize America, bringing electricity and new opportunity for college education to rural areas in 1932-1952 which continued with highway systems under Eisenhower 1952-1960.  Carter also led the unwinding of the Democratic party with roots in the Roosevelts-Wilson era since 1902, going back to Teddy Roosevelt who as a Republican pushed hard for integrity, pro worker and antimonopoly policies in the administration. A process that went on with another Southerner, this time from Arkansas that led China's entry into the WTO and world trade without any safeguards for American workers 1992-2000. Policies that went unchanged under another Democrat Obama in 2008-2016. Instead of staying in the Navy he joined his family's peanut farm business in 1953, followed by running for governor of Georgia and grasping the opportunity to run for president as an evangelical from the South to bring moral integrity to the White House.   ...

LyrArc Article Gist
Former Secretary of State James Baker III on the Obama administration's negotiations with Iran for a nuclear deal. He points out the importance of the U.S. making the removal of sanctions gradual manner as Iran fulfills its part of the agreement. Baker says Iran in the past has broken agreements to resume nuclear weapons research, making the verification process and snap back of sanctions critical. Baker does not address the issues related to how effective verification would take place, calling this the work of negotiators to work out the bureaucratic and cumbersome provisions. He also does not address the problems other critics have raised about any future snap back of sanctions because of the reluctance of European countries, saying only that the U.S. should maintain its credible position on the negtiations with its other partners- China, Russia, Germany, France and the UK.

LyrArc Article Gist
US Navy is in trouble from slow shipbuilding and industry sent overseas like other industries. Note this about the USS Constellation being built in Wisconsin in 2025- After 2.5 years only 10 percent complete. Time to build of 9 years. An Italian shipyard does this in 4.5 years. Of 20 frigates being built in 10 countries of this type 19 are being built faster. Budgeted at $1.3 billion already cost overruns of $600 million cost tag now $1.9 billion. No wonder says the WSJ, no one in the world wants to build ships here. China now makes 50% of the world's ships, before that Japan and South Korea made 50% of the ships in the 1980's and before that the US in the 1950's. One of DJT's mandates- rebuild the American Navy. This means bringing shipbuilding like other industries back to the US where it belongs. Without the US Navy in good shape there is no defense. “Every shipbuilding delay, every maintenance backlog and every inefficiency is an opening for our adversaries to challenge our [naval] dominance." -John Phelan, DJT's nominee for Secretary of the Navy, to the Senate Armed Services Committee in Feb. 2025.   ...

LyrArc Article Gist
Irwin says about the revised Basel III rules in Jan. 2013- one hopes that Mervyn King of the Bank of England and Basel regulators are doing the right thing, striking the right balance between pushing for higher capital requirements and adjusting this to take into account the stalling economies of Europe and the U.S. Banks were given till 2019 to meet capital requirements. More assets are now eligible to meet capital requirements (including lower rated corporate bonds) under revised Basel III rules. The large legal settlements and speculative losses of large banks in Europe and the U.S. in 2012 put more pressure on banks with the risk of reduced lending.

LyrArc Article Gist
Bernanke's defense of the action of the Fed's monetary policy making committee, on November 3, 2010, (with a vote of 10-1) to buy an additional $600 billion of Treasury securities over the next 8 months. His defense focusses on the prospects of deflation- how low inflation can morph into deflation (falling prices and wages), that can create a long period of economic stagnation. In addition, with low and falling inflation, Bernanke sees spare capacity in the US that can be utilized to reduce the number of jobless people. He points to the rise in stock prices and fall in long term interest rates in anticipation of the Fed's action, as evidence that this Fed move would improve financial conditions. Lower mortgage rates would make housing more affordable, higher stock prices would increase consumer wealth, confidence and spending. Spending would lead to higher incomes and profits for economic expansion, from this viewpoint. The situation in November 2010, was a deepening housing slump anticipated for 2011, gridlock after the 2010 midterm elections and no agreement on additional stimulus for 2011, the need to rebalance the global economy lacking cooperation from China (with China increasing imports and reducing exports and the US increasing exports and reducing imports). Fed's Bernanke does not mention these factors, and only hints at the gridlock towards the end of the statement. This Fed action will push the dollar lower, just as efforts to improve exports and the trade balance are underway. The Fed's committee sees the risks of commodities inflation as an acceptable risk in the current situation, and the use of a cautious approach assessing the purchase program regularly as sufficient measure of safety. As to difficulties of the unwinding of these policies, the Fed sees present danger outweighing the risks of no action. For emerging markets such as Turkey, India, Australia and other countries seeing even more inflows of capital, the risks are left to these countries to manage. The central banks of India and Australia moved to increase interest rates at the same time that the Fed made its move....

LyrArc Article Gist
It is not clear whether Citigroup is off the problem list of banks, banks which rate a 4 or a 5 on the scale of 1 to 5. This could change even now after the stress tests. Here's why. Since late 2007, Citigroup has more than $50 billion in write-downs and loan defaults. The recent stress test of the 19 largest banks produced results that showed additional large losses looming over Citigroup, and questions are raised how Citigroup passed. The test found that estimated losses could reach $104.7 billion in loan losses through 2010 under the government's worst case scenario, and face nearly $20 billion in losses on its credit card portfolio. Yet the Fed's conclusion that Citigroup needed to bolster its capital by only $5.5 billion to withstand another economic shock did not reflect these facts. Investors and analysts also saw Citigroup as being in much worse shape than the other banks. THe FDIC did not agree with the Fed's conclusion. Only the Comptroller of the Currency agrees with Citigroup CEO Pandit, that the Citi model is not broken and just needs more time. THe FDIC wanted the rating lowered for the Citibank unit, and sparred with the Comptroller of the Currency over this. The FDIC has 305 banks on the "problem" list, and would like to add Citigroup to this list, so that it could keep a tighter review of what is going on at Citigroup. FDIC is helping finance a $300 billion loss sharing agreement with Citigroup, and has large exposure to Citigroup. FDIC's Bair thinks Citigroup has not moved fast enough to get rid of unwanted assets which might cause problems if the economy deteriorates, and would like to see a change in management. FDIC officials have approached former US Bancorp CEO, Mr Grundhofer, who is highly regarded in the industry, as a possible replacement. One reason being that while most of the problems of Citi stem from consumer loans, Pandit's experience is in investment banking, and he has not moved fast enough to get rid of risky and unwanted assets. He has failed to bring in managers with experience in handling the kinds of problems Citigroup faces in this crisis. With the FDIC's Bair having anticipated the crisis earlier than other regulators, the FDIC is expected to get additional powers in the new regulatory structure. This may result in tighter supervision of Citigroup. It also shows gaps and flaws in the stress tests that let some banks off too lightly, and make them vulnerable to the next episode in this crisis. ...

LyrArc Article Gist
Russia's Sberbank is expanding in Eastern Europe by making acquisitions from Western banks withdrawing from Eastern Europe. Sberbank sees the withdrawal of banks from Austria, Portugal and other countries as an opportunity to establish a major presence in Eastern Europe. With the $800 millon deal made in 2011 acquiring Volksbank of Austria's operations in Slovakia, the Czech Republic, Hungary, Slovenia, Croatia, Ukraine, Serbia and Bosnia and Herzegovina, Sberbank is now the largest bank in Eastern Europe with $386 billion in assets. Western European banks are faced with a pullback as they work to meet higher capital reserve requirements and respond to the effects of the eurozone debt crisis. Sberbank now manages $6.9 billion in corporate and individual loans in Eastern Europe.

LyrArc Article Gist
Issues raised by the huge mismatch between revenues and investment for AI. $400 billion estimated investment by 5 Tech firms in 2025 alone with revenue of about $40 billion and huge uncertainty about when AI will produce returns. Articles seen this week of November 17 in the WSJ and NYT on this issue, podcasts, discussions in other media outlets. Could this lead to a dot com bubble type economic crisis? Could that lead to a recession? Alongside these articles another article in the WSJ on Nov 17 shows the benefits small firms get by using AI, benefits which are on the fringes of their business, not essential but with some experimenting firm owners/managers able to tweak AI information for use in business. Nothing significant which firms will pay much money for. The uncertainty is a major factor. Should geopolitics trump all these concerns? Is the competition with China require this scale of investment, and is China following a more utilitarian approach as reported in a WSJ article this month, of investing in AI in a utilitarian way targeting its use in improving manufacturing, improving infrastructure, and not wildly throwing money at experimental uses that are unlikely to yield much result. In geopolitical sense would the country that not only promoted AI but used it efficiently and cost effectively, used it in ways that promote the overall public good, get the WIN. In short it behooves everyone of us to ask hard questions of AI, to dehype the hype, to look for the public good that comes out of this from it's efficient use. To ask the tough questions when $400 billion generates only $40 billion in 2025 and the $3 trillion planned investment over 5 years is half unfunded, is it going to crowd out energy needs for homes and business, push renewable energy targets back, crowd out essential investments in the crumbling aging infrastructure of the US and Europe, crowd out essential investments in education, healthcare, pharmaceuticals, and manufacturing, that hold better promise for our People. Will it also put retirees at risk when corporate bonds from retirees money fund the unfunded portion of AI? This means making the political dimension not about migration, settling the illegal migration issue that was meant to be settled a long time back, or about cultural issues that have little day to day impact on our lives which are about groceries, childcare, housing that are non ideological. Making the political dimension not about remote countries that one knows little about except when it affects public safety and health as with fentanyl. Capital allocation decisions to the vital needs of America can then be free of politically induced error, so that it can be subjected to the test of how best it serves the public interest and the people of the Nation. ...

LyrArc Article Gist
The head of the European Centres for Disease Control ECDC, Dr. Andrea Ammon, says the Delta variant of the coronavirus will make up 70% of all cases in Europe by early August, and 90% of all cases by the end of August. ECD modeling shows that there is a risk of another wave like the one after last summer in Europe. The Delta variant is much more infectious than the UK Alpha variant and the UK variant much more infectious than the original variant. A 50% reduction in non-pharmaceutical interventions such as allowing the staging of events would lead to an increase in infection in all age groups. Latest ECDC data show 34% of people in Europe fully vaccinated and 57% with one dose. One dose offers much less protection. Younger individuals have a lower vaccination rate and are vulnerable. Also vulnerable are the older people not vaccinated yet. About 40% of people over 60 are not yet vaccinated, and 30% of people over 80 years are not yet vaccinated in the European Union. As in the US vaccination varies by region within the EU. All these vulnerable groups can be affected in another wave of the coronavirus similar to after last summer when restrictions were removed. Dr. Ammon is a former advisor to the German government. She says it is important for young people who are not vaccinated to continue to follow the strict social distancing precautions.  This is not happening today as governments are relaxing mask mandates in Britain, France and Spain. Soccer games are coming back to fan filled stadiums increasing the risk. Tourist spots in Portugal and Greece are now looking similar to the vacation spots in Croatia that increased infections in Europe after summer 2020. ...

LyrArc Article Gist
In depth interview with Kyohei Morita, chief economist of Barclays Capital, Finance Asia explores different aspects of the Japanese economy and developments after 1987 and under Koizumi, the role of exports and how ordinary households are affected. He points out a few important things about the Japanese economy that are not generally recognized. One is that Japanese banks are vulnerable in the way the subprime crisis has exposed banks in the USA. Their vulnerability comes from owning 15% of the shares on the stock market which came down from a higher number after years of reducing stock holdings. When the Nikkei drops below 9000 this reduces the bank's capital and leads to credit tightening. Morita points out the risk of turning a moderate slowdown from lower exports into a severe slowdown if banks are reluctant to lend. The other point he makes is that small nonmanufacturing companies in Japan have to thrive for Japan to thrive, but he is bearish about private consumption. In a revealing statement he says that in his research he has found that the path connecting corporate profitability to households is seriously eroding. This is due to globalization as Japanese companies are offshoring aggressively, and 30% of the Japanese market capitalization in held by foreigners. His point is that Japanese managers now tend to see wages as costs just like American managers do and not the way they did in the past, so salary costs are suppressed in favor of shareholder dividends which flow out of Japan. Finance Asia referred to an OECD study that shows Japan's ranking in terms of per capita income fell from fifth highest in the OECD in 1992 to 19th in 2002, a fact that Morita recognizes as strange as western economies have tended to follow relatively stable long term income growth, and which he attributes to Japan's terrible demographics with population shrinking since 2006 and more elderly and retired supported by a smaller percentage of working age people. In an exceptionally revealing statement Morita points out that Japan has globalized from the outside but not from the inside. Japan he says needs more foreign direct investment and ideas, and more immigrants, fresh labour and fresh taxpayers. Which is remarkably true as Japan tends to be rather insular as a country and tends to keep out immigrants. The influx of Polish and Eastern European immigrants to the UK under the Blair-Brown Labor government years would be unimaginable in Japan. In the meantime Japan's estimated $15.7 trillion in financial assets held by households or three time national GDP is something that makes it possible for now for Japan to sustain the upward trend in the debt to GDP ratio....

LyrArc Article Gist
U.S. president Trump's 2017 budget is an effort to reshape spending priorities by the Republican party. Apart from Medicare and Social Security all other entitlement programs from the days of Lyndon Johnson's Great Society are subject to cuts. Deep cuts to Medicaid and food stamps, including introducing work requirements. The philosophy behind it is that compassion will now be measured not by how large these programs are but by how much the government can get people "off these programs and back in charge of their lives,"  according to Budget Director Mulvaney.  The cuts are $616 billion to Medicaid and Children's Health programs, $193 billion in cuts to Food Stamps, $143 billion in student loans, $72 billion in disability programs. The overhaul of the Affordable Health Care Act is part of this change. The reallocation would put more money into infrastructure for $200 billion, and in tax cuts, $19 billion in a parental leave program and $29 billion for veterans programs, plus added spending on the military. William Hoagland of the Bipartisan Policy Center, a Republican who worked on budget issues says it will be politically difficult as the cuts to lower income groups come with tax cuts for small businesses and higher income individuals.  Beyond the policy priorities there is an area where both Republicans and Democrats are skeptical of the budget. This is how it impacts the U.S. debt. Under Congressional Budget Office estimates the U.S. debt as a percentage of GDP which rose to about 75% after the Great Recession starting in 2008, is projected to grow to about 85%. In sharp contrast the Trump administration estimates of the Office of Management and Budget are for it to drop to 65% based on rosier estimates of 2% inflation, 3% growth for the decade ahead. Experts say this is unlikely once the Fed raises interest rates and the unemployment rate currently at 4.4% leads to rising inflation, undercutting growth which has remained below 2% for a long period. These concerns are also voiced by Hilsenrath in the WSJ based on the experience of other countries such a Britain that cut corporate taxes without seeing an uptick in economic growth. ...

LyrArc Article Gist
This editorial in the Hindu- after encouraging news from Moody's and the World Bank on India's economic future- says that the Modi government should not be distracted by the upcoming elections as it focusses on the task ahead. After a gap of 14 years Moody's raises India's credit rating one notch. Moody's cites steps taken by the Modi government as creating a better environment for future growth- the implementation of GST goods and service tax, efforts to clear some of the bad loans in the banking system so that capital can be freed up for infrastructure investment, and reducing bureaucratic hurdles for clearance of projects. Moody's cites the high public debt burden as a constraint for growth. General government debt is at 68% of GDP in 2016, higher than the 44% median for economies in this range. On the plus side the better targeting of welfare measures to help the poor including steps in the banking field, bringing more businesses into the formal sector to improve tax revenues, and the large pool of private savings, are cited by Moody's. Critical is timely implementation in the future. As the discussion in the media on bullet trains and other new infrastructure shows, there is not enough momentum for stretch goals as China has done over the last 2 decades.   ...

LyrArc Article Gist
Imposing losses on senior bond holders is acceptable under EU law during a liquidation process, say experts. Having them take losses in a restructuring would require changes to European and national laws. The uncertainty this creates coud hurt Spain's larger banks such as Santander and BBVA, which have so far not been affected by the crisis. A new European banking supervisory authority could insist on losses for senior bond holders to reduce the amount needed from the EFSF or ESM rescue funds.

LyrArc Article Gist
A look at the history of the founding of Pakistan and the 60 years since, looking all the way back to Muslim League's activities in the 1930's under Jinnah, and the failure of politicians and the military to help build Pakistan and improve the lives of its people. One by one the generals and the politicians, including Ms Bhutto and Sharif, have all failed and the dim prospects that it would be different this time with a new elected government.