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It took a long time for the banks to understand what is in their best interests is in the best interests of the country's economy and homeowners, something Sheila Bair has been saying since the beginning of this year and implementing at IndyMac. Its just too costly for banks to use the foreclosure process to recover their money and it makes much better financial sense on the bottomline of banks and for the economy to make home payments affordable. Because the worse home prices get the worse the economy and banks do and nothing drives home prices down like foreclosures. The Bank of America settlement for Countrywide with state attorney generals to modify loans for 400,000 homeowners because of predatory lending practices also set the direction. Chase Bank is now using the Bair template to get the monthly payments down to an affordable level which is about 40% of the current payment by reducing interest rates and using a smaller loan balance and keep homeowners in their homes. Chase's plan will help 400,000 homeowners and will also help homeowners who are having difficulty making payments. It will put a 90 day hold on foreclosures till the program is put in place. Yet there is one problem. Only $350 billion of the 1.5 trillion in home mortgage it services are owned by Chase, the rest are owned by investors in the form of mortgage securities. It can do little for homeowners covered by these securites that are owned by hedge funds and other funds as a few of these funds oblivious of the overall interest including their own have threated to sue if loans are modified, and it would take some time to figure out who owns each security and what the terms are for modifying loans for that security. Its this part of mortgage securitiization that has slowed down a rational process of unwinding this problem throughout housing by making homeowners monthly payments affordable. And Fed's Bernanke did not come to grips with this point in his talk about mortgage securitization to UC Berkeley on October 31,2008, that mortgage securitization done in a way that make loan modification difficult is dangerous as it is today, and makes a crisis bigger than it otherwise would be, and turn a USA crisis into a global crisis through ricotcheting effects and a series of bad decisons....

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Robert Gordon of Northwestern University describes the problems in American Education and how this is the first generation which will not do better than its parents in educational attainment. The cost says Gordon comes in lower potential economic growth rates.

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The U.S. trade deficit widened sharply in March from February 2015, increasing by 43.1%, after the ending of a labor dispute at West coast ports. The deficit widened to $51.37 billion. This is more than expected from a strong dollar. This could make 1st quarter GDP figures show a contraction for the U.S. economy. Products imported from China were up 32%, compared with March 2014. Exports were up only 0.9%. Experts estimate GDP contraction of 0.4%- 0.5% for the 1st quarter 2015. In 2014 a similiar situation happened but growth was up for the rest of the year and experts see this happening again in 2015.

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Homeowner Nicolle Bradbury of Denmark, Maine, and Thomas Cox, lawyer for Pine Tree Legal Assistance, challenge a foreclosure eviction in court. The lender GMAC, was found to have used a "limited signing officer," who had little or no knowledge of the case. GMAC had continued to follow faulty procedures, two years after it was asked to correct these procedure. Judge Stephens cited this situation in rejecting the foreclosure.

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Italy's borrowing costs increased by one percentage point one week after the July 22, 2011 eurozone debt deal for Greece. The Italian Treasury sold 2.7 billon euros of 10 year bonds with a yield of 5.77%. The yield in late June for a similiar bond issue was 4.94%. Yields on Spain's 10 year bonds increased to 6%. German bonds are getting investors with a 10 year bond yield that has decreased to 2.62%, which means the gap between the German bonds and the bonds of southern European countries is widening.

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The Federal Reserve Open Market Committe voted 7 to 3 to carry out "Operation Twist." This does not involve printing new money as was done for the $600 billion QE II Fed program. This time the Fed will shift its holdings to hold fewer short-term Treasury bills and notes and increase holdings of Treasury securities with longer maturities. The overall impact would be to increase the average maturity of its Treasury securities portfolo to 8 years from the current 6 years. The idea is to put pressure to reduce long tem rates. The Fed says the impact on short term rates is expected to be small because of its conditional pledge made in August 2011 to hold short term rates near zero until mid-2013. The impact of the Fed's move is likely to be modest considering the fact that the average rate on 30 year fixed rate mortgages is already low. It is at 4.09%, according to the latest Freddie Mac survey.

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A Congressional Oversight Panel said the Obama administration foreclosure plan is not addressing the problems of today. It is borrowers with good credit who ave lost their jobs or those with complex mortgages who are not getting help, and this will add to the higher default rates. THese borrowers because they are jobless are not able to afford even the reduced monthly payments. The HAMP program for reducing payments fails to address these problems.

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There is strong cirticism from many quarters about low interest rates as a prime culprit in causing the bubble in housing prices. In comments before the American Economic Association, America's Fed Chairman Bernanke defended his role as Fed governor in 2003 when he along with Greenspan was an advocate of the decision to cut the Fed's target interest rate to 1%, and to leave it here for a year and raise it only slowly. Bernanke says countries like Britain, New Zealand, and Sweden had tighter monetary policy but there home prices rose more, and monetary policy explains only 5% of the variation in home prices. Analysis has shown he says that capital inflows such as those the U.S. received from China and other Asian countries explains 31% of the variation in home prices, supporting a contrasting theory that that its these global imbalances that drove the crisis. He also placed the primary fault for the housing bubble on relaxed lending standards and views that housing prices would rise forever. Alongside these comments Fed chairman Bernanke also said that bank supervisors and other financial regulators of which the Fed was one, has a better ability to contain the excesses that led to the economic crisis including housing bubble and other excesses, than the Fed as a monetary policy maker. By saying this Bernanke is acknowledging that the failure of regulation was a key part of what happened in the economic crisis. The failure to fix the regulatory system even now leads Bernanke to say that he is open to using monetary policy as a supplementary tool for addressing risks should another bubble develop, if the regulatory system isn't reformed. Still Bernanke and Greenspan were quite complacent at the time of the low interest rates and did not point out the dangers of global capital imbalances which were evident at the time, preferring to say that the United States could benefit from the inflows of capital from overseas without serious risks. And the Fed did not exercize its role of vigilance in alerting the country to excesses in the way the housing industry operated and in exercizing its own powers to that effect. Instead the Fed as regulator and in role as asafeguard for serious risks let itself become part of the cheering section as the worst excesses in housing were being exposed....

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The Economist cites figures showing Canada lost 500,000 manufacturing jobs since 2005, with employment in manufacturing down to 1.7 million by 2013. From 2000 to 2013 manufacturing's share of GDP declined from 18% to 10%. This situation is shown by the decaying manufacturing towns seen in Ontario. About 500,000 manufacturing jobs were lost between 2005 and 2013, as the price of oil increased to the $100-$120 range and the Canadian currency was overvalued, leaving the Canadian economy more dependent on energy exports. Some of the auto manufacturing supplier base has shifted from the midwest to southern U.S. states, reducing the attractiveness of Ontario for manufacturing investment. Overvalued currencies have hurt the manufacturing sector of commodity producing countries dependent on exports of mining products or oil, especially Brazil and Canada. The depreciation of the Canadian currency in 2014-2015 may not help, as many of these jobs are not likely to return.

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The risks to the Romney campaign in the U.S. Republican primaries after his work at Bain Capital comes under scrutiny. In the 1994 Senate election in Massachusetts Senator Edward Kennedy defeated Romney by focussing on the loss of jobs at companies acquired by Bain Capital. Kennedy's television advertising showed employees at Ampad who lost their jobs after a takeover by Bain Capital. A study by Stephen Davis of the University of Chicago, John Haltiwinger of the University of Maryland, Jos Lerner of Harvard, Ron Jarmin and John Miranda of the Census Bureau; looks at 3,200 buyouts between 1982 and 2005. It shows private equity firms shrinking the number of employees by about 6% more than other firms in the first 5 years. It also shows the firms largely offsetting the job losses through the firms that succeed and are expanded with new employees. This study does not look at a longer time frame. A recent examination of buyouts by Bain Capital over an eight year period by the Wall Street Journal gives a better picture because some of the firms went into bankruptcy during the 8-10 year time frame. Many of the jobs added are in the retail sector with lower wage levels- at Sports Authority, Staples, Toys R' Us, and Michael's for Bain Capital. ...

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Jac Welch gives Obama an A for leadership. Mind you he says he doesn't agree with all the President's policies. He is talking about leadership. He scores Obama in four areas, Vision and Team Building, Speed and Authenticity, and he finds him at an A in all areas and gets an A in authenticity with alittle help from Michelle with her warmth and personality. There are 2 more traits on which the test is still going on he says, that of resilience and the wherewithal to champion unpopular causes.

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John Lewis, is the last surviving speaker of the March on Washington in 1963, when Martin Luther King gave his historic speech. Here he describes how Martin Luther King would see today's America. Foremost he points out is that MLK would want to see justice not just as racial justice, but justice in a broader sense that says something about the dignity and value of human beings. And this means, says Lewis, the president getting away from advisers and polls, and talking to ordinary people. It means focussing on jobs, the unemployed and people facing foreclosure, and seniors struggling on limited incomes. He calls for a "freedom budget" that would pool resources for infrastructure and investments that would create a better environment for people to live in.

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A new bipartisan plan on comprehensive immigration reform with support from Senators Graham, McCain, Schumer, sets forth principles for legislation. This includes Democratic requirements for a pathway to citizenship for 11 million illegal immigrants and Republican requirements for stronger enforcement. A separate bill sponsored by Senator Orrin Hatch would expand the H1-B program for skilled immigrants and increase the number of green cards. Senator McCain said on a television news show: "We can't go on forever with 11 million people living in this country in the shadows in an illegal status."

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A move by the Obama administration to reenergize its Hispanic base with action on immigration three months before the U.S. presidential election of 2012. A new policy issued as a directive by President Obama allows one million young illegal immigrants to remain in the U.S. A 16 page guideline issued by the U.S. Citizenship and Immigration Services states that applicants have to show they lived in the U.S. for five years and pay a $465 fee. The policy applies to people in the ages of 15 to 30, applicants must show they completed high school, or were honorably discharged from the U.S. military. The program will offer a two year renewable expemption from deportation and work permit to people coming to the U.S. as children. President Reagan was the last president who issued a directive of this type offering amnesty in 1986 to 3 million illegal immigrants. The Obama administration says this will help conserve enforcement resources are not spent on low priority cases of young people who came to the U.S. as children, as there are an estimated 11 million illegal immigrants in the U.S. The Dream Act legislation to legalize undocumented young people is stuck in Congress with no agreement on how to move forward. The states and cities where people mainly from Latin America and Asia would benefit are- California with 400,000 who could benefit, Texas with 225,000, and New York City with 55,000....

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Harold Meyerson looks into the causes of the decline of white working class Americans by 2015. A whole section of society that was helped by the work of FDR is being undone by a combination of forces, from the decline in working class wages and jobs through globalized business, social structures unravelling, and support structures weakening. Meyerson refers to the Deaton-Case Princeton study on increasing death rates for this group. The white working class is much smaller now than in 1940 when he says 82% of Americans over 25 had only an high school education, down to 29% in 2007. The result is that it has less power to affect policies, yet is close to one third of Americans. Economic recovery, the American dream, all remain hobbled without efforts to tackle this problem. Trump's effort to appeal to this class, Meyerson points out, is similiar to the National Front's effort in France, making the political dialogue even more divisive by targeting immigrants.

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Former U.S. Treasury secretary Robert Rubin talks to Charlie Rose about the August 2 Debt Ceiling and Deficit legislation. He says there are two constructive things about the legislation. There are no serious cuts in 2011 and 2012, so there will be almost no loss in demand as spending cuts do not affect the immediate 18 month period. Former Treasury Secretary Summers also makes this point. And that the cuts include defense and non-defense. He favors the approach of the Bowles-Simpson Commission. On the overall situation Rubin points out the importance of getting a real public discussion going about what this means, what the consequences of decisions made now. Especially important for Rubin is public understanding of the importance of setting up a serious deficit reduction program that sets the date of implementation a couple of years into the future to give time to get back on track, and the need for increased revenues. A useful point Rubin makes is that the question of jobs and the question of getting into a sound position fiscally are really the same question. He cites his experience in 1993 when he helped President Clinton setup and implement a deficit reduction program- which had half spending cuts and half revenue increases. Bowles-Simpson Commission recommendations for closing loopholes for tax expenditures and Martin Feldstein's similiar proposal for limiting the deductions and exclusions to 2% of Adjusted Gross Income offer an option that creates revenues without any tax increases....

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Standard and Poor's changed its rating of U.S. Treasury securities from stable to negative. U.S. Treasury securites are still rated AAA. Moody's made no change in the rating. U.S gross debt as a percentage of GDP is 91.6%, with the comparable number for Germany at 80%, France 82%, Canada 84%, the UK at 77%, Japan 221%. The U.S. budget deficit as a percentage of GDP is 10.6%, the comparable number for Germany is 3.3%, France 7%, Canada 5.5%, the UK 10.4%. John Chambers, the head of the sovereign ratings committee at Standard & Poor's stated that "the sign of political gridlock was a key determinant in our outlook change." The budget deficit will go up to $1.5-$1.65 trillion, or over 10% of America's GDP in 2011. The gross debt for the U.S. is at $14.219 trillion, just short of the $14.294 trillion cap. With rising entitlement costs and the interest on debt this is expected to go over the debt ceiling as early as July 8, 2011. Again political gridlock and the divide between Republicans and Democrats about deficit reduction is causing concern about the delay in raising the debt ceiling....

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Christopher Wood points to deflationary trends in Europe and the USA. Bank for International Settlements (BIS) data shows European bank exposure to government debt in Portugal, Italy, Ireland, Greece and Spain at $2.8 trillion at the end of 2009, and a rise in the London interbank offered rate (LIBOR), as further signs of negative trends. The property bubble in China and strong action to tighten and use antispeculation measures have already led to transaction volumes in residential real estate falling rapidly. If Beijing reconsiders further appreciation of the yuan, a trade debate with the U.S. may intensify. All this points to increasing risk of a double dip recession.

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There are similarities in the Republican and Democratic party platforms in 2016. One area of agreement is in the reinstatement of Glass Steagall Act. That legislation made in the Depression period to separate commercial banking from investment banking was changed  when president Clinton made changes in a deal with Senators Phil Gramm and Jim Leach in 1999. The too big to fail problems of banks and the problems of investment banks during the 2008 financial crisis are attributed to the lack of Glass Steagall protections for financial stability and safety. The result is that in the post 2016 environment banks can expect a tougher regulatory environment. Another are is in trade where both parties are expected to take tougher positions to protect U.S. interests. The Republican platform calls for "better negotiated trade agreemets that put America first."