LyrArc Article Gist
This Washington Post editorial says vice president Biden's comments that "I guarantee you, flat guarantee you, there will be no changes to Social Security. I flat guarantee you," made to a voter in Southern Virginia, is downright disheartening. It points out that this is not the conclusion of the trustees of the Social Security Fund, which includes the secretaries of Treasury, labor and health and human services of the Obama administration. The April annual report of the trustees says that the disability portion of the trust fund "becomes exhausted in 2016," and the overall fund "becomes exhausted and unable to pay scheduled benefits in full on a timely basis in 2033." Actions suggested by the trustees include: raising the payroll tax, tweaking the inflation calculator, reducing benefits, or some combination of this. It is clear from polls that the U.S. voter does not want either party to touch Social Security, but the reality is something different. The idea of a flat guarantee in the light of facts that all can see is seen by the Post as going too far, trying to win votes at the cost of postponing necessary decisions which will become harder and costlier if not addressed early....

LyrArc Article Gist
The civilian labor force participation rate for people over 60 years of age reached 29.4% in the U.S. in 2012, up from a little over 22% in 2002, according to the Labor Department. This reflects the slow growth in retirement savings with low interest rates and the economic shocks from the global financial crisis of 2008 to savings. A Conference Board report shows about two thirds of people between 45 and 60 years age are planning to delay retirement, up from 42% two years earlier.

LyrArc Article Gist
Romney says in the first presidential debate he will not increase taxes on the middle class: "I will not reduce taxes paid by high income Americans. And I will not, under any circumstances, raise taxes on middle-income families. I will lower taxes on middle income families." How he would do this is through limiting or eliminating deductions and loopholes among several measures, with work done on this by his advisor Martin Feldstein, Reagan's economic advisor and a professor at Harvard University- Romney's Tax Plan can raise revenue, WSJ, 8/28/2012. Where the Democrats and Republicans differ is that economic growth generated by creating incentives for business to invest and hire also plays a part in generating the additional revenues as it did under Reagan's economic plan. Behavioural factors play a large part of this as much as the incentives and other steps, to create a climate of business confidence- search in Janvoo for the Group "Reagan memo of 1980 by Shultz, Friedman," for more on this....

LyrArc Article Gist
Joe Nocera describes his personal situation which also reflects the situation of the average investor in his 401(K) for retirement - inexperience in handling the boom-bust cycles in the market and loss of savings, especially in the last two decades with sharp swings in the market. The Employee Benefit Research Institute statistics on savings of the average American are striking, dismal is the right word- only 22% of workers 55 or older have more than $250,000 set aside for retirement, and 60% have less than $100,000 in a retirement account. The average savings of an American near retirement are $100,000.

LyrArc Article Gist
Nouriel Roubini has proven correct on global financial issues. He said in an interview on the sidelines of a symposium in Malaysia, that China needs to revalue its currency for its own sake. China will see a growth collapse in the next 2-3 years if it fails to do so. His point is that China can still maintain growth by shifting to domestic consumption and less infrastructure spending and exports. In his view growth should not be affected if China exports less and consumes more. He points to the decrease in consumption as a share of GDP from 45% to 36% in the last ten years- this ratio is 70% in the USA. A cheap yuan keeps foreign goods unaffordable and protects state owned companies which also get cheap credit, as keeping the yuan low requires China to keep interest rates artificially low. What this does is make a massive transfer of income from the household sector to the state owned companies, just at the time when China needs to do the very opposite of this. And compounding the problem is that the 25% of China's GDP that is made up of retained earnings of mostly state owned companies, goes into real estate and production facilities. See the link to David Barboza in the New York Times who points to the wasteful spending and real estate speculation by state owned companies. Roubini cites the automobile sector where capacity has doubled in the last year to 20 million, when the domestic market increased by 50% to 10 million vehicles. The stimulus only increased the effect of surplus capacity and misallocation of investment, with highways to nowhere and brand new airports that are three quarters empty. The Chinese leadership is beginning to grasp this, but the state owned companies and other interests who benefit fromm the old model, may make it difficult to reverse the trends. A lot is at stake in this, as it affects the U.S., as well as countries dependent on China's imports such as Australia, Canada, Brazil and Germany. ...

LyrArc Article Gist
Gillespie lists the myths and describes the reality about Ron Paul. Ron Paul is not a "top tier" candidate- with many Republican candidates assuming top tier status and fizzling out this has become a term that has lost meaning. Paul is a doctrinaire libertarian- he has positions similiar to libertarians but also has his own views on immigration and abortion. His views on the U.S. central bank, the Federal Reserve, such as "ending the Fed" are crazy- actually Ron Paul's legislation on auditing the Fed is gaining credibility, and Fed policy is viewed skeptically by both the Tea party and Occupy movement, as well as some in the Federal Reserve such as Kansas City Fed chairman, Thomas Hoenig, and respected economists such as Alan Meltzer of Carnegie-Mellon University.Ron Paul is anti-military- Paul has support from servicemen in the military and raised more money from them than any other candidate including Obama. Ron Paul has youth support because he is against the war on drugs- the war on drugs has not worked that well and new approaches are needed. His support among youth comes from a believing that individuals are better at making the right decisions, his idealism, and his faith in making the U.S. a better place. ...

LyrArc Article Gist
Barry Ritholtz lists the causes of the financial crisis, He says New York Mayor Bloomberg's exoneration of the financial industry is simply false- what he calls "the Big Lie"- even though Congress, regulators and the Greenspan Fed acted irresponsibly and created favorable conditions for the actions of the financial industry.

LyrArc Article Gist
Charlie Rose talks to Paul Ryan, the Republican Congressman from Wisconsin on his "Roadmap for the Future" and a major overhaul of taxes, spending, Medicare and Social Security. He tells Rose, who hosts a news show on Bloomberg TV, that in 2010 he is all by himself looking at the big picture for shaping ideas on economic reform, and still hopes others will join him in this effort.

LyrArc Article Gist
The majority report of the Financial Crisis Inquiry Commisssion says Alan Greenspan and Ben Bernanke, regulators, and several financial institutions were responsible for what was an "avoidable disaster." The report criticizes Mr Greenspan for advocating deregulation and considers the failure to stem the flow of toxic mortgages under his leadership at the central bank as a "prime example" of negligence. The report also says that the New York Fed under Timothy Geithner, now Treasury Secretary, also missed signs of trouble at Citigroup and Lehman. There are 6 Democrats and 4 Republicans on the Commission. The fourth Republican has his dissent, calling policies to promote home ownership, the role of Fannie Mae and Freddie Mac a major cause. The panel was hobbled by internal divisions and staff turnover, which have made what should have been a report of major significance into one marred by partisan differences. The majority report itself was heavily shaped by Phil Angelides, the committee's chairman, and it has many literary phrases. Overleveraging was a critical factor in the crisis. For every $40 in assets, the US's 5 largest investment banks had only $1 in capital to cover losses. The banks hid their leveraging with derivatives, off-balance sheet entities and other devices. The banks relied heavily on short-term debt which worsened the crisis. The report also said the Clinton adminstration's decision to exempt over-the counter derivatives from regulation- made in the last year of Clinton's term- also helped set up the ground for later events leading to the crisis....

LyrArc Article Gist
Friedman compares the anti-corruption movements in India and the U.S., the world's two largest democracies. The Occupy Wall Street anti-corruption movement in the U.S. focusses on the excessive influence of banks on lawmakers, regulators, and the government, through the use of campaign money, revolving door for government officials and regulators to join banks, and intense lobbying. The anti-corruption movement focusses on corruption in government at higher levels, such as the handling of government licenses, and at the basic levels of needing to bribe officials for something as simple as getting a birth certificate or other government document. Both have pernicious effects, in the U.S. excesssive bank influence leads to taking excessive risk for higher bonuses, putting the entire financial system at risk and creating a crisis in housing that delays the economic recovery. And in India the corruption leads to retarded progress, as funds to invest in infrastructure and development are siphoned off, business and entrepreneurs are required to pay bribes at each step, and ordinary people face the need to pay bribes for the most routine interactions with government officials. In the process this creates more unequal societies by skewing the distribution of benefits from wealth created to groups that are better equipped to game the system. The economic system once distorted in these ways has tendencies to take talent away from productive activity and innovation which create wealth, and direct it towards speculative activities....

LyrArc Article Gist
Samuelson warns that turning seniors into a protected class making no sacrifices whatsoever, will mean shrinking all other social programs, defense and investments in education and infrastructure. This is the reality of the budget deficits facing the U.S. He cites the Congressional Budget Office projections that even with cutting defense and non defense discretionary spending by a third, the U.S. risks a deficit in 2023 of about 6.75% of the economy or gross domestic product (GDP). To cover this would require $1 trillion in higher taxes, an increase of a third above the 1970-2011 average. He says Democrats are using demagoguery and intimidation on this issue, and ironically even Paul Ryan's proposal reflects a desire not to touch seniors benefits and willingness to pass on the costs to the young to pay for these programs. Social Security and Medicare are a critical part of the American fabric, and no one wants to dismantle them, it is about modernizing them to reflect higher life expectancy and larger wealth accumulated by the elderly compared to previous generations, and to reduce the burden on the young. ...

LyrArc Article Gist
CNN reporter Cassie Spodak provides this exceptional report into the minds of New Hampshire Democratic voters who gave Bernie Sanders a 22 percent lead in the New Hampshire Democratic primary over Hillary Clinton. In October 2016 Hillary Clinton has the support of Bernie Sanders against Donald Trump in the U.S. presidential election. She described it as "100 percent support" in television debate. Sanders has appeared with Clinton twice, and campaigned 4 times in New Hampshire, and continually across the country. Younger New Hampshire voters still long for Sanders as their favored candidate. Older voters and some who have been motivated by Sanders to run for local office see the shaping of the Democratic Party platform as a victory for Sanders. Key planks of Sanders, taxes on the wealthy and higher incomes to pay for student tuition, infrastructure, and helping working class families, are now key parts of the Democratic platform. These voters see this as a pragmatic step and are enthusiastic in their support for Hillary Clinton. Overall Clinton now has 87 percent of Democratic voter support in New Hampshire according to a WMUR/UNH poll in mid October 2016, and she is doing well with millenials and independents nationally, a critical bloc of voters for Clinton to show nationwide support. One member of the steering committee for Sanders in New Hampshire named Dudley Dudley, reflects the opinion that has shifted the party to emerge united during and even more so in the final months of the presidential campaign of 2016- she tells the CNN reporter Spodak that she supports Hillary because "of the way she has grown, and stretched," and the way Clinton and Sanders are now campaigning together and working together. Both Clinton and Sanders deserve credit for their extraordinary ability to grow during their campaigns and during the party's way to shape the way forward. ...

LyrArc Article Gist
A recent book "The Spirit Level" has become popular in Britain. It says that countries with greater disparities in income also do worse in a number of social indicators, from higher murder rates to lower life expectancy. It also affects the consensus in society which is a necessary underpinning for sustained economic development and economic growth. Inequality when it affects the middle class and reduces the size of incomes in the middle, or creates stagnation in incomes, poses large risks for society and affects economic growth. In the US the home foreclosure crisis and the lack of bargaining power of wage earners in the middle class has created this problem. This is exacerbated by the banking crisis and bad loans in the banking system. Studies show that slow growth in college graduating rates in the USA after 1970 compared to the period 1900-1970, has increased inequality, especially with today's knowledge economy. Germany is also affected by this problem as wages for workers have remained stagnant with the labor reforms. Interestingly a combination of economic growth and payments to the poor have increased the size of the middle class and its incomes in Brazil. The austerity policies in Britain will affect incomes and income growth in Britain for the middle class. In China the gap is widening quickly between the urban areas and the rural areas. And the policy of residency permits- the hukou system-which limits internal mobility from rural areas to the cities and towns, makes the inequality all the more glaring. The lack of democratic election makes the situation worse in China compared to Brazil, because free elections in Brazil enabled leaders from the working classes such as Luiz Inacio Da Silva and Ms. Rousseff to emerge as heads of government. These leaders pursued policies that would explicitly bring a more shared prosperity in Brazil compared to the leadership in China. In China policies are determined by entrenched interests in its model of development- the state-owned companies and banks and their managers, local and government officials of the Communist party, and businesses with the networks and connections with the Communist party and local governments. This is why the ginni coefficient which measures inequality has dropped significantly in China, putting it in the rank of developing countries with poor records in equality. Inflation in China, India and Africa also affects the poor and lower middle classes to a greater extent. Current trends suggest that rebuilding the middle class in the developed countries and providing fairer distribution in developing countries will be of serious importance in coming years. Especially with the likelihood of more economic crises which tend to adversely affect the middle and lower classes disproportionately....

LyrArc Article Gist
Dan Balz says former prime minister Blair's policies in Britain (1997-2007) closely followed the policies of moving to centrist positions of U.S. president Clinton, with Blair's election in 1997 following Clinton's wins in 1992 and 1996. Clinton followed the Reagan years and Blair the Thatcher years in government, in modifying the early postwar ideas about the economy. The election of Corbyn by 59.5% of the vote of Labor party members, exceeds the 57% achieved by Blair in 1994. The opposing candidates did very poorly. Yvette Cooper, who most resembled Blair's positions was seen as waffling on issues by not taking clear positions. She lost badly with 4.5% of the vote, showing that something significantly has changed with the the deep recession following the 2008 financial crisis, and the recovery through years of austerity policies under Cameron's Conservative government. Balz's view is that this is likely to bring up the same debate in the Democratic party- Corbyn proposes a national investment bank for large investments in education, health services and infrastructure, and a reversal of Labor policies introducing fees for college education to increase opportunity. Sanders has not proposed a national investment bank, but says he would invest in education ( including reversing the spiralling education costs), health services, infrastructure, and other areas. Hillary Clinton has made the issue of upward mobility for the middle and working class a central issue in her campaign, but lacks the authenticity claimed by Sanders, who has tapped into anti-establishment feeling following the lack of recovery in wages under 7 years of the Democratic party government in the U.S. In this context Jeb Bush has also stated at the 2013 CPAC conference that social and economic mobility is the central issue of our times, only he would approach it by giving business incentives to increase business investment to create jobs and increase wages; and by adopting a tax code that would be also fair to the middle and working class....

LyrArc Article Gist
People who worked with Romney in the Mormon church describe the experience of Romney who started as an "iron rodder" walking the straight path, and gradually learning of other people's experiences that led to learning and growth and showing a new openness. In contrast to his "47%" remark about people dependent on the government, here he is seen telling another church member Barlow, that what bothers him most and what he has thought a lot about is how to genuinely help the poor in his church. Over the years he learned to compromise with Mormon feminists who sought larger roles in the church and was able to make the progress from being less flexible to being open to other ideas and perceptions. In other situations he allowed unorthodox progressives in the Mormon church to play a part in the organization and teach. The outreach efforts Romney participated in actively included efforts in the inner city and working with immigrants from Haiti, some of whom were illegal immigrants. This is a detailed well researched account from talking to many people active in the church organization and in the church community by Jason Horowitz of the Washington Post. It is one of the rare glimpses of the life of Mitt Romney inside the church. Because of the public perception of Mormonism there is a distance kept with accounts of life in the church, and Romney has shown the same reticence to talk about the church. Seen as a church it is is like other churches, Catholic or Protestant, with the same challenges that face all churches- keeping up the size of the congregation, the poor, immigrants, church organization, raising contributions, getting people to donate hours of work to the church activity. It is one of the ironies of the 2012 presidential campaign that Romney as a member of a Mormon church in a predominantly Catholic and Protestant world has remained reticent about his experiences and how it shaped him. And also remained reticent -till the last months of the campaign with the demands for authenticity growing strident- about how the experiences as governor of the liberal state of Massachusetts had shaped him, this time as the number of Republican politicians in sharply liberal states were a distinct minority in the Republican party. To voters this meant not knowing who he was beyond Bain Capital, the perceptions of which doggedly pursued Romney till the reticence became unbearable in the final weeks of the campaign....

LyrArc Article Gist
Krugman points out that the federal tax rate for the top 1% is 34% in 2013, according to the Congressional Budget Office, because president Obama let the high end Bush tax cuts to expire. It is the number to remember says Krugman- 34. In 2008 the figure was 28.2. Under Hillary Clinton the average tax rate for the top 1% would go up by 3.4 percentage points, according to the Tax Policy Center. Some of this would help pay for the tution plan to provide access to the middle class to public universities. Under populist Trump, Krugman points to the elimination of the inheritance tax and tax rates going down substantially, and no such programs to promote the upward mobility that everyone is talking about, and no way to pay for a big infrastructure building effort for growth and jobs- upward mobility that is the focus of every candidate's election campaign including Sanders, Trump in appealing to older white working class families, Clinton, Ryan, Bush, and others in both parties.   ...

LyrArc Article Gist
Prof. Gorton and Prof. Metrick of the Yale School of Management review 16 scholarly studies and papers on the causes of the 2008-2009 global financial crisis in the current isue of the Journal of Economic Literature. Another article in the same journal reviews 21 books on the subject. Samuelson says the most cited causes- lax regulation and passive regulators, and the policy of home ownership that encourage the packaging and of securitization of mortgages to government sponsored agencies Fannie Mae and Freddie Mac- are only the surface causes. If we are to explain how a whole society seemed to believe in the idea that somehow there was a way to maintain a rising tide continuously, with only small corrections over several decades, by the clever manipulation of monetary and fiscal policies; then one has to look to the hubris of economists who acted as if this was possible and the gullibility of business and a public that desperately wanted to believe as some have put it "that this time it was different," or that shrewd management of economic policy could actually bring about such a panacea. The abiding lesson is economic policies based on a better understanding of how modern industrial economies work are merely useful tools, no more no less, and there is no substitute for a good ethic, wise management and careful thinking on the part of the public, business and government, particularly for the people in leadership positions. ...

LyrArc Article Gist
A report released by the Organization for Economic Cooperation and Development (OECD) shows growing income inequality in 34 OECD countries. OECD Secretary General, Angel Gurria says: "The social contract is starting to unravel in many countries. This study dispels the assumptions that the benefits of economic growth will automatically trickle down to the disadvantaged and that the greater inequality fosters greater social mobility. Without a comprehensive strategy for inclusive growth, income inequality will continue to rise." Countries with the largest ratios between incomes at the top and the bottom, are the United States, Turkey and Israel, roughly 14 to 1. Germany, Denmark and Sweden have ratios of 6 to 1, with their ratios up from the 1980's. Gaps in Chile and Mexico are at 25 to 1. The study covers the period from 1980 to 2008. Overall inequality went up by 25% in the U.S. from 1980. In 2008 the top ten percent in the U.S. earned $114,000, 15 times than incomes for the bottom 10%. The top 1% of Americans saw incomes go up from 1980 to 2008, increasing from 8 percent to 18 percent. The richest 1% having $1.3 million in after tax income, and the lowest 20% making $17,700. The trends have accentuated an increase at the highest end- the top 1% and top 10% of the people- and a sharp decrease for the bottom 20%, which can be grasped from the $17,700 and the $1.3 million, both at extreme ends. The study attributes the rise in inequality to a growing gap in wages for highly skilled workers as technology advances, a surge in foreign direct investment and a looser regulatory regime that reduces employee protections leading to wage premiums for financial jobs and smaller incomes for workers at the bottom. Income groups and professions and sectors that had the greatest influence in government were able during this period to get the greatest protection for incomes, and able also to maximize their incomes. Incomes in the financial sector increased dramatically in the last decade, as a result of deregulation leading to higher risk and speculative activities in the financial sector, leading to the financial crisis of 2008-2009. Financial crises further depress incomes at the lower end. Similiar income inequality trends can be seen for India and China. China has a Ginni coefficient of 0.5 according to researchers at Beijing Normal University, up from 0.3 three decades ago- a Ginni Coefficient above 0.4 is considered destabilizing. Another factor that played a part in these countries is corruption and lobbying by special interests for favored treatment of sectors or groups. Austerity measures taken in Europe and in the U.S. are likely to widen income gaps by depressing the lower end income groups, creating social unrest, especially in the absence of efforts to stimulate growth....

LyrArc Article Gist
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."

LyrArc Article Gist
Rep. Dave Camp, House Ways and Means Committee chairman, representing northern Michigan, says every deduction in the tax code is there because of a reason, and powerful lobbies will oppose any changes. The best he can do is work himself out of this job as he will have to tackle the Democrats on entitlements, the business lobbies on tax loopholes, and other lobbies protecting their preferences in the tax code. He plans to achieve a simpler tax code with lowered rates of 25% for business and earners above six figures, and 10% for everyone else. The approach he is taking is to be revenue neutral when tackling tax reform, in the belief that the economic growth generated from a simpler tax code and lower rates would generate revenues of 18 to 19% of GDP, up from about 16% today. He says the economc cost of not getting this done to get the economy rolling again is so high that he is upbeat that both sides can come together after the election no matter who wins. He is also looking at a repatriation tax of 5% on profits kept by American companies overseas, which would boost revenues for business which could be reinvested in stead of sitting idle. Today the much steeper tax rate on repatriation makes businesses reluctant to bring it back....

LyrArc Article Gist
This was one of the last reports written by Anthony Shadid, New York Times foreign correspondent, before his death in Syria. It covers the Islamist movement's shift to modernism and incorporating an outlook that includes ideas of liberal democracy from Britain, as seen from Tunisia. No longer is the main source of ideas coming from Egypt. A diverse group of thought is being developed in Arab and North Africa, and in places like London, where emigres from the Middle East during the years of repression gathered to discuss ideas for the future. Said Ferjani's as one of these emigres is one of sources of the new thinking and approaches of Islamist thought.