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Jeanne Whalen on the Two Speed Economy in the US September 2025- diverging paths of low and high income Americans. With the new administration in 2025 priorities shift to immigration and what to do about 14 million illegal migrants from Latin America and other places, war on fentanyl and drug trafficking gangs with hundreds of thousands of lives lost to fentanyl and drugs in the US, crime and safety which includes the unprecedented illegal movement of drug trafficking in the Nation, and to a bold posture on using US advantages of its huge market to get European Union, Japan, South Korea, and China to level the playing field on trade bring jobs home.The Biden administration had already conceded to DJT's approach in its one term presidency by shifting on uncontrolled illegal migration but not fast enough, by not removing DJT's tariffs, and failing to take an aggressive posture on fentanyl and drug trafficking. Of the DJT plan US has tariff based revenues of 10--15% for all countries imports into US can that it redirect to groups to soften any effects of tariffs. DJT administration oil transition policy of stretching out the transition to give middle class and lower classes cost of living relief was also accepted by the Biden administration and is now the policy of Democrat run California state government.  The US economy was slowing in 2024 under the Biden administration. What has changed in 2025 is that the US stock markets are responding to steps taken by the DJT Republican administration to lower the cost of doing business by softening regulations, and giving US business the upper hand in different industries, and rebuilding the manufacturing sector with calls for EU and Japan/South Korea to invest more in the US as a quid pro quo for market access. This has led to increase in the value of market portfolios of the income earners above 250,000, or 10% of American households. As this happens the process of trade renegotiation has introduced some uncertainty in 2025 and businesses are looking for more clarity before increasing investment and slowing job hiring which hurts younger people entering the job market and lower income Americans. Were things better under Biden? Government Covid assistance and payouts in the early years 2020-2021 helped lower income workers, as this faded and the cost of living autos, housing increased sharply under Biden in 2022-2024 the situation deteriorated. The situation today is similar to the situation in 2024 with the difference in 2025 that inflation is coming down just as government help is receding. And added factor is the DJT administration plan to tackle head on the increasing cost of Medicaid to about $1 trillion by adding new requirements and reducing subsidies. The federal workforce had a disproportionate share of black workers and the policy changes to reduce the federal workforce have increased black unemployment from 6.1% under Biden in August 2024 to 7.5 % a year later. Hispanics have seen slight improvement in unemployment to 5.3% in 2025, and the middle class incomes also have held up and are holding steady. Meantime Bloomberg points out that one third of people in the top 10% are living paycheck by paycheck because of high cost of housing, university education for children, and inflation.     ...

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The heavy destruction of Lebanese infrastructure by Israeli bombing may have created serious differences of opinion between the U.S. and its European allies about the wisdom of current U.S. policy in the Middle East and weakened U.S. -Middle East relations and increased the volatility of future oil supplies.

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BP Russia is the only large joint venture in which a foreign company has a 50% ownership and it is highly profitable with net profit of $5.7 billion on annual revenue of $24.9 billion. The Russian government is consolidating the oil industry to make it largely a state owned industry and renegotiating old contracts for a majority position in all oil joint ventures. In the light of that policy and its implementation for several years it would appear that the BP joint venture also would be seen as part of the same scheme of things. The minority partners and BP would negotiate their way for the best possible situation in this scheme of things.

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The WSJ responds to president Biden ramping up renewable energy plans and linking Republicans with Senator Rick Scott's plan for sunset provisions on federal legislation every 5 years that Biden says would include Medicare and Social Security. WSJ is critical of Biden's renewable energy plans and calls for increasing production of oil and gas to meet energy shortages and price increases. It is also against a wealth tax, Biden's $2 trillion Workers and Families Plan, and Biden's plan for Medicare to negotiate drug prices. WSJ says real disposable personal income increased $4205 under the Trump presidency 2017-2020, and has since declined by $374 with high inflation depressing purchasing power. The impact of climate change requiring brave choices and strong action is missing in the Republican plan as Republicans focus on attacking Democrats controlling the presidency and Congress on the issue of inflation. The issue of remaking supply chains are on both the Republican and Democratic agendas with president Trump giving more rhetoric against China's role in dominance of supply chains and Mr. Biden taking stronger action in Theodore Roosevelt's style of carrying a big stick and quiet posture in restoring America as a manufacturing powerhouse. The impact of climate change is short term rather than long term as seen by the heat wave in South Asia today, the fires in North America and Europe. Republicans are losing sight of the importance of making the shift on renewable energy quickly with some short term pain, as they push for oil and gas solutions and a less effective program for renewable energy. Mr. Biden is taking on bigger risks in the short term in the midterms and beyond but following a sound policy of aggressively pushing renewable energy. This can also be seen in the importance renewable energy is being given even in countries with a need for coal and natural gas such as India. Modi's plans in India are to buildup renewable energy capacity with aggressive targets for 2030. ...

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Relations between Iran and Arab Sunni states Saudi Arabia and UAE are improving especially as Arabs distance themselves from the Bush Administration after faulty inelligence estimates about Iran were corrected by the CIA concluding that Iran wasnot pursuing a nuclear weapons program. The Arab Sunni states arenot altogether happy with the US policy in Iraq and Palestine. Note that that even before this there is a stron economic link between UAE and Iran. About 400,000 Iranian expatriates live in the Emirates and 9000 part Iranian owned firms are registered with the Dubai Chamber of Commerce and Industry. One look at the map show why Dubai is closest to Iran just a short strip of water dividing the two countries. This bodes well for oil prices as any volatility in the region would only increase pressure on oil prices. Peace in the Gulf region would do a lot to decrease the volatility affecting oil prices. It would also give Iran confidence to address its own role as a supplier by modernizing its oil industry. See the link to Mexico where President Calderon wants to transform Pemex and Mexico's oil industry over 10 years after Petrobras was pushed into reform by President Cardozo in Brazil. Commerce and Industry...

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The Bank of Mexico, Mexico's central bank, cuts interest rates by half a percentage point to 3% in June 2014. The consumer price index is at 3.4% for 12 months through mid-May, and the central bank sees the inflation target of 3% by early 2015 as achievable. The central bank's estimate for GDP growth in 2014 was lowered to 2.8% from 3.5%. GDP growth was annualized 1.1% for the 1st quarter of 2014. Mexico has failed to live up to the growth expectations after the new Nieto administration's efforts to jumpstart the economy and opening up of the state oil industry to foreign investment. The policy changes of the Nieto administration set the future course of the economy and will take time to deliver results in economic growth. More effective administration and execution is needed for economic growth.

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Central bank chief Nelson Merentes becomes the new finance minister in the administration of president Maduro in Venezuela. Former finance minister Giordani remains part of the economic team. An internal debate is taking place inside Maduro's economic team about the right policy course to follow considering the shortage of dollars in Venezuela, the policies of giving gasoline almost for free, lack of investment in the oil industry, and economic stagnation in Venezuela.

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Russia's economic planners and president Putin underestimated the importance of foreign investment to build its tech sector and diversify the economy away from its dependence on oil and gas commodity exports. The strong balance sheet with only 20% of GDP in government debt and over $300 billion in foreign exchange reserves created a false sense of security. An adventurous foreign policy has resulted in western sanctions and a poor investment climate crippling much needed foreign investment. Capital flight exposed vulnerabilities in the economic situation and cracks were evident in the emerging markets crisis in early 2014. Russian corporations were exposed as they depended on access to financial markets which was reduced with EU and U.S. sanctions. These problems were compounded by Dec. 2015 as OPEC led by Saudi Arabia did not cut back production to offset higher shale oil supplies, leading to the drop in oil prices below $50. Experts see the drop as being a lasting factor and Russia's finance minister sees no rebound of oil prices to $100 as happened after 2008, accepting a long term situation of low oil prices. This increases dependence on oil says Barley. It shows how Russia under Putin had grown complacent about the risks to the economy of not forging ahead with an aggressive plan of diversifying into tech and related sectors. In a competitive global economy the risks of standing still, of complacency, misallocation of resources, poor decisions, and weak political processes, can be disastrous....

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The handling of the oil spill by the Obama administration threatens to permanently affect the image of the Obama administration. There may be a spillover effect from BP's ineptness that draws in Obama's and Interior Secretary Ken Salazar's handling of the crisis. The Obama administration relied too much on BP to bring an end to the crisis. And it has not articulated aclear policy for regulation of technologically sophisticated industries like investment banking, deepwater oil drilling and other industries of this type where alot can go wrong. Tough inspections are needed in these industries and strict regulation for the proper operation of capitalism. Financial regulatory reform bills in Congress also have suffered from being whittled down so that strict regulation is far from being a reality to avoid future crises.

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Republican orthodoxy means Republican platforms and policy calls for less government which goes against the facts on the ground and the needs of the Nation, and the People. This WSJ report shows Republican counties are more dependent on government aid by a factor of 10 to 1 compared to Democratic counties, and this is increasing every 4 years since 2000. It was 1 to 1 in 2000 and went up to 1 to 5 by 2016 and accelerated since to 1 to 10. Why is this important? It is important because as is true also for the trillions of dollars of funds allocated in the Biden legislation in the Inflation Reduction Act, for Infrastructure, and for Chips and Science. Much of this funding goes to Republican states and counties. Not just in this but in environment regulation for health this vastly benefits Republican counties as shown in the WSJ exclusive below on Mooresville, NC, on coal ash cancer causing soil fillers use in the wealthiest suburbs.   ...

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Iran's (IRGC's not the people of Iran who are protesting) strategy in talks is to stall peace talks, to use the help of global media which is creating perception for Iran, and see if the strategy of no nuclear materials turned over to Russia or some other country, see if that strategy works. This is  what German Foreign Minister Wadephul is saying on Day 16 of the Naval Blockade. Earlier this week German chancellor Merz called it unfortunate that the Iran War is continuing in explaining to ordinary Germans why the German economy is slowing down, yet he understands the danger posed by nuclear weapons in Iran or for that matter anywhere inthe volatile and explosive Middle East. Almost like the volatile and explosive Balkans that ignited World War I in 1914. This strategy of IRGC Iran does much irreparable damage to the Iranian economy in weeks to come. Iranian protests were intended to put the economy on a new path in which not just students, the middle class in the bazaars, the younger generation of Iranians who had the most to lose participated. Why is this happening? It is happening because of the complicated politics of the Middle East and centuries old differences within the Islamic world between different sectarian beliefs and cultures. It is not happening because of the US. The US cannot be responsible for what colonial empires of the British and French did in this region in the 1920's by creating artificial states of Lebanon, Syria, Iraq, out of the Arab portion of the collapsed Ottoman Empire defeated in World War I with Shia, Sunni populations in these states mixed up into unmanageable states. Five decades of wars in the Middle East are the result of these unmanageable artificial states of French and British Empires by 1921. The British Empire also controlled Iran in the 1900's and its oil resources. There was no involvement of America as the British and French did what they wanted to do even in the Treaty of Versailles that ended WWI.  The fall of the pro-Soviet Mossadegh regime in 1956 was the only fragmentary situation which is an anti Soviet Cold War move by the US in 1952, and was done by a group that had British connections deep inside the Eisenhower administration led by Secretary of State John Foster Dulles that took this unfortunate step for America (looking back over  5 decades of wars). A British oriented group was active inside the Republican party that continued to operate in the Reagan administration's involvement in support for Iraq in its war with Iran. And which no longer exists in the Republican party led by DJT which puts America First, grasps the fact of unmanageable states of British and French Empires and seeks to distance the US from the Middle East. Gandhi and Patel (and Jinnah) avoided the creation of such a state in British India's partition into India and Pakistan. Afghanistan is simply an extension of this Middle Eastern complicated setup, including 9/11. Why is all this important? Arab Middle East is a dangerous place for nuclear weapons- this is all the US is trying to accomplish, thankfully without the cooperation of the British and French whose Empires are responsible for the creation of a hodge podge mix of peoples in Lebanon, Syria and Iraq which (check this out) never existed before British and French Mandates of 1921. The global and American media that sees DJT Republicans as too conservative on cultural issues and the political establishment intending to return to power have completely obscured or not presented this side of the Middle East, yet is key to devising a policy that keeps America out of Middle East wars but keeps the goal of no nuclear weapons in this powderkeg of a region. ...

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Morse's reasoning and figures for a fall in oil prices by the end of this year and eventually settling down in the $90 price range? On the supply side he sees the OPEC decision to last year withhold oil production increases and this year's decision to put more oil on the market putting an additional 1.2 million barrels a day on the supply side. About 500,000 barrels a day are added to this from Iraq as security improves in Iraq to make this 1.7 million barrels a day. And refined product with refining capacity for the heavier crude has increased creating more competition among refiners leading to refined product increases lagging behind crude price increases. Add to this the large investments in the middle east and especially in Saudi Arabia to increase production, also in places like Nigeria and Angola, says Morse. On ther demand side he sees an astonishing decline of as much as 900,000 barrels a day year over year from 2008 over 2007 in the USA as fuel conservation is kicking in. On this score he sees a decline in oil price even if this decline had not happened in the USA. (From the video interview). This underscores the importance of everything else that is happening. He sees demand in China declining after the Olympics. The Chinese economy will slow as the Indian economy is already doing and oil imports will decline for China. At this point demand from India, China and other developing countries says Morse is increasing at 1 million barrels a day year over year and will now head downward. A couple of points are relevant in this context. One is that credit contraction in one study by University of Chicago economist Anil Kashyap is expected to be $1 trillion, in recent BW report on the economic situation and banks lending. With such a big impact industrial production by the end of this year and into 2009 will be severely impacted, especially as other countries in the EU and Asia are affected. This plus the dramatic nature of the shift to smaller cars as companies like Ford and its CEO Alan Mulaly vow to transform their production by 2009 to smaller cars is sure to bring further declines in demand. See recent statements by Mulaly and Ford. Morse's credentials show that he brings experience un teaching monetary policy at Princeton, as well as experience going back to being Deputy Assistant Secretary of State for international energy policy in the Carter administration , cofounder of consultants PFC Energy and publisher of Petroleum Intelligence Weekly, following the petroleum industry for many years. He has in the past predicted the emergence of Russia as a dominant oil supplier rivalling Saudi Arabia, and predicted the oil price increases based on fundamentals. So as he says the oil price has always been affected by fundamentals, that being the reason for the oil price increases in the last few years and now the moderating influences that reverse someof these oil price increases in the coming year and continue to exercize that moderating effect in coming years. ...

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China imports from the US only $143 billion and much of this is soyabeans (US farmers), petroleum oil products (buyers in Europe and Asia), aircraft (Boeing). Farmers were compensated from the tariff revenues in the first term, oil products would be shipped to Asia and LNG to Europe to make up for loss of supplies from Russia. India will take up the Boeing production as it's economy expands to levels China, Japan had earlier. The action is a last resort as 490,000 lives were lost in 12 years from the fentanyl shipped raw materials from China and drug trafficking gangs in Mexico processing it in labs to ship across the long US border or Canadian border into the US. China and Mexico have not stopped the flow of fentanyl into the US. How much is 490,000 American lives worth? That is 5 times the lives lost in the Vietnam War and the Korean War combined of 100,000 lives lost in both wars. China exported $436 billion to the US in 2023 increasing by about 6% from prior year. Integrated Circuits alone were more than all US exports combined to China at $154 billion. Electric batteries another $80 billion. Computers and office machine parts were $54 billion. Where will China ship all these products. It is brave but it is easier to stop fentanyl flows out of China, and cut all the trade barriers, reverse state policy to dominate key industrial sectors in State Planning. The problem in the stock market response is that this is a trade war which it is NOT. It is about National Security if this is allowed to continue as Clinton, Bush, Obama have allowed to happen US is in real danger of becoming a second rate power in the world, at which point the world will become a dangerous place with India, China, Russia, Germany and other states having no constraints to create future wars without US to set some basic principles of world peace. UN itself would not exist without Cordell Hull and FDR. The world we know will be GONE. US Navy will not be able to build the ships it needs in USA if this deindustrialization is allowed to continue.    ...

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The impact on stock markets around the world of the protests in Egypt. The Nikkei fell 1.5%, the Kospi index fell 1.5%, on Jan 31, and the Dow Jones average fell 166 points on Friday Jan 28, 2011. Oil prices increased by 3.7% to $89.34 during the week of protests in Egypt. The Bipartisan Policy Center in Washington estimates a 5% increase in the price of oil takes away $5 billion dollars from the US economy. Sam Stovall, chief investment strategist at Standard & Poor's Equity Research, says that a boxer rarely gets knocked out by a punch he is expecting, and this could be what starts a decline after the market fought off fears from sovereign debt crises in Europe and interest rate increases in China. What makes Egypt significant? The Suez Canal is ony a 1000 feet wide at the narrowest point. Supertankers carrying oil do not pass through the canal but rely on smaller vessels and on the Sumed pipeline. About 2.9 million barrels of oil a day, 2.6% of global oil production passed though the Suez Canal and the pipeline according to the US Energy Department. Because prices are determined at the margin this is a lot of oil, especially considering the global spare production capacity is only 2.5 millon barrels a day. The immediate impact would be on Europe which gets much of the oil refined in the Middle East and shipped using the canal and pipeline. Egypt is also a major importer of wheat, importing more wheat than any other country. Any increase in imports to placate consumers would increase wheat prices. Already wheat prices are impacted by floods in Australia, a long drought in Argentina, and forest fires in Russia. Inflationary impact of rising food prices has been felt in China, India and other countries....

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It looks likely that after ignoring the chances of the former Iraqi army disappearing in the war and becoming insurgents the Bush administration military has now embraced them in the form of Awakening groups in Anbar province, initially with tribal groups with ageold traditions predating even Islam but now more dangerously in Baghdad itself with former members of the Baathist military. The tribal groups have limited loyalties but are not friendly to the Shiite led government and fight among themselves. But the Baghdad Sunnis who have already suffered from the Shiite led national police and militas are hostile to the Shiite led government. This is why the movement is growing so quickly as the war against the Americans is turning into an effort by Sunnis of all kinds of politics to turn their attention to the eventual conflict that they see with the Shiites. These Awakening Groups are numbering some 65000 and could quickly reach 100,000 and are watched suspiciously by the SHiite led army and police who refuse to integrate them into the army and police making them more likely to look to money from elsewhere once the Americans stop paying them. The Americans for their part are paying them $300 per month which will cost the US military budget some 234 million dollars and save a lot of American lives and give the US already convinced that this is quite possibly a civil war situation not entirely of its own making , an opportunity to have cover for a withdrawal that shows honorable intentions to Sunni and Shiite alike. The American officers clearly say that once they withdraw there won't be anybody to administer the contracts. Would other Sunni countries like the Saudis step in with economic aid. This is a possibility. This may be why some Iraqis are actually now going back home from overseas, adefacto partition is already taking place, And the Awakening groups only provide the safety to Sunnis in their Baghdad neighborhoods. from the Shiite led police and army. Why would'nt the US simply recognize the defacto situation call it partition or anything else, its the defacto situation. Is it because that leaves most of the oil in Shiite or Kurdish areas, Basra and Kirkuk? But in effect thats what the defacto situation is because most of the oil production as figures show is from the South Oil Company in the Shiite south. See the link to the recent article WSJ Dec 13, 2007, on oil production numbers from the South Oil Company and in the north. Of 2.5 million barrels 2 million barrels came from South Oil and 500,000 from the north. Not much of the oil money is going to the Sunni areas anyway and the national government members are not willing to even meet with the Sunni representatives in some areas. From the larger standpoint of oil supply in world markets and oil prices this means that the current increase supply into world markets will see two new phases. For a while there will be good supply as the insurgency settles down to prepare for a sunni led government in sunni areas under cover of US protection and withdrawal because violence against pipelines ect will diminish. The when the US withdraws this production will decline for a period as the sunnis and shiites form their own separate governments. After that as peace settles down on the region in a kind of coexistence of sunni and shiite governments oil production in Iraq will see a modernization and significant increase. As the new Shhite government will need a lot of money to fund reconstruction of its areas Iraq may hav an incentive to really bump up production like the Russians did afterthe Yeltsin chaotic years. Note that of the $2.4 billion oil investment budget for 2007, only 30% of this was spent in 2007 according to the link WSJ Dec 13, 2007, even though the industry is using dilapidated and old equipment and facilities and badly needs investment, so the impact of a real modernization and investment once the country's Shiiites and Sunnis have their own governments and coexist and peace settles in the region would be huge increase in oil supply. In this sense this is why its been so difficult to understand oil prices and supplies. Twisters have been thrown into the works for the Iraq area because of the civil war situaton and for Iran the nuclear situation and the rhetoric simply complicated matters even as Iranian production was declining and its internal demand growing. ...

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Speaking at a banking conference, advisors including the head of Russia's largest retail bank Sberbank, German Gref, minister of the economy, Aleksei Ulyukayev, and head of the central bank , Elvira Nabiullina, express deep concern about the economic prospects in 2015. Foreign investment is down from about $90 billion in the 1st quarter of 2013 to a negligible amount in the 3rd quarter of 2014. Capital outflows following the Ukraine crisis are estimated at about $110 billion by former finance minister Alexsei Kudrin. The ruble dropped to its lowest level against the dollar since the 1990's. And the sharp decline in oil prices with Brent crude at about $90 is another risk factor as 50% of the budget comes from oil and gas revenues and 60% of exports are still oil and gas, with no serious or effective effort to diversify under the Putin adminstration. Putin told the banking conference that a deficit free budget and reserves of $460 billion are "fundamental factors supporting stability." Advisors and leading bankers remain unconvinced. The problem is that even at the beginning of 2014 before the Ukraine crisis foreign investment had slowed to a trickle, similiar to what India experienced in 2013. The central bank head says her effort to open up the bond markets in Russia to foreign investors is now in vain because there are few foreign investors. Instead of reversing the situation as is happening in India with the new Modi administration, policy under Putin and the Ukraine conflict may have scared investors away with the increasing western sanctions and stagflation (estimated 8% inflation and about 0.5% growth in 2014). The head of Sberbank Mr. Gref told the banking conference- "The Soviet Union broke apart because of the mind boggling incompetence of the Soviet leadership. They did not respect the laws of economic development." The problem with sovereign reserves is that it can protect a sovereign currency such the Russian ruble or the Brazilian cruzeiro to some extent, but today's vibrant economies need foreign investment and foreign technology for growth. Even a country such as China with a trillion dollars in reserves needs the reserves in its special case because of its billion plus aging population, and is no exception to these laws of economic development about the need for foreign technology and foreign investment. ...

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India is becoming a major destination for foreign investment in manufacturing in many industries. The youth population 15-24 now exceeds that of China. Over the period 2015-2019 the number of youth 15-24 will increase to be close to 250 million in India in 2019, compared to a rapidly declining youth population in China of little over 150 million in 2019, according to the International Labor Organization. China's one child policy, investigation of multinationals business practices, and increasing wages in manufacturing, are reducing its attractiveness for foreign investors. Other destinations such as Russia are less attractive because of the economic crisis after falling oil prices. India also benefits from the large drop in oil prices to help reduce its chronic deficit and lower inflation- significant dividends at a critical time. Raghuram Rajan, head of the central bank, estimates the gain from the drop in oil prices at about $50 billion. Indonesia also benefits from the same trends. Prime minister Modi is reducing the bureaucratic structures and red tape that are a legacy of the Congress governments since independence in 1947, creating a new climate for business investment. ...

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The ECB stands ready to act with the unanimous support of its 25 member governing policy, says Mario Draghi, president of the ECB. Draghi said that "if oil feeds into other prices, that could generate exactly what we want to avoid, namely a spiralling downward phenomenon" for wages and prices. Mark Carney of the Bank of England, says he will see "how things evolve." The U.S. Federal Reserve might slow planned rate increases in 2016, if inflation remains well below the target of 2%, and conditions indicate adverse effect on the economy.

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India's $1 billion credit line and about $2.5 billion in economic assistance comes at a critical time for Sri Lanka. Indian ties to Sri Lanka go back to the founding of the country with the landing of North Indian prince Vijaya in Tampabanni, cooper colored soil country. No other two nations have ties that go back so long in time to the Buddhist period in India when the Emperor Ashoka sent his son Mahinda with a branch of the Bodhi tree to Sri Lanka. India also provides a role model with Modi's sab ka vikas, sab ke sath, sab ka viswas, sab ka prayas, development for all, with all, with everyone's confidence, everyone's effort as the theme and policy for all of the nations in the Neighborhood Initiative. Another aspect of the ties is the revival of the Buddhist ties as India revives Buddhism and Buddhist religious places in India including Kushinagar where Lord Buddha gained Nirvana. It now has direct air links to major cities in Asia. ...

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Joe Kaeser, CEO of Siemens AG, meets Russian president Putin in Moscow on March 26, 2014. He also had talks with Gazprom chief, Alexei Miller. Siemen's has invested 800 million dollars in Russia in the last 2 years. Siemens sales in Russia are 2.17 billion euros, 2.9% of the company's revenue. Germany's total trade with Russia is 56.3 billion euros for 2012. Eckhard Cordes, chairman of German industry group Ostausschuss, representing German companies with investments in Eastern Europe, met with Russian officials and Alexei Mordashov, CEO of Severstal metals group. He then briefed the German government on his talks. Chancellor Merkel says dialogue is also part of government policy: "Business contacts are still taking place and I am not interested in seeing the situation escalate, but rather am working towards a de-escalation." Exxon has major investments in Russia and deals with Russian oil companies and the Russian government for oil exploration. Exxon CEO Tillerson has taken a similiar approach....

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Michael Birnbaum, the Post, Moscow bureau chief talks to experts and politicians in Moscow about the economic situation as the ruble declines by 36% since July, with the fall in oil prices accelerating its fall and reducing the impact of central bank intervention in slowing the decline. He cites a Putin interview with Tass news agency in Nov. which he says a tieup is possible between the U.S. and Saudi Arabia to bring down oil prices as a way to strengthen the effect of sanctions in changing Russian policy. Russian Finance minister Anton Siluanov says lost oil revenue impact is about $90 to $100 billion a year, added to the cost of sanctions at $40 billion. Significant capital flight also adds to the overall cost. Russian companies borrowing in dollars have large debt payments due that will need to be supported by the Russian government, an added cost. This will put the Russian economy in recession in 2015. The central bank expects inflaion at 10% in 2015. Large losses of this magnitude will be harder to sustain and deplete international reserves of $429 billion as of Oct. 2014. The thinking of ordinary Russians is reflected in an independent Levada Center opinion poll showing 61% of Russians expecting a decline in living standards and economic crisis in the near future. The man most responsible for stabilizing Russia's finances, former finance minister Alexei Kudrin, who had profound public disagreements with president Medvedev over increases in the military budget, warned of an economic crisis following the parliamentary and presidential elections. A major weakness of the Putin-Medvedev second and third terms is the failure to use higher oil revenues to expand the tech sector and other industries to diversify Russian exports away from oil. ...

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Vannis Varoufakis, Greece's feisty finance minister in the debt negotiations with the IMF and the EU, dispels the notion that the Argentina default is an example for Greece to follow, both in his blog and talking to James Stewart of the NYT. He says in his blog, that this is "profoundly wrong." Greece's economy is dependent on the euro, its banks and private sector borrowings tied to the euro, and going back to the drachma would be harder than Argentina removing the peg to the dollar and devaluing sharply in 2001. Even then half of the purchasing power was gone in conversion from dollar denominated deposits to pesos. In December 2001 Argentina defaulted on $93 billion in debt, sharply devalued the peso, resulting in a economic depression, riots and demonstrations. The economy stabilized in 2002, and paid back debt owed to the IMF by 2006, only because of export demand for Argentina's main products of soya beans, and corn, soya oil with high demand from China and Brazil. Greece's exports of cotton and fish cannot provide the basis for such a recovery, says Varoufakis. Arturo Porzecanski at American University, and Daniel Gros, Director of the Center for European Policy Studies have written 2 separate papers on Greece following the Argentine example, and agree with this conclusion....

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Goldstein at the Energy Policy Research Foundation sees a moderation in demand for oil holding the increase to less than 1 million barrels a day. Goldstein sees improvements in crude oil supply, spare refining capacity,and product inventories which should help moderate prices. A lot depends on how the slowdown in the US affects Russia, India, China and Brazil. China's export based economy is likely to be affected and India and Russia to a lesser extent. Already the stock markets worldwide have come down in synchronized fashion in January 2007 leading to action by the Federal Reserve in the USA. There is likely to be a slowing down worldwide with Europe and India and Russia doing better than the USA. The USA may already be in recession. On the supply side the investments in Saudi Arabia and other places in OPEC and production increase in Russia should lead to supply increase of 2.5 million barrels a day according to analysts. At these supply and demand levels prices could range from $65 to $80, with a consensus of $80 under present conditions. There is a possibility of it going down to the $60 range if global economic conditions get worse and consequently demand decreases more. A price in the $60 range will still be needed to increase the incentives of exploration and production of new oil sources and to pay the higher costs of exploration and drilling for oil, especially in remote difficult locations like Russian Siberia and in deep sea offshore locations....

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Dropping wheat and corn prices will reduce the effect on increase in inflation for food prices. A recently signed agreement for UN and Turkey to supervise exports of Ukrainian grain to world markets is showing up in declining futures prices for corn and wheat that will show up in lower food prices. A large harvest for wheat and other foodgrains in Russia and Ukraine is also having an impact. Slower economic growth in China from frequent lockdowns and the ailing property sector, could bring oil prices down from the highs. The shift to renewable energy taking on a huge impetus from recently passed legislation in the US Congress for $369 billion investment and similar moves in Europe with a 15% required reduction under new EU rules could have the same effect of pushing down fossil fuel prices from their highs. This suggests Fed chairman Powell's sense that the economy would improve in the second half is consistent with international developments. The war in Ukraine could also have a possibility of coming to a close in coming months with Russian gains in the east and Ukraine recovering lost land around the Black Sea in the south. Decades of fighting in Ukraine may have obscured the fact that the eastern parts of Ukraine voted in pro Russian governments in the past and the western parts of Ukraine have voted in pro EU governments. The war could end with a settlement around these new boundaries. This would also enhance president Biden's foreign and domestic policy achievements and help the US focus on climate change actions, building new supply chains, rebuilding its manufacturing, its leadership in science and technology, its alliances with EU, and with Japan and India in the Indo-Pacific. ...

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Where changes are being made that make America stronger business leaders wholeheartedly support and value the president's work and the people on his team working on it. Brad Smith of Microsoft says of Biden on cybersecurity "he has done more in his presidency than any president ever." CEO's of auto companies (Stellantis, GM, Ford) and Intel CEO Geisinger value the investment the government is making for climate change transition and investments in rebuilding semiconductor manufacturing to level the playing field with China, something the US Chamber of Commerce never advocated. It is the policy officer of the US Chamber of Commerce who uses the word "complicated" because the positions taken by the US Chamber of Commerce are at odds with what the American people need, or are demanding of the president. If one is talking about large oil companies, so called Tech companies such as Google and Apple that are not paying their fair share of taxes, and Pharma companies that are charging exorbitant prices, the president is only doing what is best for the American people. One could see this in the recent Senate hearings with Big Pharma companies ,when out of sheer frustration the senior Republican senator Mike Braun of Indiana warned the Pharma companies, that they were following a path that he other Republicans could no longer support. Banks faced tighter regulation because of banking crises including the 2009 crisis caused by the banks that hurt workers and middle class. Business relations with the Biden administration are being shaped then by a new vision for America and the American people, to point to a brighter future, not to pull back to the past. ...