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In his plain talk on Syria Trump said the primary message to Russia was: "You should have peace in Syria; its enough." This is the message foreign minister Tillerson is delivering in Moscow. He described the Russian support for the Syrian government as: "I think it's very bad for Russia, I think it's very bad for mankind, it's very bad for this world." He also described Chinese president Xi Jinping's response at a state dinner during dessert when Trump told him about the U.S. missile attack on Syrian airfield, as expressing the sentiment that it was OK considering the chemical attacks by the Syrian government on civilians and children. The closest any president gets to the plain talk given by Trump is during the period of the Cold War when Truman also had this kind of plain talking style to deliver the message that needed to be heard.

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A complete breakdown in negotiations between the U.S. and Russia happens after Russia continues its bombing campaign in Aleppo. About 275,000 people and 100,000 children are in the war torn area in northern Syria. The U.S. had called on Russia to stop the bombing campaign, but Secretary of State Kerry failed to persuade Russia to commit to a ceasefire. The result has been international criticism of the Russian role in the war, and speculation on what president Putin sees Russia gaining from this intervention in DW.com and other sites. 

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The lack of a change in culture at Moody's two years after the financial crisis of 2008.

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S&P's faulty ratings on U.S. mortgage securities was a critical factor leading to the financial crisis of 2008-2009, and the deep recession that followed in the U.S. Recovery was only made possible by large government stimulus and central bank intervention with monetary easing on a massive scale. The effects are still evident after millions of people lost their homes in foreclosures and widening income inequality. Yet it took about 7 years before S&P accepted responsibility and settled with the Justice Department. Earlier S&P accused the Justice Department of suing the company in retaliation for a downgrade of U.S. government debt in 2011. In the convoluted upside down nature of such lawsuits and protests by defendents, McGraw Hill said that the settlement "contains no findings of violations of law." Yet the government produced 290 million documents in response to discovery requested by S&P. Associate U.S. Attorney General, Stuart Delery, the top negotiator for the government, says "put simply, the department brought this case because S&P committed fraud." Delery says no case in Justice Department history has produced this many documents. The Justice Department cited several instances of breach of duty in a statement signed by both parties. In 2007 an internal group's downgrade recommendation for a large number of mortgage securities was rejected by upper management because of concern S&P would lose business. In another cited instance S&P alters its ratings model for grading complex risky securities in 2004 with the goal of being able to issue grades for "2-3 notch improvements" and resulting "improving of S&P market share." S&P had about $1.9 billion in cash balances in third quarter 2014, say analysts, and the settlement was designed to set the right course but not hurt S&P in carrying out its role of issuing about 95% of ratings globally along with counterparts Moody's and Fitch. Mississippi Attorney General Jim Hood says S&P's responsibility lies in that banks might be expected to do something shady, but credit ratings agencies were the ones the country looked up to to do the right thing and flag this....

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Republicans and Democrats decided to tackle the U.S. fiscal cliff in several steps. The first step for the Bush tax cuts to be extended to single earners with income under $400,000, and couples earning under $450,000 was part of the agreement reached Jan. 1, 2013. Republicans see this as protecting small business owners who generate jobs in the U.S. economy. Democrats see this as progress in taxing the wealthy to reduce spending cuts in other programs. As expected the deal was reached between Senate colleagues Republican Mitch McConnell and former Democratic senator and Vice President Joe Biden, as rapport is missing in the relationship between Speaker Boehner and president Obama. The $110 fiscal cliff spending cuts on entitlements and defence will be postponed for 2 months till early March under the deal. Debt ceiling will not be raised and negotiations will be needed again by the end of Feb. 2013 to raise the debt ceiling. By March 27, 2013 short term funding measures lapse. Republicans see accepting tax cuts on the wealthy as a way to remove this issue in future negotiations to focus on spending cuts needed to improve U.S. finances. ...

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Some figures on the foreclosure situation. 2.3 million Americans faced foreclosure proceedings in 2008, 81% increase over 2007. 860,000 properties were repossessed by lenders, more than double the 2007 level, according to RealtyTRac a foreclosure listing firm in Irvine,, California. Moody's Economy.com predicts the numbers to go up 18% in 2009 before slowing through 2011. That is 2.71 million foreclosures in 2009. To prevent the foreclosure levels from getting much worse as unemployment drops, the new administration plans to use upto $100 billion of the remaining $350 billion TARP funds to help homeowners. The 4 states hardest hit are Nevada, Arizona, California and Florida. More than 1.1 million properties there received foreclosure notices, almost half the total nationwide. The hardest hit areas are in California, with the metro areas worst hit in order are Stockton, California, Las Vegas, Nevada, Riverside and Bakersfield, California, and Phoenix. In December more than 303,000 properties nationwide received foreclosure notices, up 40% from year ago month, and 17% above November 2008. At 303,000 the yearly rate is 3.6 million foreclosures or higher for 2009, so the Moody's estimate for 2009 must take into account acceleration of steps to help homeowners with the new administration. Are the rather modest steps taken upto now helping? RealtyTrac analysts estimate that without a state law requiring lenders to give borrowers a 30 day warning before starting the foreclosure process, the foreclosures in California would be 10% higher. There are similiar state laws in Massachusetts and Maryland. Throughout 2008 few steps were taken by the Bush administration to slow foreclosures, even though Republican economists like Martin Feldstein repeatedly advocated this. See links to Feldstein and Sheila Bair of the FDIC who also advocated aggressive action, and providing the numbers to show that it was costlier for lenders to see borrowers go into foreclosure compared to reducing principal and interest payments significantly. ...

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How bankruptcy courts can offer a solution to the foreclosure crisis or at least mitigate its effects on the economy and on people. Senator Durbin of Illinois is expected to introduce legislation to put this into effect. It was adopted as a Chapter 12 provision to save farmowners in distress in Iowa in the 1980's, and helped keep many farming families on the farm in that situation. Not all families would be helped as some will not be able to make even the reduced payments given by a bankruptcy judge. But it gives bankruptcy courts the authority to cut through all the red tape and reluctance of bankers and mortgage securities owners to take the initiative and reduce payments, and in the end may actually generate more money for lenders than foreclosure, which has high costs on several dimensions. One cost and one dimension that is not considered is the cost to the economy and to all businesses, from retail to other products, as foreclosures lead to declines in housing prices. This leads in a downward spiral to more homeowners going under water with their homes being worth less than the mortgage, and this in turn leading to foreclosures that lead to further house price declines. The decline in housing prices adds to the incentive to save and reduce spending, which leads to inventory buildup and layoffs. This is why the situation cannot be seen in isolation, and becomes an area where interests of individual parties like lenders and securities holders tend not to be maximized when they follow their personal interest. And there is no party that can take the collective interest in this case except the federal government. ...

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The precarious situation at Satyam has it faces liquidity concerns, and as the Indian Securities and Exchange Board and other regulators conduct their investigations.

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Questions raised about Price Waterhouse's audit procedures, whether it contacted the banks directly to verify the cash balances on hand and whether it looked for signs of trouble like the huge discrepancies between net income and operating cash flow in recent years. The Institute of Chartered Accountants of India, India's professional accounting body is conducting its own investigation and may revoke licenses and remove members for violations of its code of conduct and ethics.

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Keith Bradsher's NYT interview with Raghuram Rajan, Governor of the Reserve Bank of India, comes when Rajan has come under criticism from the business sector and the small business support base of prime minister Modi's party. The criticism centers on the drop in oil prices since Nov. 2014, and Rajan's failure to drop interest rates at the Dec. 2, 2014 central bank meeting. Rajan says it was not clear whether oil prices would remain low for an extended period at the Dec. 2, 2014 meeting. Since then new inventory data, EIA estimates and OPEC policy guidance have confirmed low prices will remain for an extended period. Rajan lowered interest rates on Jan. 14, 2015, by one quarter of a percentage point. Under India's setup the central bank chief makes decisions on interest rates, compared to the decisions made by the Federal Open Market Committee at the U.S. Federal Reserve. Rajan says there is full understanding between the central bank and the Modi government economic team led by finance minister Arun Jaitley, Jayan Sinha, deputy minister of state for finance, and chief economic advisor Arvind Subramanium. Modi and Jaitley prefer to rely on the advice and policy direction of economic policymakers with long experience in the U.S. and international circles. Both Subramanium and Rajan bring this level of experience and expertise. Subramanium brings experience from his years at the GATT which preceded the WTO, the IMF, and the Peterson Institute of International Economics, and Rajan brings experience at the University of Chicago, and as chief economist of the IMF. Modi is a dilgent listener and policymaker giving careful attention to the best advice, making it unlikely that Rajan would be seen as a holdover from the administration of Manmohan Singh. Other criticism that the business sector has made of Rajan are as financial regulator in asking state banks to increase collateral required from large business firms for large bank loans. Rajan points out the need for business to bear the costs as well as the benefits of taking risks. Under previous governments the state banks allowed large firms to keep their holdings at companies even when the risk taking resulted in losses. Rajan has also not tried to reverse the sharp decline in the rupee, which hurts business firms which took on dollar denominated loans. Rajan has instead followed policy of building up the reserves by buying dollars. The reserves were depleted in 2013 by a policy of currency interventions to reverse that decline. Inflation in India reached 9.9% in Dec. 2013, with policy of the central bank under Rajan set to bring it down to 8% in 2014, and below 6% in 2015, so that India could get out of the trap of persistently high inflation with slow growth. This is critical for a new Indian success story. A goal set by Rajan in Oct. 2012 when he was appointed as central bank chief, was to increase foreign investment and encourage new business so that India was no longer dependent on large companies for growth. This is also critical for a new Indian success story, as the Modi administration and the central bank are both keenly aware. Just as Bernanke and now Yellen at the U.S. Fed face criticism for quantitative easing monetary policy, focus on the high long term unemployed, and not focussing on inflation- with their focus on the long term economic recovery in an environment of low inflation below 2% in the U.S.- India's Reserve Bank faces a different kind of criticism for careful and prudent policies to ensure long term growth....

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Monthly reports are issued on bank lending by the Treasury. The report for February shows business lending is down by 24% in its dollar value from the previous month, and a similiar decline in student, auto and credit card lending. The only increase is in mortgage lending as government efforts to hold down interest rates heave led to a refinancing boom. The two largest lenders Wells Fargo and Bank of America reported a 35% jump in mortgage lending in February over January. Businesses are charged more for loans by Chase, which it says is to reflect increased risks, and Chase has sharply reduced its business lending. This is bad news for the economy, because it means businesses will continue to pull back, and some businesses will layoff employees and others may close for lack of financing. The other link to the report in the WPost about the consumers who have jobs, but are acting flat broke suggests consumption will continue to decline, which puts stresses on businesses as sales revenues for all sorts of products decline across the spectrum of the economy. With less acess to costlier financing, and declining sales, the picture of continued large job losses is being etched, and will continue to be etched as these are becoming things that will not change for a long time. Banks are insolvent or close to being insolvent, so lending is only like to change if the government takesover the banks and puses through lending at attractive rates. But it has to do this quickly, before confidence drops to a level where the demand for loans just isn't there. China is able to push lending through the banks because government controls the banks, this cannot happen in the US unless the government actually steps in to take over the insolvent banks and push through a large lending program. In this sense the Obama program while admirable and helpful to stabilize things a bit, is only part effective, and can never really restore confidence or a serious measure of economic stability because of the three pillars of progress in this situation, it can impact only two directly- foreclosure prevention, and business plus consumer lending. The third consumption is something it can only indirectly control through foreclosure prevention and lending, but which is headed down as Americans convert to a frugal lifestyle. And in these two areas of foreclosure prevention and business lending the government is failing. The fourth pillar of progress in the recovery is employment, and this is also an area the government can only indirectly control through stimulus spending on infrastructure, education and energy, but is largely influenced by foreclosure prevention- which keeps home prices from falling rapidly and overshooting and reduces household wealth- and business/consumer lending. These are ER (f) FPL (CE). Economic Recovery as a function of Foreclosure Prevention and Lending, and Consumption and Employment, where indirect control is shown by ( ). With not much in place for FPL- the only two variables government can directly control if it takes strong and immediate action before its influence on these two variables begins to diminish over time- Obama's inexperience and learning curve and failure to take bold action to get serious results on FPL, may result in admirable demeanor and rhetoric but medicore results and a struggling economy for years to come. ...

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The political warfare between the two parties Republicans and Democrats complicates help to the automakers being released from the TARP $700 billion by Bush in the months before January transfer to the President elect. Bush is purported to want the Democrats to support the Columbia trade agreement which Obama vigorously opposes on the grounds of violence against union workers in Columbia. Complicating the situation further Obama and environmentalists including Al Gore wnat to see the auto industry help in the light of promoting energy conservation and environmental goals, whereas the industry and the unions and their Michigan supporters like Rep. Dingell and others want to see the aid given without any strings attached. This leaves the danger that both sides may be caught in a situation they could not control, the Bush people with a outgoing President who is struggling to preserve something of his legacy amid dismal ratings, and the Obama people without the experience to handle a situation such as this which is getting increasingly complicated. See the editorial pages of the WSJ on November 10 which said government help should only be given if the current management and board are replaced with new management and board, suggesting government receivership for GM. The management and board of GM which have hung onto their jobs through thick and thin are not likely to volunteer for a change. And the public perception is that the automakers management is responsible for this mess having dragged their feet all the way and used lobbyists to delay having to make the fuel efficient automobiles customers want. And another intractable factor that remains in the background is the collapsing sales of automakers which if it continues would require even bigger amount of government aid to keep operations running and pay workers way beyond the $50 billion that is being discussed, almost unrestricted help. In the meantime the Center for Automotive Research athink tank based in Michigan says about 3 million jobs depend directly of indirectly on the automotive industry and suppliers and services and goods providers to autoworkers. At the rate things are going a further deterioration in the conditions of the industry and further sales losses look likely, and GM's share price has already been placed at zero value by auto analysts at Deutsche Bank. It may well turn out that no one is in control and as the situation lurches from crisis to crisis, both the outgoing and incoming administration might find events happening in rapid fire mode one after another may take GM' s share price down close to zero before any solutions are found to an impasse and action taken. This happened with Lehman Brothers where in the end the failure of Fuld to take decisive and correct action early led to a collapse which the Fed and Treasury let happen. The danger to the economy is that when the story of these events is written years hence it may be recorded that very liitle action was taken to prevent foreclosures and action taken was not taken early or decisively. And individuals like Fuld at Lehman in October and Waggoner at GM in November failed to provide the leadership in the months and years leading into the crisis, leading to its steep and worsening nature on the credit front and on the auto front. ...

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The SuperCommittee in the U.S. Congress for deficit reduction reaches an impasse a week before the Thanksgiving deadline on the issue of tax increases and the extension of the Bush tax cuts. The Bush tax cuts automatically expire in December 2012, an option that Democrats are willing to live with, but is one the Republicans find it harder to accept.