LyrArc Article Gist
This NYT editorial provides statistics for the problems of young people facing high student debt, high unemployment, and working in jobs that do not require their educational qualifications. Federal Reserve data show 44% of young college graduates in 2012 working at jobs that did not require a college degree. Underemployment stands at 16.8% in the U.S.- this includes young people too discouraged to look for work and those stuck in part time jobs. Put another way the hope that existed in the 1970's for a better future is simply lacking. The boom, bust, and corrective policy preceding and following the 2000 and 2008 crises have acted as a huge distraction for needed policy steps and imposed additional penalties on young people, just as other trends in the globalized manufacturing and IT industry were shifting jobs overseas.

LyrArc Article Gist
Feldstein points out that Obama economic plans missed the real target, which was on the home front where it came down to addressing the problems of 15 million homeowners under water- with mortgages exceeding the value of their homes- and lack of solutions to deal with the $1.5 trillion in troubled commercial real estate loans. Administration plans really did not help more than a couple of hundred thousand homeowners to reduce their monthly mortgage payments. Getting banks to start lending again by selling impaired loans to nonbank investors, also failed to work, as banks were reluctant to do so and reduce their accounting capital. Health care legislation simply distracted attention from the real problems. See the links to Feldstein's repeated insistence that the new administration (and even during the late stages of the Bush administration) focus on these problems. Health care legislation that passed simply would not control the increase in health care spending, that the public correctly perceived as the real problem if the other health care issues were to be resolved. Instead Obama's health care legislation offered to increase the deficit to unsustainable levels, with no solutions to more pressing home front problems in sight. Feldstein, is one of the most eminent US economists....

LyrArc Article Gist
IHS Global Insight estimates that output in the US for the auto industry for 2009 will be 9.5 million vehicles, with capacity of 16.9 milllion vehicles this amounts to 56% capacity utilization number which is very low. Center for Automotive Research estimates that the sales began moving ahead of trend in 1996 and really accelerated after 1998. The easy financing fueled the boom. Now the 16-17 million sales years that were considered normal are seen as inflated and way above the trend. All this suggests that there is a lot of restructuring ahead for the auto industry.

LyrArc Article Gist
The comparison of China with Japan as stress builds up from overexpansion of credit in the banking system. The sharp increase in credit following the 2008 financial crisis has built up stress in China's banking system. Japan went through a period of low growth and insufficient lending by banks. Banks refinanced bad debts to zombie companies in Japan leading to a long period of low growth. China faces a similiar period of low growth after a credit expansion binge.

LyrArc Article Gist
A black supporter of Obama, Ms. Hart, tells him- " I'm exhausted of defending you, defending your administration. I've been told that I voted for a man who was going to change things in a meaningful way for the middle class." This encounter happened at an hour long town hall meeting on CNBC, which John Harwood moderated. Harwood asked Obama whether he was having difficulty connecting with average Americans because of attending Ivy League schools and spending part of his youth overseas. The incident reflects the frustration and disappointment felt by average Americans with the Obama administration and with Obama.

LyrArc Article Gist
Russian president Putin tells Russians at an annual news conference on Dec. 17, 2014, that the West wanted to deprive Russia of its natural resources. He says steps taken by the central bank and his administration were proper, including avoiding capital controls, except that the decision to raise interest rates to 17% in mid-Dec. should have been taken earlier. He deflects criticism that the sanctions and the decline in the ruble were "payment for Crimea" (Russia's takeover of the Crimea) by saying it was "payment for our independence, our sovereignty." Putin expressed unease with the expansion of NATO to Russia's borders. He told Russians to expect that the crisis will last for 2 years and during this time the Russian economy will adapt, in particular shifting its heavy dependence on oil exports. During the 10 years of the Putin administration since 2004, Russia has not made a vigorous effort to diversify away from oil dependence. Progress was made primarily in better integrating the economy with the European Union, entry into WTO, building a sovereign reserves fund, until the crisis in Ukraine. The Putin years may be seen in the future as the transition years towards a more diversified economy, and may lead to a shift away from the kind of management of economic and foreign policy by a single leader that may have led to the disruption in relations with Germany, a critical economic partner for Russia. Chancellor Merkel said Germany would continue to support sanctions as long as Russia opposed the right of self- determination of people in Europe and European values. Germany continues even now to maintain dialogue with Russia through Social Democrat Foreign Minister Steinmeier, which is why Putin continues to refer to it as "our partners" and cites the differences with our partners, very different from the Cold War period when no such close relations with Germany existed. ...

LyrArc Article Gist
Haruhiko Kuroda, 68 years old, a senior finance ministry expert who ran the ministry's currency policy as vice finance minister for 4 years in the early 2000's, is prime minister Abe's nominee for central bank chief. He lectured at Hitoshibashi University for two years before becoming the head of the Asian Development Bank. His book "Success and Failure in Fiscal and Monetary Policy," is critical of the Bank of Japan for mistakes in being first too accomodative in monetary policy to set up the 1987 crash, and then tightening too quickly leading to the deflation and recessions of the last two decades. By choosing an expert with a long experience in the field of monetary policy and a vigorous advocate of getting things right to shake off the deflationary trends, Abe is sending a strong signal to financial markets. Kuroda says he is looking at a shorter time frame to achieve a 2% target for inflation- about two years. In essence Kuroda is taking a page from the policy book of a small group of MIT trained economists, Bernanke at the U.S. Federal Reserve, Draghi at the European Central Bank, and Mervyn King at the Bank of England to boost domestic economies in the context of increasing global growth. The yen weakened to 94.77 to the dollar on Feb 25, 2013, after the announcement. Abe's nominee for one of two deputy governor appointments is Kikuo Iwata, a 70 year old economist who was also critical of Bank of Japan monetary policy since the 1990's. The Abe administration has also carefully communicated this message. Speaking at the Centre for Strategic and International Studies in Washington D.C. Abe said Japan's goal was to increase exports, but at the same time it will increase imports which should benefit the U.S., China, India and other countries. He described a recovery in Middle America from the Dakotas to the Carolinas and sees something like this happening also in Japan. Even the appeals to nationalist sentiment are also coupled with the message to China and S. Korea of not climbing up the escalation ladder and seeking good relations to promote mutually beneficial development. Abe's focus is on building the U.S.- Japan relationship....

LyrArc Article Gist
WSJ reporter Bob Davis writes this report on the end of the China economic miracle in 2014 as he completes a 4 year assignment covering China. He says China's economy is slowing rapidly and he is pessimistic abou the future. Construction cranes visible across China's skyline says Davis, can no longer be interpreted as growth inducing. With rows upon rows of empty flats in third and fourth tier cities which account for the bulk of the increase in housing construction, the consequences of a debt fueled construction boom are easy to see. Davis cites the IMF on the dangers of credit fueled growth in China- only 4 countries have experienced as rapid an increase in credit to GDP ratio in 5 years. Each of the 4 countries Brazil, Ireland, Spain and Sweden experienced a sharp decline in GDP growth and banking crises following the credit bubble. Estimates of debt to GDP are as high as 250% for China. Krugman, Roubini and other economists have warned about the credit bubble, saying China is no exception to the rule for the risks posed by such a bubble. ...

LyrArc Article Gist
The minimum wage was raised in Arizona, Colorado, Florida, Montana, Ohio, Oregon, Vermont, and Washington. Wage increases are for 28 to 37 cents an hour, and raises the minimum wage in these states to $7.64 to $9.04 an hour, with Washington as the only state with a minimum wage above $9.00. The federal wage level for most workers is $7.25 a hour. Labor Department data show most of the minimum wage workers in these states are women, over 20 and white. The added income is not expected to put these workers above the povety line because of higher inflation.

LyrArc Article Gist
The Indonesian currency, the Rupiah, has declined by 13% in 2013- by Sept. 3. It reached a level of 11,050 rupiah for one dollar on Sept 3. Economic growth has declined to 6% for the second quarter of 2013. The depreciation of the rupiah is likely to increase inflation significantly and affect the consumer spending boom in Indonesia. Indonesia had a $2.3 billion trade deficit in July 2013 after a continuing surge in imports. This will affect car prices and prices of international brands popular in the country. Toyota set the rate at 9500 rupiah to the dollar and plans to increase prices now that the rate has passed 11,000 rupiah.