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Indifference on the Republican side, and a sense that not much is going to get done on the Democratic side, as President Obama pitches a $447 billion second stimulus plan in a speech to both houses of the U.S. Congress on September 8, 2011. Dana Milbank documents the attitudes and skepticism with which members of Congress received the proposals- a general sense that President Obama was too weak and ineffective to get things done and has lost credibility. John Taylor, senior economic advisor on the Republican side pointed out in a Wall Street Journal column a few days before the speech, that the jobs proposals Obama and economic advisor Alan Krueger were presenting were similiar to old plans that have not produced results. Taylor viewed them as placing too much reliance on government and not enough on the private sector to generate economic growth and jobs.

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A review of the aid program for Greece done for European leaders meeting in Brussels on October 23, 2011, shows that most of the money sent to Greece has gone to pay off bondholders (mostly European banks that lent to Greece). For the initial bailout program of the European Union and the IMF in May 2010, international loans amount to $91 billion. Of this $52 billion has gone to repay bonds that came due between May 2010 and September 2011, according to this review. The report was prepared by the European Commission in coordination with the IMF and the ECB. Greece owes over $300 billion dollars and Greece's borrowing extends far beyond the country's size and ability to repay, creating extraordinary risks to the financial system in Europe. The initial bailout program based its lending on little or no haircuts for the bondholders, who are mainly the European banks (mostly French and German banks) that loaned the money, which creates another set of risks, and a logjam, because taxpayers in the stronger financial countries such as Germany are equally adamant on not paying for the excess lending of the French and German banks. The financial leaders in Germany, Finance Minister Schauble, Axel Weber, the former head of the Bundesbank, and other prominent financial experts have also adamantly insisted on following prudent financial practices, and are opposed to using the European Central Bank to buy the sovereign bonds of France, Italy and Spain....

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German chancellor Angela Merkel arrived for a meeting of eurozone leaders in Brussels on October 23, 2011. She said: "I believe that now we have reached a more realistic view of the situation in Greece and that we will provide the necessary means to be able to protect the euro." Germany has insisted that bondholders take writeoffs of between 50-60% of Greek debt so that Greece would have sustainable debt. A review of Greece's debt by the European Commission in coordination with the ECB and the IMF shows that Greece's debt situation is totally unsustainable and will require a bondholder writeoff of around 60%. according to that report a 60% writeoff for bondholders would be required to bring Greece's debt below 110 percent of GDP by 2020. This has supported the German "realistic" view and Jean-Claude Juncker of Luxembourg, who heads the euro group of finance ministers stated that "we agreed yesterday (Friday, Oct. 21) that we have to have a significant increase in the banks' contribution." France also backed away from the plan it was supporting for the European Financial Stability Facility (the fund established to lend to troubled countries) to borrow from the European Central Bank, something Germany opposes. French finance minister Francois Baroin, said the issue was "not a definitive point of discussion for us,... what matters is what works." The Dutch support the Germans on these issues and Dutch finance minister, Jan Kees de Jager, said the use of the European central bank was "no longer an option." Options being considered are for the European Financial Stability Facility to offer insurance against a portion of losses on Italian and Spanish bonds....

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A behind the scenes account of the chain of events after the meeting of French President Sarkozy and German Chancellor Merkel at the seaside resort of Deauville, France, on October 18, 2010. Based on interviews with EU officials this account shows how these events are leading to closer union of the 16 nations of the European Union. At the seaside meeting Sarkozy met privately with Merkel. Merkel offered to take back the German demand for automatic penalties for nations failing debt guidelines. She insisted that bondholders should bear losses if a member nation of the EU defaults. The French president agreed to accept the German condition knowing that Germany was reluctant to support the bailout fund beyond 2013, and German public opinion was souring on the bailout. The European Central Bank president, Trichet, was furious that the two leaders were undercutting his efforts to create confidence in the euro. Trichet told Sarkozy, he must not understand how serious the situation was. Sarkozy told Trichet, "you must be talking to the bankers," "we are responsible to the citizens." Weeks of negotiating between the ECB and the Irish government followed, leading to the bailout of Ireland. The contagion effects on Portugal and Spain created more tensions for the euro. Merkel softened the German position and the EU leaders meeting in December 2010 moved in the direction of a closer union. Bondholders would still take losses but only if one of the EU member states were to become insolvent. And after months of discussion and debate the EU leaders realized that the only way forward for the European experiment was to build a closer financial union. Germany's future, Merkel told the German parliament, was in Europe....

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Transcripts released for the U.S. Federal Reserve's Federal Open Market Committee (FOMC) 2006 meetings show Fed chairman Bernanke and then New York Fed president Geithner ignored the risks of a hard landing from the mortgage and housing bubble. Geithner even went so far as to say about retiring chairman Greenspan, who also ignored the risks from the bubble and set the tone during his long period as chairman at the Fed: "I'd like the record to show that I think you're pretty terrific, too...And thinking about the probabilities, I think the risk that we decide in the future that you're even better than we think is higher than the alternative." In evaluating the risks facing the U.S. economy in December 2006, at the height of the bubble, Geithner stated: "The current weakness in the economy still seems principally to stem from the direct effects of the slowdown in housing on construction activity... The softer than expected recent numbers don't argue in our view, for a substantial reassessment of the risks in the outlook." The Fed chairman, Ben Bernanke, said at the first meeting in March 2006: " Strong fundamentals support a relatively soft landing in housing... I think we are unlikely to see growth being derailed by the housing market." When a Fed economist gave a presentation in March 2006 on the risks in Iceland, Bernanke said- "We'd like a full report on the Icelandic," at which point the rest of the group erupted with laughter. Iceland defaulted on its debts in 2008. Warnings about housing by Fed Governor Susan Bies were ignored by Bernanke and Geithner. Two highly leveraged Wall Street investment banks collapsed in 2008- Bear Stearns in March and Lehman in September- from the impact of the bursting of the bubble in housing and mortgages. When they collapsed these banks were leveraged at about 30 to 1, as most of the warning signs had been ignored by regulators including the Federal Reserve....

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Systemic risks from "too big to fail" and the pushback on capital reserve requirements that leave banks with lower reserves. Ewing describes the role of the president of the Swiss Central Bank, Mr Hildebrand, in setting rules for higher capital reserves for Swiss banks than that of other countries and the pushback from the banks resisting the new regulations. "He will never find another job in Switzerland," a Swiss newspaper Der Sonntag quoted one banker saying this about Mr. Hildebrand. Losses at Swiss bank UBS during the financial crisis and the $2 billion loss at a UBS trading desk in 2011 have created a new awareness of systemic risk at banks. During the financial crisis banks used an optimistic estimate of "risk weighted assets" which led to insufficient capital reserves in a crisis even as the banks were shown to be well capitalized. A sense that banks in Europe and the U.S. will continue to have insufficient capital reserves at 3-4% of assets under new rules and with the longer phase in times for the new Basel III regulations of reserves at 7% of assets to after 2016....

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The fears within Mexico's auto industry that the TPP will allow imports of cheap Chinese auto parts hurting its auto industry, and reversing years of gains made under NAFTA. Canada also has fears about the TPP for its auto industry. Japan uses China and Thailand as part of its supply chain. China is not part of the TPP. Add to this the UAW and Detroit's suspicion of TPP concessions to Japan. This has stalled U.S. negotiations with Japan on the TPP trade agreement in 2015.

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The implications of the U.S. Federal Reserve's loose monetary policy. Total U.S. debt in 2012 is expected to be $11.58 trillion, with 52% of this in maturities of less than 3 years. The average interest on this is about 2.24% in January 2012, with interest on the debt at about 225 billion in Jan. 2012. If interest rates were to go up in 2014-2017 as forecast by the CBO, an interest rate of 5-6% would result in doubling or tripling the amount of interest on U.S. debt. The U.S. Treasury is financing the huge increase in debt- $5 trillion added in the last four years- through low interest rates and shorter maturities. This stores up large financial risks for the future including calls for tax increases to pay for a sudden rise in the interest on U.S. debt.

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Aghhanistan peace talks with the Taliban in Kyoto, Japan in June 2012.

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A decade after the 2004 speech at the Democratic National Convention, Obama's message of change and hope as seen by American voters in 2014.

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The first of a series of quarterly reports put out by the Federal Reserve Bank of New York, on the subject of household debt and credit. It shows that the process of unwinding consumer debt in the US is a slow and painful one. The figures tell the story, which touch every aspect of the US economy and business, with ripple effects through the world economy. Total consumer debt is $11.7 trillion as of June 30, 2010, which is down 6.5% from the crest reached in the third quarter 2008. Credit card accounts are down 23% from the high reached in second quarter 2008, and mortgage obligations down 6.4% from 2008. By mid 2010 11.4% of consumer debt was delinquent, and this was up from 11.2% in 2009. $1.3 trillion of consumer debt is delinquent, and $986 billion is seriously delinquent- that is 90 days late. Serious delinquencies are up by 3.1%. Other figures fromt he Fed report: Half million people in the USA had a foreclosure added to the credit reports for the period March 31, 2010 to June 30, 2010. This was up 8.7% above the figure for first quarter of 2010. New bankruptcies showed up in credit reports for 624,000 people during that quarter, an increase of 34%. Another major problem stacked on top of this for consumer spending- the Fed's interest rate policy according to Todd Petzel, chief investment officer of Offit Capital Advisors, burdens consumers with a tax of $350 billion in income lost from low to zero interest rates. This creates two problems of its own. Not only does it depress consumer spending. It also makes consumers reach out for riskier investments. This figure was calculated by taking $14 trillion in debt issued by Treasury, federal agencies and municipalities. Rates are near zero on short term Treasuries compared to 3% average over the years. Taking 2.5% on $14 trillion, the figure of $350 billion was arrived at. Or 2% of gross domestic product. Analysts say that it would be better not to save a few zombie banks at the expense of consumers and pension funds. It lowers the cost of the deficits through the lower interest rates the government pays on its debt, but lower consumer spending and a limping economy hurt tax revenues and increases the deficit....

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The growth in U.S. GDP was 1.7 % in 2011, yet unemployment dropped by 0.7% in the last 12 months to 8.3% by Feb. 2012. A pickup in hiring is seen in job figures. Christina Romer gives as an explanation to the rise in unemployment in 2009 to 10%, more than expected, and the drop since then, to the overreaction of companies to the financial crisis by laying off workers and freezing hiring- with hiring picking up as conditions return to normal levels. The unemployment rate as defined is also not an accurate measure of the jobs situation, as it reflects only workers who are looking for work, and many workers drop out of the jobs market when they are discouraged especially the long term unemployed. Taking into account people who have dropped out of the labor markets the unemployment rate was 11% in Nov. 2009, according to Luce in the Financial Times- in Ezra Klein, Washington Post 12/12/2011, Wonkbook: Real unemployment rate 11%. Lawrence Katz, Harvard Labor economist also cites this as one of three jobs crises in unemployment today that need to be addressed, the other two being: foreclosures and debt, and the low number of jobs added because of automated manufacturing- in Friedman, NYT, 12/10/11, The Next First 100 Days. Explanations for the low GDP growth as unemployment declines is a likely productivity slowdown. Prof. Robert Gordon of Northwestern University, sees a slowdown in productivity. Worker output for every hour worked, how productivity is measured, increased only 0.4% in 2011 and 0.9% in the last 7 quarters, and is trending downward in the longer term. A more likely explanation is that unemployment is still at higher levels but is understated in unemployment figures....

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A new West Coast Model is emerging with ballot measures in the states of Washington, California and Oregon. The model is to make up for decades of faulty income distribution which favored tech communities in west coast states leaving behind people from minority communities and the working class outside tech hubs such as San Francisco, San Jose and Seattle. During this period budgets for education and healthcare, social services and essential infrastructure suffered as budgets were squeezed for local governments. Minimum wage also lagged behind and communities struggled to keep up. Washington votes for a ballot measure that raises the minimum wage to $13.25 statewide and mandate paid sick leave for workers. In California a ballot measure makes permanent an income tax surcharge on millionaires to use these funds for education. In Oregon measure 97 places a gross receipts tax on corporations with annual sales in Oregon over $25 million, raising $3 billion a year for schools, health care and other programs. The California and Washington measures are likely to pass, Oregon uncertain, say experts. And even in Oregon supporters have learned from the experience to put forward new proposals on the ballot. The Washington measure is supported by Nick Hanauer, and Zach Silk, president of Civic Ventures in Seattle, who say it is essential to put more money in workers wages to increase growth and to bring better lives outside the tech hub areas. Most of the tech booms of the last two decades have not touched the areas outside tech hub metropolitan areas. The conservative approach adopted in Louisiana and Kansas of reducing taxes first and then when holes in state budgets developed to cut education, health and other service expenditures has not worked, and it has led to the backlash in the form of the new West Coast Model, which is expected to be brought up in other states in the east and midwest. The tech hub areas have grown with the boom in tech but this has largely ignored the rural areas, communities just outside of the tech cities, and led to uneven and distorted growth shortchanging the working class and the middle class, and hurting investment in education and healthcare across each state. Bill Whalen, a research fellow at Stanford University's Hoover Institution conservative think tank ,says that its hard to deny that the balanced growth for all communities across the state has lagged far behind as the tech booms boosted growth in the economies of California, Oregon and Washington. An article in the German online site Zeit on Silicon Valley described this vividly showing how this can happen in communities sitting side by side in the San Jose area, with minority Hispanic communities and working class communties seeing very little of the benefits of growth. ...

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Harold Meyerson poses some difficult questions for those who like Mitt Romney say America's choice is between the merit based society Romney sees and the "European social democratic vision." In Romney's words- "a merit-based opportunity society- an American-style society- where people earn their rewards based on their education, their work, their willingness to take risks and their dreams." Meyerson cites several studies to show that European societies today are more dynamic on several measures of performance than America's. In intergenerational mobility he cites a Brookings Institution study by Julia Isaacs, that shows incomes are three times more likely to remain the same in America compared to Denmark, Norway and Finland, and one and a half times more frequently than in Germany. Another measure evident from Germany's experience is the degree of union-company-government cooperation to worker retraining, corporate boards that have representatives of workers and management, the "kurzarbeit" program of retaining employees to smooth out impact of cyclical swings in the economy on workers and companies, and worker's willingness to show restraint on wages especially because management wages are not way out of line as in America. Meyerson reminds readers that the U.S. had a more merit based society in terms of upward intergenerational mobility, distribution of rewards of work between workers in manufacturing and service sectors and management, educational mobility with the G.I. bill, in the first 30 years after the Second World War. In a separate article in the Washington Post on Jan. 5, 2012, David Ignatius poses questions about the effects of globalization in shrivelling the middle class. The access to lower wage manufacturing in China, India, Mexico, and other countries, and lowering of wages in the U.S. to be competitive, was part of globalization. The two tier wage structure in the U.S. automobile industry is one example, making middle class wages a thing of the past. Globalization opened up new markets for American companies. Yet many of the gains in employment were made in emerging markets, as the example of GM's expansion in China showed, with automobile manufacturing expansion inside China....

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O'Malley, Sanders, and Clinton emphasize the issue of wages, income disparities, rising inequality, and a shrinking middle class in the first Democratic debate of the U.S. 2016 presidential election. Clinton points out that "at the center of my campaign is how we're going to raise wages." Sanders says that "the middle class of this country for the last 40 years has been disappearing." Clinton points out her opposition to the Trans Pacific Partnership trade agreement because it does not help raise American wages. Clinton calls herself a progressive, but "a progressive who gets things done," and a moderate when it comes to getting things done. Sanders points to the "deep injustice, an economic injustice that threatens to tear our country apart, and it will not solve itself." Sanders points to the wealth concentration in the U.S. "with the top one tenth of 1 percent owning about as much as the bottom 90 percent, and 57% of all new income going to the top 1 percent." Clinton comes to Sanders defense on the issue saying "it's our job to rein in the excesses of capitalism so that it doesn't run amok and doesn't cause the kind of inequities we're seeing in our economic system."...

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Friedman says Obama's 2012 presidential campaign lacks bold vision, a failure to articulate tangible achievements, and owes too much to campaign consultants. He describes it as being developed in test tube fashion. The failure to embrace and strongly advocate his own presidential commission's Simpson-Bowles deficit reduction plan, which could be coupled with long term investment in the productive potential of the U.S. economy, shows the lack of courage to prepare a plan going forward. It is likely to cost support of independent, center and center-right voters in the 2012 U.S. presidential election.

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Transcripts from U.S. Federal Reserve meetings in 2006 that show Bernanke, as Fed chairman, and Geithner, as head of the New York Fed, ignored the risks of a collapsing bubble in housing and mortgages.