LyrArc Article Gist
The U.S. Labor Department reports 204,000 nonfarm jobs were created in October 2013. Upward revisions of prior months lead to a level of about 202,000 jobs created in the three months July to October 2013. The unemployment rate goes up from 7.2% to 7.3% in the household survey, with furloughed government employees counted after the temporary government shutdown. The negative part of the picture is that 720,000 persons dropped out of the labor force, a high and puzzling number, and the labor participation rate drops to a 35 year low of 62.8%. This has been a problem since the 2008 crisis as more discouraged workers drop out of the work force, go to school or stay home and care for children, and increasing numbers retire. Some economists now see the Fed waiting till the unemployment rate drops to 6% before withdrawing from the bond buying program in place of the earlier announced 6.5%.

LyrArc Article Gist
Economists at the IMF estimate that the public debt of the leading 10 industrialized countries would reach 114% of GDP by 2014, from 78% today. The governments then owe about $50,000 for each person in the country. Unlike World War II this situation is not temporary, because of the pension and health care costs of a population that is getting older. So what is to be done? Without the stimulus, the deep and prolonged recession would lead to greater damage to the finances of these countries. But continued in this manner the government would crowd out private investment and lead to lower economic growth. In some countries, Greece, Ireland, Italy Portugal and Spain it might lead to default, in other countries the real cost of the debt may be reduced through inflation. In the USA yields on 10 year Treasuries reached about 4% on June 10th, in December it was about 2%, a consequence of the economic recovery. If interest rates are allowed to rise too fast, it might abort the economic recovery. A rise in taxes is also not the answer, because in Europe the taxes are already at 40%, in America they are around 30%. But raising consumption taxes at the time when the economy was fragile, aborted a recovery in Japan during Japan's earlier crisis decade. A caution signal that says fiscal tightening can backfire, especially some years after a banking crisis when things are still in a weak condition. Some steps that can be taken are raising the retirement age, which would cut pension costs as people work longer and would boost tax revenues, and eliminating the tax deduction for home mortgage payments in the US. Its important to build credibility that the government and the legislative bodies are serious about controlling the finances and acting with prudence. In America wasteful health care spending is a priority, as this would reduce the burden on public finances considerably , and should be as much of a priority for the new Obama administration, as providing universal health care. With today's finances its not something that can be put off....

LyrArc Article Gist
China's holdings of U.S. Treasury's reached $1.316 trillion in June 2013, the highest on record.

LyrArc Article Gist
The closure of the Kiel Canal in March 2013, because of of dilapidated and old locks, has focussed attention on Germany's neglect of infrastructure. German investment in infrastructure each year is less than the depreciation for the infrastructure. About 100 billion euros in backlog for infrastructure spending exists at German municipalities, according to KfW bank. And the investment of $39.5 billion euros in infrastructure spending for 2012 was down 9.5% from 2011. The government has restricted itself to high profile projects such as renovation of Stuttgart rail station, neglecting schools, roads and bridges.

LyrArc Article Gist
Laurence Meyer of Macroeconomics Advisors, a former Fed governor, says monetary policy will offset the effects of tighter fiscal policies and budget cuts. This is not stated explicitly he says, but Bernanke will counteract the effects of budget cuts and austerity policies by putting off rate hikes. The expiry in December 2011 of a compromise reached between the GOP and Obama to lower payroll taxes and offering business a tax break on capital investment will lead to a reduction in GDP by 1% in 2012, according to Mark Zandl, of Moody's Analytics. Pressure for budget cuts could add another half percentage point reduction in GDP, according to IHS Consultants. Bernanke will be mindful of these considerations as he considers any rate hikes in 2012.

LyrArc Article Gist
The U.S. Census Bureau shows incomes of American households, the median household income, surged in 2015 by 5.2%. This increased by $2800 to $56,500. This is the largest increase since 1967. It shows that steadily improving employment and hiring is leading to improvement in incomes for the middle and working class. Ris in minimum wage has also helped . The largest increase was for the lowest 20% of the income tiers. Full time working women did better than men, with increase annually of 2.7% for women, and 1.5% for men. Nocitizen incomes increased 10.5% to $45,100, native born households went up 4.4% to $57,200. The number of people without health insurance also declined from 33 million or 10.4% of the population to  29 million people or 9.1%. Another way the changes are helping lower income households is the decline of the official poverty rate to 13.5% in 2015 by 1.2 percentage points from 14.8% in 2014. Through a series of small incremental steps the path is being set for a recovery of household incomes for the middle class and working class. A bright spot is that the improvement has affected all age groups, household types, regions and ethnic groups, though among full time workers women did better than men. In this recession older white men have had more difficulties getting back into the workforce. This is reflected in the political scene in 2015-2016 for the election season. ...

LyrArc Article Gist
Iran will discontinue the second phase of the subsidy reduction program as the currency depreciates drastically in October 2012.

LyrArc Article Gist
U.S. Fed chairman Bernanke tells a IMF conference on financial crises in Nov 2013 that the unemployment rate of 7.3% does not reflect the problems in the labor market, which require strong action to improve job creation. He says the level of student debt is a serious issue that also needs to be taken into account.

LyrArc Article Gist
India's central bank, the RBI, lowered interest rates by a half percentage point to 8% in April 2012.

LyrArc Article Gist
Deepening frustration and economic diffficulties in Iran over sanctions. The Iranian currency, the rial, loses a third of its value.

LyrArc Article Gist
The U.S. responds to Iran's threat to close the Straits of Hormuz, a vital route for oil tankers.

LyrArc Article Gist
Declining manufacturing wages in the U.S. and the return of manufacturing jobs. Indiana's experience with new manufacturing plants.

LyrArc Article Gist
The UK's Office of National Statistics said construction output fell by 3.7% in the first quarter of 2012, compared to prior year. Output fell 3%. The revised decline in GDP for the first quarter is 0.3%.

LyrArc Article Gist
The issues China faces as it plans the next phase of massive urbanization. Urbanization is a major priority of prime minister Li Keqiang, which was also the focus of his postgraduate work in his student days. In the early 1980's about 20% of China was urbanized, this has changed over three decades to where the figure is 47%, plus 17% for workers working in the cities but classified as rural, a total of 64%. China's plan is to fully integrate 70% of the population or 900 millon into cities by 2025. In 2013 only 35% of the population has a urban residency permit, or hukou. The permit is needed for residents to register their children in local schools or qualify for medical programs in urban locations. One of the problems is the huge cost of doing this which it is feared could lead to inflation and higher debt levels. Currently local governments bear these costs using land sales, and central government transfer payments, but without added financing and unable to issue their own bonds, the local governments strictly limit the use of local school and health services to their own residents keeping out rural newcomers. Local government taking over farmer plots, often without enough compensation is highly unpopular in China. Other problems are- providing a steady stream of earnings for new urban residents from farms, if no employment can be found. So they can sustain themselves- especially as they get past 40 years of age when factory employment is harder to find. The government planners see the larger urban population as a way to shift from a largely export based economy and slowing growth, to a consumption based economy. But critics say the risk is that for this to happen new residents from the farming villages have to find jobs, something the government will have difficulty accomplishing. A permanent underclass of unemployed and other financially strapped citydwellers living around major cities, as has happened with the progress of urbanization in Brazil and Mexico, is something the government would want to avoid. ...

LyrArc Article Gist
Roosevelt say experts was a great crisis manager but not great when it comes to policies to create jobs. His achievements were stabilizing the banking system with deposit insurance, government investment in banks, and restrictions on banking practices, creation of the SEC, and fireside chats that steadied the national mood. Unemployment when he took office in 1933 was 25% from 3% in 1929, and industrial production had dropped 40% since 1929. So FDR took office when a lot of the damage had already been done, compared to that Obama takes office earlier in this downturn. And Roosevelt did not fully grasp John Maynard Keynes's advice when he visited the White House in 1934. Keynes complained to Labor Secretary Ms. Perkins that he had thought the President was more literate economically speaking, while the President felt Keynes had a rigmarole of figures he did not understand. Roosevelt said of Keynes: "He must be a mathematician rather than a political economist." It took some time for government spending to take hold. Throughout the 1930's government spending remained around 20% as a share of the economy. Today its 35%. And the average unemployment stayed at stubborn 17% on average for the decade of the 1930's. It was not till the 1940's that things changed. Total government spending as a share of the economy reached 52% in 1942 with the onset of the war, and peaked at 70% in 1944 when the unemployment rate dropped to 1%. One lesson experts say is that its easier to stem unemployment and job losses by action earlier in the downward spiral through vigorous action by government. In retrospect because industrial production fell by 40% during the 1930's experts say Roosevelt was actually timid in his response. U.S. Fed chairman Bernanke is a student of this period and draws a similiar lesson from that period for vigorous action early in the crisis....

LyrArc Article Gist
The U.S. Labor Department reported a gain of 236,000 jobs in February 2013. The job gains were broad based, an encouraging sign, with gains of 48,000 in construction, 32,000 in health care, 24,000 in retail. Government jobs declined by 10,000. The unemployment rate declined from 7.9% in Jan 2013 to 7.7% in Feb 2013. Part of the reason for the decline in the unemployment rate was 130,000 people leaving the labor force. Of this some were retiring or returned to school. About 80,000 were "discouraged workers" adding to the continued problem of a declining labor force participation rate, a serious concern for the U.S. Federal Reserve and Fed chairman Bernanke.

LyrArc Article Gist
Chile's experience in Latin America stands out for the painful experience of the dictatorship years and the mismanagement of the economy by the government preceding it. The governments of the last 20 years of the Concertacion have studied the mistakes of these years and corrected them to aremarkable degree, like no other country in Latin America. The new politicians decided that the economy had to be managed so that inflation was under control and these Concertacion administrations produced budget surpluses in all but 4 years says Finance Minister Velasco. Velasco himself was 13 years old when the dictatorship of Augusto Pinochet was set up, and his father a law professor had to leave the country for criticizing human rights abuses. He studied economics at Columbia University, and his principal focus there was he says, " to understand how did this happen to Chile and how do we make sure it will nhot happen again." His finding was that runaway inflation had created so much unrest among the people that coup plots could take place, and that political stability could not be maintained without good management of the economy. It also meant that Chile must avoid extremes, try to take amoderate position, which meant preserving the free market reforms that had taken place, and introducing policy measures, projects and investment which helped to bring up the vast majority of the people including the least well off of society. Velasco also studied the history of Latin American economies with their boom and bust cycle, the situation in countries especially Argentina and sometimes in Brazil and other countries since the fifties. He found as he says that when " a country seems very creditworthy, everyone wants to lend to you, capital flows in and consumption booms." At some point excessive amounts of capital flow in which cannot be absorbed and is wasted in unproductive ways, which becomes adebt burden as the bust part of the cycle takes hold. So Chile has been careful to control speculative inflows of capital. But Velaco went further. In 2006 he left a Professorship at Harvard University to become finance minister of Chile under President Ms. Bachelet. Copper prices were surging and Velasco insisted on caution. In 2006 he pushed through a law requiring the annual budget to be based on an independedt committtee's estimate of the average price of copper in the next 10 years. Any copper income above the budgeted price goes into a savings fund maintained outside the country. In 2007 the copper price used in the calculation was $1.21 a pound, while the market price was $3.23 a pound. The profits $6 billion for 2007 went into the rainy day fund, which is invested conservatively in government bonds or money market instruments denominated in dollars, euros and yen. This fund is now at$20 billion. What is remarkable for Velasco is the way this was executed. The price used was conservative, the political pressures from unions and students and other groups was resisted effectively, and the whole exercize was carried out to successful conclusion even as popular support for the government dropped. When the crisi hit in December 2007 copper prices plummeted. Velasco announced a stimulus package, getting the $4 billion stimulus package through both Houses of Congress in January 2009. Chile expects only adrop of 0.5% in GDP in 2009 year over year. $500 million was given to stae owned bank BancoEstado, which reduced consumer lending rates by half. The package offers subsidies for businesses to hire younger workers, $700 million for large infrastructure program designed to create 60,000 jobs in road paving, airport upgrades and housing construction. And 1.7 million families, the poorest 40% of the population received cash stipends from the government equivalent to $70, with another stipend due in August....