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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%.

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U.S. auto sales increase to levels seen before the recession in 2006- with 16.5 million units sold in 2014. Sales increased by 5.9% over 2013, according to Autodata. Fiat Chrysler NV sales reached 2 million units in 2014, for an astounding recovery under Marchionne, close to the 2.4 milllion units sold by Toyota and the 2.5 million units sold by Ford Motor.

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This WSJ editorial points out a big concern in the third quarter 2012 economic growth figures- the figure showing non-housing related investment contracting by 1.3%. It says the U.S. borrowed $5 trillion and all it got in return was 1.7% economic growth- 1.7% being the growth in U.S. GDP for the first 9 months of 2012. It also points out that the growth came from consumer spending and the Federal Reserve's money printing. The consumer spending would be hard pressed to continue if incomes remain stagnant without the capital investment and hiring from the private sector. Government spending accounts for 0.7% of the GDP growth, and estimates for private sector growth in output is about 1.3%.

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Ford CEO, Alan Mulally, says the electric battery in the newly designed Ford Focus EV electric car costs about $12,000 to $15,000. The car price is $39,200. The similiar gasoline powered car price is about $22,000. This car has a 23 hour kilowatt hour battery pack. Based on this information the cost is $522- $650 per kilwatt hour. The U.S. Department of Energy has set a goal reaching $300 per kilowatt hour by 2013, as it funds new electric car development in the U.S. The Ford Focus EV is directly competing against the Nissan Leaf. The Leaf starts at $35,200, with a range of 73 miles on a full charge compared to 76 for the Focus EV. The Focus can be recharged in three and half hours using a 240 volt charger, compared to 7 hours for the Leaf. What the battery cost tells us is that the electric car development has to bring costs down rapidly for electric cars to become price competitive.

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The government of Theresa May and the EU appear to be on a collision course with the release of the EU draft legal agreement that says Northern Ireland must remain in the customs union and future arbitration or appeal would be under the European Court of Justice.

Ireland favors the EU draft and sees it as a default solution to avoiding a hard border with Northern Ireland if it becomes necessary. Theresa May and the DUP party of Ireland on whom the prime minister depends for her coalition government's thin majority support in parliament, both reject the EU solution. 

The Labor Party says it would solve the Irish border issue by entering into a new customs union with the EU, so that no checks are needed at the border for people and goods. The Labor party sees it as vital to prevent any effort to undermine the Good Friday Agreement that forms the basis of the peace in Northern Ireland.

 

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Adam Parker, chief equity strategist of Morgan Stanley, sees the Standard and Poor's 500 stock index ending 2012 at 1167. Garry Evans, global head of equity strategy at HSBC, sees the S&P 500 stock index ending 2012 at 1190. This is down from the end of 2011 level of 1257. David Kostin, top equity strategist at Goldman Sachs, sees the S&P at 1250 at the end of 2012. Parker, Evans and Kostin, share concerns about the macroeconomic environment and Europe. Parker also sees weakness in bank earnings contributing to this level in the S&P 500 stock index. Parker view global macroeconomic factors determining 50% of the outcome, with weaknesses not only in Europe but also in China. His predictions for S&P earnings per share are at about $100 for 2012 and $103 for 2013.

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Finnish president Niinisto provides a new understanding of Mr. Putin and the thinking that led to the invasion of Ukraine. Mr. Niinisto has an advantage having spoken with Mr. Putin countless times says this report in WSJ, and spoke again to Mr. Putin on May 14 to tell him that Finland was planning to join NATO. Putin simply responded that Russia does not pose a threat and "you made a mistake." He says it was not the Finnish way to not call Putin and tell him directly, and that not doing so would be like sneaking away around the corner. Mr. Niinisto says WSJ, has a rare insight into the thinking that led to the behavior of Mr. Putin in launching the war. Here are some insights from this report by Adam O'Neal of WSJ. On the situation in Ukraine Niinisto says " I would be a lot more worried about Ukrainians than about how Russians feel." Mr. Putin's willingness to see Ukraine's industrial centers, its infrastructure and cities destroyed, turning them into moon craters in the east compares with the relative ease of life in Moscow, St Petersburg and other cities, cushioned by Russian oil and gas exports and financial reserves. As a student of Finland's long and violent history with Russia Mr. Niinisto has some unique insights into Russian thinking. He tells WSJ's Adam O'Neal  that if a Russian is angry, yes, be careful, but if he's calm, be even more careful. The Russian invasion of Finland led to loss of 200,000 lives in 1939-40, and another 250,000 Russian lives in fighting between 1941-1944. Finland has 300,000 men or women in military reserves and men between 18 years and 60 years are called up for military service with the Finnish Constitution requiring every citizen to contribute to national defense. Recently Finland ordered 64 F-35 fighter jets from the US. What led to the invasion of Ukraine by Mr. Putin? Niinisto says that "somehow Mr. Putin has a feeling that Russia was betrayed in the 90's by the West. Over time this thinking continued feeding the negativity says Niinisto and led to the thinking that Russia could be betrayed once more.  Another aspect of Mr. Putin which was covered during the last decade of relations with Ukraine in Lyrarc, was his perception that Ukraine under various leaders before Zelensky was basically led by corrupt leaders including one president he supported but lost power in the last decade. Mr. Putin saw protests in Kviv and Lviv that ousted a president he supported recently as orchestrated from outside. This led to thinking that Ukrainian nationalism did not exist and he believed that Kviv would not be defended and would fall easily within a week or weeks. As his nationalist perceptions and that of a small group that included his partner in office Mr. Medvedev became stronger in the last ten years Mr. Putin made the decision to take the option for invasion in the thinking that the response of the US and Germany would not be to support Ukraine with arms and other aid. The CDU and SPD was perceived as weak in Germany and Scholz not seen as able to cut down oil and gas imports to the EU. Biden was seen as not willing to stop Russia by taking on a difficult conflict because of China allying itself with Russia, considering China's interconnections with the American economy. The timing was seen as good considering that this level of dependence on oil and gas imports of Europe on Russia would never be the case after planned shifts to renewable energy. The Russian economy was cushioned by its $620 billion in reserves and by the world's need for energy even as the shift to renewable was taking place. This window my have induced Mr. Putin to take what appeared to be a rational decision that ignored the common feelings of humanity of risking the destruction of a brotherly people that spoke Russian, prayed in Orthodox churches, and where Russia as a state started in the year 1000. Cambridge historian Brendan Simms in his new book "Europe : The Struggle for Supremacy 1453 to the present," has shown all European powers susceptible of reasoning and calculation of this type in their wars since 1453 in the struggle for supremacy in Europe up to the present- the Portuguese, the Spanish, the Dutch, the British, the French, the Germans, the Russians, the Danes, the Swedes. This also led to British and French empires in Asia and Africa with subjugation of Asian and African people. The Second World War had created the perception that somehow this had changed after the loss of millions of lives- that was the perception of Merkel a pastor's daughter who had grown up in the former communist state of GDR in East Germany, and of SPD leader Steinmeier who felt strongly about the loss of lives from the Nazi invasion. Merkel and Steinmeier built the relationship of Germany with Russia that has collapsed under Germany's new leader Scholz and Habeck-Baerbock of the Greens party. Merkel and Steinmeier also built the trade relationship with China that also faces collapse with China's support of Russia under Mr. Jinping, and the unexpected shifts in Chinese leadership and policies from that pursued by premier Deng and his successors in 1990-2010 of interconnected economic links with US and EU. Mr. Scholz, the new chancellor of Germany has Brendan Simms book on Europe on his reading list for 2022 as he ponders over the lessons of 2022 and the pandemic. Mr. Biden with long experience in the Senate of the US has a memory and understanding of what happened since World War II, how America got to this point, and what it will have to do to bring back the American spirit to the Free World that America has led for most of the last two hundred years. ...

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Biden has put forward a new initiative to strengthen democracy by getting increased commitments to key features for democratic processes in the world. The idea is not to limit partnerships with other countries says Anthony Blinken, Mr. Biden's main adviser and secretary of state. This means India a key partner in both democracy and the Indo-Pacific can for defending its thousands of miles of border in the high Himalayas with enroachment of China into border areas such as Tibet, maintain its good legacy relationships with Russia as happened in last weeks Modi-Putin meeting.  The idea says Blinken is- "The US does not want to limit your partnerships with other countries. We want to make your partnerships with us even stronger." This means the Philippines, Indonesia, Malaysia, Sri Lanka, can maintain economic and development related ties with China which contribute to their economy, and build stronger relationships of culture and democratic processes with the US, India, European Union and Japan. For this reason the White House has emphasized that this is not about the US giving stamp of approval or disapproval of which country is a democracy and which is not. Too much of that happened under previous governments including Reagan, Carter, Bush, Obama.  The situation of Turkey relates to independence of judiciary and the unwillingness to take another look at problems. There is also the issue of technology is to be used so that citizens are protected from undue surveillance. Mistakes can be made but judiciary acts as an independent branch under the arrangements of checks and balances in American, British and now European frameworks of democracy built over centuries of struggle between monarchies and the people dating back to the Magna Carta in Britain. Neglect of workers and families also is an issue for democracies as for instance the effort now taking place in Germany under Scholz to "respect" workers and families. Lack of this led to the movements in US and European democracies giving room to vent that could ultimately lead to subverting democracies in the homeplace of democracies in the US or Britain. Why such a large gathering of 100 countries? Biden understands that the processes of democracy are always being improved and are a work for each new generation. For this reason there is no perfect scorecard- an ever renewing effort to make the process work in the best interests of the people of the country one generation at a time, to improve the quality of life and do this by preserving the right of peoples to choose their governments.  Why exclude China and Russia, till recently China had a consultative arrangement to run the country and Russia has elections? On this question the response of the Biden administration is that countries commit to the process and back initiatives to "counter authoritarianism. combat corruption, and promote respect for human rights."   Pakistan because it struggles with a long legacy of shortfall in the area of education after the collapse of Mughal rule that was seen under the British, and the general poverty of the Indian subcontinent that is striving to preserve the practice of elections, judiciary, and other democratic processes that were introduced in the Punjab and Sind provinces, and elsewhere since 1900. This is true for much of Africa, and also in parts of India, where aspirations of the people are for democratic process but faced with difficulties, corruption and poverty. In India the efforts of Naoroji, Gokhale, Gandhi, Nehru and Rajagopachari, Govind Pant, almost all leaders of the period since the 1850's, and able well meaning administrators since Lord Mayo in 1868 were to let democratic processes gradually find deep roots. Biden see aspirational in the face of difficulties as acceptable, even truly remarkable, with a willingness to learn from other countries to strengthen its own processes for democracy. It is no longer an Anglo-Saxon model alone as Germany and Europe are part of this process to be renewed by each generation. So are India and Japan. India after a century of elections since 1900 gradually expanding voters from one million to 5 million in the 1930's and to 900 million in 2019, with independent judiciary in a system of checks and balances as in the US.    ...

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Israel's ambassador to the U.S., Michael Oren, describes Iran's efforts to make weapons grade nuclear material, escalating the enrichment process from 3.5% to 20%. He says Iran now has 225 pounds of 20% uranium and 11,000 pounds of 3.5%, enough for 5 nuclear bombs, and points out that 20% uranium can be enhanced to weapons grade in weeks. During the initial negotiations the P5+1 nations demanded suspension of enrichment acitivites at a time when the enrichment process was at 3.5%, and transfer of stockpiles abroad. As negotiations dragged on Iran escalated to 20% enrichment. current demands of the P5+1 are for cessation of 20% enrichment and removal of the 20% stockpile, and closing the facility at Qom, as a first step. This has been rejected by Iran. In this op-ed Oren says Israel alerted the world about the Iranian nuclear program 20 years ago, and as this has continued to what it is today, Israel's view is that much of that time was wasted and the window for international efforts to cease and dismantle Iran's nuclear program is almost shut. ...

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The U.S. Labor Department reports that 4.4 million unemployed workers in the U.S. were out of work for more than one year. For the U.S. this is 30% of all unemployed. In some of the largest states about one in three unemployed workers have been out of work for more than one year. For New Jersey which has a 9.4% unemployment rate compared to 9.6% nationally, 37.1% were out of work for more than one year. Older Americans, the highly educated workers, are more likely to have longer stretches of unemployment. This is the situation in New Jersey and Florida where there is a larger population of older workers.

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Two realities are affecting exchanges. One is that trading commodities and derivatives is a $600 trillion business worldwide and is more profitable than trading in corporate shares. This shows in the value of ICE and NYSE in the stock market. In April 2011 ICE was valued at $1.5 billion less than NYSE, in Dec 2012 ICE was valued at $4 billion more that NYSE as it makes its bid to merge with NYSE. The other is that the Dodd-Frank financial system overhaul in the U.S. after the 2008 financial crisis has created a new model for derivatives trading providing advantages to regulated electronic exchanges and clearinghouses that handle derivatives trades with transparency. Jeffrey Sprecher, CEO of ICE, the IntercontinentalExchange, which handles derivatives trading through its clearinghouse operations, says: "For the past decade, our solutions made our markets increasingly electronic and increasingly clear. Today, financial reform is imposing that vision on many markets through a rule-making process." Bart Chilton, a member of the CFTC which regulates derivatives trading says Dodd-Frank legislation supports the business model of derivatives exchanges. This is especially true for Mr Sprecher and ICE. Sprecher has a good relationship with regulators with whom he talks directly, and is supportive of CFTC efforts to close loopholes as he is confident he can make money as long as the rules are clear. His confidence stems from his model which is technology based from day one, with its own clearinghouse and technology based transparency of the ICE data vault, information it shares with regulators. Sprecher stumbled upon this opportunity. He is an executive in the power industry. Working on developing power plants Sprecher found it was difficult for power firms to hedge investments in energy with financial contracts because there was no well organized, clear and transparent market for such contracts. This he set out to do by buying a little know exchange in Atlanta for buying and selling electricity, later getting the the backing of BP, and investment banks such as Goldman Sachs and Morgan Stanley, to form ICE in 2000. Banks liked the idea of a having an organized clear place to buy and sell derivatives in oil and other commodities, and having an alternative to the Chicago Mercantile Exchange in futures trading. Swaps trading under Dodd Frank supervision is converting to old style futures contracts where there is less competition for ICE's futures trading creating new opportunity. ICE setup its own clearinghouse, and acquired the Clearing Corporation, which was the base for a derivative called credit-default swap. To make derivatives trading transparent and reduce systemic risk Dodd-Frank legislation required exchanges to provide information to data warehouses which would then share the information with regulators. ICE setup its own data warehouse to do this called ICE Trade Vault. Dood-Frank rules envisioned the formation of clearinghouses and exchange such a ICE to provide a clear process, transparency and reduce systemic risk in derivatives trading. ICE under Sprecher by making this vision its own and using technology has created new opportunity. ...

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The American withdrawal from Iraq, and the future for Iraq under prime minister, Nouri al-Maliki.

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The U.S. jobs added for Dec. 2011, are 325,000, according to ADP figures, but the reliability of these figures has been questioned because of the different methods used in calculating the number. For Nov. 2011, the ADP number for private sector jobs added was 206,000. The same number from the Labor Department was 140,000. For June 2011 there was wide divergence- the ADP showed private sector jobs added as 157,000, the same number from the Labor Department was 57,000 jobs. For December 2010, ADP reported private sector jobs increased by 297,000, and official numbers showed 113,000. For December there are seasonal issues as well that affect the figures. Other factors affecting the jobs picture is the loss of jobs inthe government sector, and the gains in jobs predominantly coming from poorly paid retail and restaurant industries and fewer job gains in the better paid construction and manufacturing industries.

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Dana Goldstein of the NYT looks at the big problem in education today- the failure to teach reading and writing skills to students in American schools. Goldstein cites two alarming statistics. About 40% of students who took the ACT writing exam in the high school class of 2016 lack the reading and writing skills to pass a college level composition class in English. 8th and 12th grade classes in the U.S. have 75% of the students lacking writing skills proficiency, according to the National Assessment of Educational Progress. Of the 1204 comments to this article in the NYT, many of the 17 selected by NYT say the problem is that students lack reading skills. Other problems shown here are the handicaps created by technology, yes technology. Mobile phone use is common and this is done quickly with the least attention to write good sentences, little attention to punctuation, spelling or grammar. Half or incomplete sentences are easier to type on mobile, so a new generation grows up thinking that this is normal. As a result a whole generation of kids have not learned to read or write well, constructing sentences with limited vocabulary. Steve Jobs and Apple may say that iPads and iPhones, smartphones and other tech devices have advanced reading with the beautiful display technology screens, but this is not what is really happening. Google may say that its search helps people access good reading materials, and this too is not what is really happening.  Equally alarming is that there is no clear agreement on how to tackle this problem. The No Child Left Behind 2002 law set a program emphasizing reading and use of multiple choice questions to test reading skills. This was followed by the Common Core standards now implemented in schools for 6 years that shift the focus to writing. Yet the results are still the same, showing little progress. Goodman cites as examples of disagreement, the Writing Revolution project which focusses on grammar and other writing skills, and the Long Island Writing Project that focusses on students finding their own voice by freewriting. A student in the freewriting class which encourages finding your own voice, expresses her frustration by saying she doesn't hear a voice- what voice, she asks.  One of the problems is that teachers themselves lack writing skills. A look at 2400 teacher preparation programs shows little attention paid to teaching writing. The head of the Reading and Writing Project at Columbia University's Teachers College, says Common Core failed in implementation of massive teacher training, which is required to address the problem. As a result remediation programs are needed badly in colleges to fix literacy skills, when better teaching would have prevented the problem in the first place. Little understood or debated is that every generation has to learn about the country's democratic institutions, every generation has to make its own effort to gain civic literacy- it is not something that can be taken for granted or handed down from one generation to the next. Without reading and learning about how these institutions function, young people lack the skills for participating in our democracy and in the global economy. ...

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In a new book, "Back to Work: Why We Need Smart Government for a Strong Economy," Bill Clinton says he would have done two things differently. He would have raised the debt ceiling in the first two years when the Democrats had majorities in both houses of Congress. He also thinks President Obama's criticism of Wall Street has been harsh and counterproductive. Clinton is strongly critical of the Republicans for their anti-government ideology.