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Mandel of BW says the GDP numbers for third quarter 2009 do not reflect intangibles spendign for R&D, product development, design and worker training, all of which are suffering badly. This is because the statistics do not measure this, what we have is an obsolete measure of what is really going on in the economy. What these intangibles do is seriously affect long term growth prospects.

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Problems in the Niger Delta region that have proved so intractable. Disarmed militias are not likely to stay that way for long unless jobs are found to make up for the money lost from stealing oil from blownup pipelines. Problems of corruption, neglect, and few opportunities show the problems faced by resource rich regions still trapped in poverty. America gets 12% of its oil from this area.

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Stiglitz wants to put money in places where it will be spent immediately, unemployment compensation, in state and local governments hands to build critical infrastructure, state education budgets and environment spending for benefits in the long run, only limited help in the mortgage mess to the deserving and to reduce foreclosures, and no money to upperclass Americans who won't be spending much of it anyway.

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India is a major partner for Africa in the areas of energy and healthcare. India is a critical partner for Africa during the coronavirus pandemic in providing medical supplies and maintaining the critical supply chain. Indian oil and gas firms have invested $7 billion in Mozambique. India is Africa's third largest export market and India has $54 billion in investments in Africa. Foreign minister Jaishankar called India a reliable partner for Africa interested in developing the region. In fact Gandhi first started his nonviolent struggle in South Africa on behalf of miners in the region and fought for rights of African and Indian people in British South Africa. As a leading member of the British Commonwealth of nations India has a long history of ties with South Africa, Kenya, Tanzania, Nigeria, Ghana and other former parts of the British Empire. Indian workers and merchants played a large role in development in Africa after and during British rule. There are also older ties with Portuguese ruled Africa (Mozambique and Angola) with Portuguese settlements on the east coast of India. The Indian Ocean ties go back to the 15th century. ...

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President Macron announces plans to bring a draft law that aims to fight separatist cultural influences in France through the education system and through children being educated at home. These separatist influences stem from France's colonial past in Arab North Africa and influx of Arab immigrants as well as immigrants from Asian countries practicing Islam. Macron said there has been a hardening of positions in Islamic communities worldwide which has created a crisis in Islam making it important to emphasize France's tradition of secular values. Macron says Islam practiced in France must be freed from foreign influence as part of France's long tradition of laicite or state secularism values set by a law first enacted in 1905 separating church from state. In saying this Macron said he accepted the failings of French policy in letting ghettoization of communities of Muslim residents happen in France. And added that "where we stepped away other stepped in." In referring to the colonial legacy he said "we have not unpacked our past. We have grandparents who have passed their scars onto their children." ...

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How financing for ambitious infrastructure and Atman Nirbhar Bharat (self-reliant economy) development is being financed in India is explained here. The central bank acting as debt manager for the government of India is pushing government securities to trade in lots of 5 crores or more, seven crores being about 1 million dollars. This is now being traded among commercial entities. These are essentially 3 month, 6 month, and 12 month treasury bills, and long term debt instruments for the government that run to maturities of 5 to 40 years. Retail investors are being provided opportunities to participate in a different pathway. Currently institutional investors such as banks, mutual funds, insurance companies are major participants.The government needs 1.2 million crores or $175 billion from the financial markets to fund its ambitious capital expenditures for 2021 financial year. To do this it turns to financing such as government securities. Higher demand for capital leads to higher interest rates. The RBI and the government want to keep interest rates down and one way its to broaden the base of investors for government securities which it is now doing. ...

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Caryn James provides an exceptional account of Robert Altman, iconoclastic director of M*A*S*H*, which came out in 1970, of Nashville, and a British period movie Gosford Park in 2001. His long career involved moments such as the one described in the currrent exhibit and documentary on Altman at the MOMA- he was fired by studio chief Jack Warner because "that fool has actors talking all the time." With M*A*S*H* the Altman style was estalished as anti-authoritarian, boisterous language, and the overlapping dialogue that so offended Jack Warner, irreverent attitude to established ways, and screenplays that invited improvisation. As Caryn James points out much of Altman's style has filtered through to a new wave of cinema directors, and into movies and television, to the point where it seems invisible. Ron Magliozzi, curator of the MOMA series, says of Altman that he comes across as such a maverick that people lose sight of his work in movies such as Gosford Park, a period piece where a story is told about a murder mystery on a English counry estate, a forerunner for Downton Abbey....

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A New York hedge fund Elliott Management Corp. finally makes a settlement with the new Argentine government of president Mauricio Macri. It took 15 years and 5 different administrations in Argentina. Eliott gained $2.4 billion 10-15 times the original investment on Argentine bonds made in 2001, but requiring extraordinary persistence from hedge fund manager Mr. Newman at Elliott Management Corp and Mr. Singer. In 2001 the Argentine bonds traded at 20 cents to the dollar, and Mr. Newman who had made large gains on Peruvian bonds saw this as a good investment. By 2008 the bonds instead traded at pennies on the dollar, and the Argentine government later settled with 93% of bondholders at 30 cents to the dollar. The holdouts were three hedge funds, including Elliott. The Argentine government of Kirchner opposed any settlement with the holdouts. The situation changed with the election of Mauricio Macri in 2015, who made resolution of the issue a priority, so that Argentina could borrow in global financial markets and grow its economy. The U.S. Supreme Court had rejected Argentina's appeal of a U.S. District Court ruling prohibiting paying interest on exchanged bonds when payment had not been made to the holdout hedge funds- which led to the settlement with Elliott, and closing a long and difficult chapter for Argentina....

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This WSJ editorial by Joffe of Die Zeit in Hamburg and the Hoover Institution in the WSJ, says Italy's odd coalition of Five Star Movement with the Northern League cannot last as it is like having a coalition between Bernie Sanders supporters and the Tea Party in the U.S. This coalition is full of conflicts. Five Star leader Maio had earlier dismissed any idea of a coalition with a party having many opposite views, yet the coalition was put together to prevent going to the polls again. This editorial even says the coalition is as stable as nitroglycerin, and looks weirdest even when compared to other events in Italy. It says Italy had 66 governments since 1945, and Giuseppe Conte cannot last long as prime minister. The coalition is euroskeptic but 72% of Italians support staying in the the eurozone, which makes it even more inconsistent with Italian opinion.

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Vladimir Medinsky of Russia, 54 years, sees the Ukraine war though a different lens. He is the head of the negotiating team for Russia with Ukraine in Istanbul. He sees as an example that Russia prevails in long wars- the 21 year conflict of Peter the Great with the Swedish Empire 1700-1721. The Battle of Poltava in 1709 led to the Russian victory even though the war ended in 1721, with Russia not Sweden dominant in the Northern Baltic region.

 

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Niall Ferguson, a history professor at Harvard, and Moritz Shularick, a economic history professor at the Free University of Berlin, coined the term Chimerica, to describe the Chinese export machine and the American overconsumption right down to negative savings. Now they call it an economic monster that needs to be given a burial. It does little good for America. For America its a 10-10 deal the authors say, 10% growth for China and 10% unemployment int the USA. The mood in the USA is no longer to go on with this arrangement they warn, and ask that the Obama administration take steps to end this arrangement. The USA should ask China to make a 30 % depreciation of the renminbi say Ferguson and Schularick. Krugman makes a similiar point and warns of dire consequences in aworld out of balance on the same page of the NYT, see the link. Ferguson and Schularick point out that unlike China, both Germany and Japan let their currencies appreciate by 60% for Germany and 50% in Japan, at a similiar period in their country's development. China's renmibi is pegged at 6.83 renminbi to the dollar, and China's government used $300 billion in reserves to keep the renminbi from appreciating this year. Throughout the 1980's and 1990's it was pegged at around 8.28 renminbi to the dollar. For the USA this has been very costly, with a distortion in the global cost of capital significantly reducing long term interest rates, and helping create the real estate bubble in the US. They point out that with Japan and Germany dollar reserves increased roughly in line with growth of American GDP at about 1% and stable before moving slighltly higher in the 1970's. By contrast China's reserves have grown from about 1% of Ameica's GDP in 2000 or $165 billion to 5% in 2005 and 10% in 2008 and headed for 12% in 2009 end. This is simply unsustainable any longer; carrying on any longer risks China losing the very basis of its economic success which is the open global trading system....

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Thomas Bach is a German fencing athlete who won the Olympic Gold medal. He is from Wurzburg, Germany and was elected in 2013, in office as International Olympic Committee president till 2025. In the new election in 2025 Bach supported Coventry of Zimbabwe, a winner of the gold medal in swimming for the job, over a candidate from Spain whose father Samaranch held the same job, and COE a candidate from Britain. Other candidates were from Japan and France. The process of voting and the people voting is not representative of the world's people. As countries such as Germany and Spain are dominant. Britain and France, China and India have never elected a representative from their country as IOC president in the 20th century or the 21st. IOC presidents are there for long periods, as long as 20 years. Avery Brundage of the US was IOC president from 1952-1972  for 20 years followed by Morris of Ireland for 7 years. Following this in 1980 another 20 year term for a Spanish businessman Antonio Samaranch, whose son tried to run in 2025. In 2001 12 years for a Belgian Jacques Rogge, followed by another 12 years for German Thomas Bach.  In 20th century no one from France or Greece, no one from India or China has been elected IOC president and the election process is an insider's affair, even thought the games are watched in China, India and other parts of the world by hundreds of millions of people. ...

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Prime minister Renzi of Italy resigns after defeat in a referendum to change the constitution. Renzi had said he would resign if there was a "no" vote on constitutional changes to make it possible to pass further reforms. The results show the "yes" vote with about 41% of the vote, and 59% saying "no." About 65% of 47 million registered voters voted. The referendum called for cutting the size of the upper house Senate eliminating some constitutional bodies, and increasing powers at the federal level. Renzi may have made the mistake of making the vote for or against constitutional change a vote for his democratic left party, and not understanding the depth of public skepticism of established parties. Parties such as 5 Star M5S  have appealed to a public skeptical of how economic reforms would help bring more prosperity to the middle class, and a desire to try out new options. Virginia Raggi of M5S was elected mayor of Rome recently and Renzi's referendum move similar to the way prime minister Cameron moved for a referendum on an old issue of euroskeptisim, may have failed to grasp grassroots changes. The irony is that in 2014 elections to the European parliament Renzi's democratic left party won 40% of the vote and was seen at the time as a success, and the same size vote in the referendum is seen as a failure. In a referendum all other parties votes are added together from right to left parties and new parties. In the Brexit vote the Labor party "no" vote including Labor voters who never voted added to the votes of Brexit supporters and the newer UKIP party giving Brexit the slight edge needed. The singular feature of the trend is that working class voters are combining with right leaning voters to upset established parties, in the midwestern U.S., in the north of England, and in the north of France. In the medium to long run this means the left parties are likely to move to realign themselves with their base of support. ...

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The WSJ looks at $110 billion in projects which get financial support from the US government under the climate law of the Inflation Reduction Act. Many of the projects are being done by foreign companies. Panasonic is planning a third battery plant in the US and will get $2 billion in tax credits from the US government. Other companies are from South Korea such as LG, and from China. The intent is to build a US supply chain that depends on factories in the US and creates jobs in the US, yet because the US supply chain is so undeveloped with so little attention paid to it in the past, foreign companies will be needed.

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Russian president Putin was hoping for an end to sanctions. The interference in the 2016 election was done with the hope that a Trump administration could make a difference in the sanctions after the deterioration of relations in the last year of president Obama.The U.S. Congress has moved to extend the sanctions, with Democrats and Republicans coming together on this issue. This means there is not much that president Trump can do to improve relations. This report in the NYT by David Sanger even goes as far as citing George Kennan from Foreign Affairs publication in 1947, that a "long term, patient but firm and vigilant, containment of Russian expansive tendencies," is likely to be U.S.policy.

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Feeding America, a national network of food banks, finds that 37 million, or 1 in 8 Americans, needed emergency food assistance in 2009. Even in affluent suburbs like Long Island it found 280,000 sought assistance for food in 2009. And 39% of these were children under 18. Only 30% of those seeking help received food stamps suggesting that even that program is not reaching everyone that needs help.

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Ireland's unemployment has increased in the years since the 2009 financial crisis. Unemployment in 2011 was 14.6% according to the Central Statistics Office. 76,400 people left the country in the year ended April 2011, up 17% from the prior year. About 60% of the unemployed were long term unemployed at the end of 2011, compared to 50% in 2010. This is the highest in the OECD, after Slovakia.

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Societe Generale has total loans in Russia of 13 billion euros, mostly mortgage and car loans, which is only 3.7% of all lending. Loan loss provisions were increased 63% in 2014 to 243 million euros. BNP Paribas has reduced its lending to the energy industry, with market share declining from 6% in 2010 to 2.6%. ING Bank is also cutting back with Russian loans only 1.4% of total loans.

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Comments by Seidman, Volcker, Shiller and Soros on thie mortgage crisis. How will it afffect economic growth and for how long. Soros points to a complicating factor the dollar if the Fed has to cut interest rates and the current account deficit. Volcker points out that its to early to tell not knowing what will happen in 2008. Volcker says its potentially approaching the scale of the savings and loan crisis.

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How the deepening downturn is leading Brown and Labor and the liberal Democrats who had rejected tax cuts for so long to now advocate large tax cuts, with the Conservatives arguing for fiscal discipline when they had argued for taxcuts on principled grounds for most of the last decade. A tax cut of 15 billion pounds or $23 billion was mentioned by the Institute for Fiscal Studies. Strange things are happening.

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UK about a third of children living in poverty in 2025. This means Labour's Starmer government has to advance from a weak base and the benefit cuts are a step backwards. The reason given is worsening finances. It is also true that Reform UK is not giving the issue priority and it is increasing in popularity in the Conservative voter base, giving Labour second thoughts about its programs. After the migrant issue is tackled and Britain like the US faces up to its long term future and its responsibilities, investments in childcare and education become a major priority as it is in Asia.

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523 European banks borrowed 489 billion euros from the European Central Bank on Dec. 21, 2011, under the newly created Long Term Financing Operation of the ECB. This is designed to meet the financing needs of European banks which are shutoff from normal financing of selling unsecured bonds to private investors because of market anxiety. Much of this is for replacing other outstanding ECB loans, with analysts estimating about 190 billion euros of new liquidity being injected into the banking system. This also has the effect of reducing the borrowing rates for government bonds. In Spain the government sold 5.6 billion euros of government bonds at an auction on Dec. 20, 2011, with the interest rates dropping from 5.7% a month earlier to 1.7%. Small and midsize banks in Spain helped surging demand by buying the bonds to use as collateral for three year loans from the ECB at 1%.

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Andrew Ross Sorkin points out that investors are sitting on their hands and money is moving out of the stock market. About $171 billion has moved out of mutual funds over the last year, according to the Investment Company Institute. About $208 billion has gone into the bond market in the same period. There are now fewer long term investors and the market is dominated by professionals which increases the volatility. There is a lack of confidence in the economy, the same reason that businesses in the U.S. are sitting on $2 trillion in cash that could be invested, and for investors the feeling that the market is rigged to favor insiders. The Financial Literacy Group surveyed 878 students at 18 high schools in 11 states in the U.S. It found that three fourths of the students agreed with the statement: "The stock market is rigged mostly to benefit greedy Wall Street bankers."

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Kenneth Rogoff of Harvard University, expert on debt crises, and author of "This Time is Different," says China is one of the best examples of the idea that this time is different, with the idea created that somehow China was impervious to the massive build up of debt. The debt is now over 250% of GDP, and this was possible for so long because of the high savings rate of 30% of disposable income and the millions of young migrants moving to cities to work in manufacturing. The growth of shadow banking, opaqueness in decisionmaking, unreliable data, use of local government financing vehicles, the bubble in housing with a large portion of loans tied to the real estate market, all combine to create serious problems that will take a long time to sort out. Rogoff says the crisis in Tianjin with the deadly explosions in the port area, and the government's inability to provide answers to questions from a alarmed public, only added to the uncertainty and loss of credibility. Rogoff says he hopes the trillions of dollars in reserves will provide China with the tools adequate to tackle the debt problems before they spread to other countries....