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The skills to navigate different personalities and work patiently on the issues surrounding changes to the U.S. tax system of Rep. Dave Camp (MI), chairman of the U.S House of Representatives Ways and Means Committee, will be immensely useful in the effort to make changes to the U.S. tax system. Camp works well with fellow House Republican leaders Boehner, Ryan, Cantor, and his Democratic counterpart in the U.S. Senate Max Baucus. Camp is a good listener, refuses to engage in partisan criticism, and has the patience to work through difficult issues of achieving savings and keeping fairness in the the tax changes. Earlier efforts to achieve consensus in late 2011 failed, making it even more important to have leadership which can create productive debate and bridge the differences. The tax changes are part of the overall effort for U.S. economic recovery by reducing the deficit.

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China's July 2012 exports were up barely by 1%, over the same month prior year. Exports to the European Union declined by 16.2%. A big problem is cost increases for land, labor and electricity. By 2004 China's exports were growing at a peak rate of 35%. Since then prices of inputs have increased- wages by 150%, land by 70%, and electricity prices by 30%, according to Dragonomics. The yuan appreciated by 30%. Productivity is increasing by about 8% a year, according to the World Bank. As a result of the price increases of inputs the competitiveness of China, with products exported mainly on the basis of price, is deteriorating.

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Richard Thaler, a Professor of Economics at the Booth School of Business, University of Chicago, on the reasons why millions of homeowners under water- owing more on their homes than their homes are worth- have not defaulted in large numbers. In places like Nevada nearly two thirds of homeowners are under water. Changing a home, changing school for children, losing one's credit rating, social stigma. He points out that the costs are outweighed by the benefits of getting out of an underwater mortgage, and research has shown this is contagious once the process of defaulting has started. So once the neighbors are defaulting its much easier to do so and the proces picks up momentum, the psychic costs simply decline. So he says the result is that we may face a tsumani of strategic defaults. Professors Posner and Zingales of the University of Chicago have a proposal. Banks should be required to provide loan modifications in neighborhoods with home prices having dropped over 20%. Banks would reduce the payment by the average price reduction in the area and get in return 50% of the average gain in prices when the house is eventually sold. This requires Congress to pass legislation....

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Brazil's GDP increased by 0.34% for the 4th quarter of 2011 from the prior quarter. For the full year GDP increased by 2.7%, with an actual decline in GDP for the third quarter of 0.1%. The GDP growth for 2010 was 7.5%. The slowing economic growth reflects an overvalued currency, weak manufacturing competitiveness, and inflation. Brazil's growth will be lower than potential say analysts, and it will be tough to get to even 3.5% growth in 2012-2013. A similiar process is seen in other emerging markets. China's premier Wen Biao announced lower growth targets of 7.5% and a shift in priorities recently. And India's growth rate for 4th quarter, 2011, was 6.1%.

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What happens to the 70,000 residents of Anacostia, near the Capitol in Washington DC where a third of the people live in poverty and there is a 40% dropout rate, and only 8% of all students there attend college. Vacant homes, drug use and crime sap the neighborhood here. Obama said he would bring 20 cities an antipoverty program successful in Harlem, New York that would include parenting and infant care classes, as well as early childhopod education and free medical care for children. An investment of $1 billion for 5 years for a transitional jobs program, to place the unemployed in temporary jobs. The Obama transition team did not return requests seeking comment on the 20 city plan or the $1 billion for transitional jobs, says the WSJ on January 20, 2008, the day of the inauguration. Its incredible that right in the nation's capital there exists another Washington DC of such neighborhood decline within sight of the Capitol.

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In a major policy move India's Modi government makes major changes for foreign investment in India. In different sectors, pharmaceuticals, defense, civil aviation, and retail stores, the move is designed to attract investment and create new jobs. Foreign investors can now take 100 percent ownership in defense, civil aviation, and food products sectors with government approval. In pharmaceuticals foreign investors can take upto 74 percent ownership with no government approval needed. In retail stores, such as for Apple and Ikea, the rules offer new incentives. From now on the requirement that Apple and other companies buy 30% of their supplies locally for single brand retail stores will be relaxed with a 3 year exemption on local sourcing, which can be extended to 5 years if the products sold are "state of the art" and "cutting edge technology," according to a government announcement. The changes were made by executive order. Apple CEO Tim Cook visited India and lobbied for this change recently. In combination with a national GST goods and services tax to be passed in July 2016, which is to be instituted nationally to replace a old set of state by state requirements and taxes, the two changes could have a bigger impact than the 1991 reforms that moved India away from a socialist managed economy. Poor job report numbers may have increased the pressure for taking action. In the defense sector the earlier change to allow 49% ownership had resulted in few new proposals. The changes in foreign investment rules also follows the resignation of the head of the central bank, Raghuram Rajan. ...

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Portfolio manager Robert Arnett, who manages two of PIMCO's funds, has some alarming things to say about the environment retirees face in the future. In ten years for every working age person added to the workforce there will be 10 new retirees, the complete reverse of what it was ten years ago when there were 10 new working age persons for every new retiree. The impact of this will take the shape of many more retirees selling stocks and bonds to live on and fewer buyers for the bonds and securities, lowering the prospects for higher prices for bonds and securities. He expects the demand for goods and services to continue with higher prices. He sees stocks giving a nominal return of about 5%, bonds a nominal return of 2-4%, for a balanced portfolio yield of about 4%, during the next 10-20 years. After inflation and taxes the returns will be very thin. Expectations of 10% returns do not take into account deficits, debt, and demography in developed countries, says Arnott.

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The head of Italy's statistics agency Istat, Enrico Giovannini, says Italy's manufacturing sector has performed quite well, and the problem is with the services sector, in lagging sectors such as transport, communications, tourism, retail and social services. The manufacturing sector is only one sixth of the economy. He says productivity is poor and there is lack of investment in human capital and information technology for the services sector. IT's contribution to growth in Italy's labor productivity is the lowest in Europe, according to the European Investment Bank. Italy's total efficiency gains declined one half percentage point from 1995-2005. Retail and tourism sectors lack the needed productivity gains. This means actions taken by prime minister Monti to change labor laws and related changes will not be enough to generate confidence in the economy and economic growth. Giovannini says investment in human capital and productivity is badly needed, and shifting education and training to where there are new job opportunities....

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Street protests in Brazilian cities with economic growth slowing to about 1% in 2012 and inflation at about 6%. Street protests in Brazil reflect public disconten over corruption, overspending on the World Cup and Olympics, and lack of good education, health and other public services. Increase in bus fare and police response against small protests using tear gas set off the large scale protests of tens of thousands in Brazilian cities. President Rousseff's sees her popularity ratings drop 8% percentage points from the March level to 57% in June 2013, according to polling firm Datafolha. Ths includes high popularity in poor northern states. Rousseff's popularity in more industrialized southern states declined by 13%, and by 16% among college educated youth.

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After a severe financial crisis that could have snowballed into a Depression type situation and the credit rating agencies playing their critic-for-hire role in causing the crisis, there has been very little done to reform or correct the basic way in which credit ratings are made. Other than small patches to the system that failed the country badly by 2008, it has been left alone by Congress, the Obama administration, and regulatory agencies. The Attorney General of Ohio, Richard Cordray, says the "rating agencies total disregard for the life's work of ordinary Ohioans caused the collapse of our housing and credit markets and is at he heart of what's wrong with Wall Street today." Richard Blumenthal, Connecticut's Attorney General says he plans to join the suit against the credit rating agencies, Fitch, Standard and Poors and Moody's. Cordrays suit was filed Nov. 20, on behalf of Ohio's pension funds. It seeks billions of dollars in damages from these ratings agencies and accuses the agencies of negligence and fraud. About the failure of Congress to make even the basic change to the system of ratings, Joseph Grundfest, a professor of securities law at Stanford says ; "What you see in these bills are Botox shots, for a little while everyone is going to be frozen into a grin, and then the shots are going to wear off.'' A deputy dean at Yale Law School, Jonathan Macey, was a member of a bipartisan task force on credit ratings reform and met with lawmakers in Congress on this issue. He says its mortifying to see that this problem which is different from other complicated issues like water shortages around the world has been left unsolved, as it could be easily solved if there was even a basic degree of political will to do so. Congress looked at the option of creating an independent fee financed credit rating agency along the lines of the Public Company Accounting Oversight Board, established after the Enron, but did nothing with this idea. Rep. Kanjorski and Senator Reed have led the efforts to look at the credit ratings agencies in Congress and have basically decided this to leave the system very much the same as before the crisis, with the conflict of interest problem and incentives to improve profitability at the expense of the integrity of the ratings process still intact. Bills in Congress give more oversight powers to the S.E.C. and require companies to strengthen their compliance teams. In the period leading to the 2008 crisis the internal compliance teams did not get top management support at the credit rating agencies and there is skepticism about the effectiveness of compliance teams. S.E.C. regulatory efforts face push-back from the credit ratings agencies and the effectiveness of S.E.C. regulatory supervision is uncertain given the critical role that is given to credit ratings in bond and securties issuance....

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Ring-fencing the retail operations of UK banks from possible losses in the investment banking activities was part of proposals by the Independent Commission on Banking in the UK. Now a parliamentary commission calls for periodic reviews of such ring-fences to ensure this separation is actually still in place, and not been diluted or otherwise removed by bending the rules to favor banks because of lobbying by the banks. It says "over time the ring-fence will be tested and challenged by the banks. Politicians too could succumb to lobbying from banks and others, adding to pressures to put holes in the ring-fence." The report emphasized that a lot more needs to be done to restore standards in banking, especially after recent reports of LIBOR and other revelations of market rigging and corruption. The emphasis in the report is for banks "to be discouraged from gaming the rules."

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The yuan has risen 14.5% against the yuan in the last 4 months, according to the Chinese Commerce ministry. Loosening the Chinese currency's peg to the dollar will increase the value of the renminbi even further. And with further declines in the euro expected this would seriously affect Chinese exporters to Europe. This also makes European goods more competitive than American goods in the Chinese market putting the Obama's administration's goal of doubling exports further at risk. The Shanghai stock index declined by 5.1% on Monday May 17, 2010, reflecting these concerns. The Chinese government continues to intervene in currency markets and the renminbi is now at 6.827 renminbi to the dollar.

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Ian Talley provides this excellent account of how this drop in oil prices is likely to add to economic growth in major world economies, removing any ambiguity about the positive effect on the global economy. West Texas Intermediate crude dropped to about $65 from $105 between June and December 2014. The IMF estimates growth in 2015 will increase from 3.1% to 3.5% largely because of the lowering in energy costs. JP Morgan Chase economists see an addition of 0.7% points in global growth in the first half of 2015. ECB president Draghi sees the lower oil prices as an unambiguous positive. Estimates from Rhodium Group show major oil importing countries seeing import bills cut by $500 billion if prices remain low for 6-8 months, with $90 billion going into the U.S. economy. IMF estimate is that only 20% of the drop in oil prices is from lower demand, about 80% from higher fuel efficiency, increased supply using new technologies, decisions by OPEC to lower oil price, increases in supply. Based on estimates by the Rhodium Group, IEA and the IMF, the extra money flowing into the economies of the U.S., Asia and Western Europe from reduced oil import bills, as measured in percentage of GDP is: the U.S. 0.5%, Germany 0.8%, Japan 1.2%, China 0.8%, India 1.8%, South Korea 2.4%. Italy and France and other oil importing countries benefit. The impact comes at a time when Japan, China, India and eurozone economies badly needed a boost after significant slowdown in growth in 2014. It could not have come at a better time and because it is technologically driven as in the case of highly fuel efficient automobiles and new oil exploration technologies, a self sustaining process. The corresponding impact for oil exporters is: Russia -4.7%, Nigeria -5.4%, Venezuela -10.2%....

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George Osborne, Britain's Chancellor of the Exchequer, says he supports giving regulators powers to take action to split banks that do not ring fence their risky operations and separate deposit taking from risk taking activities. He says this as parliament considers legislation on banking regulation after the LIBOR investigations and problems in British banking following the 2008 financial crisis. Osborne said: "Irresponsible behavior was rewarded, failure was bailed out, and the innocent- people who have nothing to do whatsoever with the banks- suffered." Referring to the larger role of the financial industry in the British economy, Osborne stated: "Our country has paid a higher price than any other major economy for what went so badly wrong in our banking system." This comes as Britain feels the impact of a decline in growth in 2013.

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Italy's prime minister, Monti, says he will submit his "irrevocable" resignation, after about 1 year in office, following the withdrawal of support from Berlusconi's People of Liberty party. He told president Giorgio Napolitano he would make an effort to pass the budget and a financial stability law to defer "the consequences of a government crisis" before turning in his resignation.

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Rep. Dave Camp, House Ways and Means Committee chairman, representing northern Michigan, says every deduction in the tax code is there because of a reason, and powerful lobbies will oppose any changes. The best he can do is work himself out of this job as he will have to tackle the Democrats on entitlements, the business lobbies on tax loopholes, and other lobbies protecting their preferences in the tax code. He plans to achieve a simpler tax code with lowered rates of 25% for business and earners above six figures, and 10% for everyone else. The approach he is taking is to be revenue neutral when tackling tax reform, in the belief that the economic growth generated from a simpler tax code and lower rates would generate revenues of 18 to 19% of GDP, up from about 16% today. He says the economc cost of not getting this done to get the economy rolling again is so high that he is upbeat that both sides can come together after the election no matter who wins. He is also looking at a repatriation tax of 5% on profits kept by American companies overseas, which would boost revenues for business which could be reinvested in stead of sitting idle. Today the much steeper tax rate on repatriation makes businesses reluctant to bring it back....

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A detailed account of the developments that unfolded for Bankia bank during and after the initial public offering of its shares, after it was put together from seven failing cajas savings banks with bad real estate loans made during the housing bubble. The procrastination and small steps taken to paper over the problems by the Spanish government and regulators during the last year of the Zapatero administration and into the first year of the Rajoy administration.

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CNN reporter Cassie Spodak provides this exceptional report into the minds of New Hampshire Democratic voters who gave Bernie Sanders a 22 percent lead in the New Hampshire Democratic primary over Hillary Clinton. In October 2016 Hillary Clinton has the support of Bernie Sanders against Donald Trump in the U.S. presidential election. She described it as "100 percent support" in television debate. Sanders has appeared with Clinton twice, and campaigned 4 times in New Hampshire, and continually across the country. Younger New Hampshire voters still long for Sanders as their favored candidate. Older voters and some who have been motivated by Sanders to run for local office see the shaping of the Democratic Party platform as a victory for Sanders. Key planks of Sanders, taxes on the wealthy and higher incomes to pay for student tuition, infrastructure, and helping working class families, are now key parts of the Democratic platform. These voters see this as a pragmatic step and are enthusiastic in their support for Hillary Clinton. Overall Clinton now has 87 percent of Democratic voter support in New Hampshire according to a WMUR/UNH poll in mid October 2016, and she is doing well with millenials and independents nationally, a critical bloc of voters for Clinton to show nationwide support. One member of the steering committee for Sanders in New Hampshire named Dudley Dudley, reflects the opinion that has shifted the party to emerge united during and even more so in the final months of the presidential campaign of 2016- she tells the CNN reporter Spodak that she supports Hillary because "of the way she has grown, and stretched," and the way Clinton and Sanders are now campaigning together and working together. Both Clinton and Sanders deserve credit for their extraordinary ability to grow during their campaigns and during the party's way to shape the way forward. ...

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Theresa May becomes the only candidate for leadership of the Conservative Party after Ms Leadsom withdraws from the race. No leadership vote will no take place with Conservative Party members and no early general election is planned. May is expected to become prime minister of Britain by July 12, replacing David Cameron. Her theme is for "one Britain" and to do away with the rising inequality and gap between London and the rest of the country, which was part of the anxiety of voters who voted 52% for Brexit on issues of immigration burden on social and health services, national sovereignty, and a sense of ordinary people being neglected by elites in both parties. May will invoke Article 50 to leave the European Union and begin a 2 year period of negotiations only after she has developed a clear negotiating strategy. Kenneth Clarke, a Conservative Party cabinet minister called May a "bloody difficult woman," but this did not affect May, who said Mr Juncker of the EU was the one who would find this out in negotiations.  What is significant for Britain is May's moderate position coupled with a clear goal for removing some of the causes of the inequity in British society, which is needed for Britain to remain united. She called on companies like Amazon, Google and others to pay their fair share of taxes, and made clear her intent to strengthen the mechanisms for controlling executive pay. Also part of this strategy will be a more effective immigration control policy, which she did not implement vigorously as Home Secretary in the Cameron government, partly because of constraints set by EU membership. May made clear her agenda going forward by saying: "There is a growing divide between a more prosperous older generation and a struggling younger generation. And there is a gaping chasm between wealthy London and the rest of the country."  Changes May is supporting are to make executive pay rules to become binding not just advisory, and for employees and consumers to gain seats on company boards.  ...