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Following president Trump's decision to increase tariffs on $200 billion of Chinese goods on May 9, 2019, the WSJ looks at the mistakes made by both sides in misjudging each other's negotiating position. Mr. Trump says he is willing to increase the pressure on China by imposing tariffs on all Chinese imports into the U.S. after what he sees as China reneging on its commitments on trade by deleting key sections on enforcement provisions and Chinese legislation for enforcement to take place in the 150 page agreement prepared for both presidents to sign.  Early on in the negotiations between Liu He and Mr. Lighthizer, China misread the thinking on the U.S. side. Chinese thinking was that president Trump's urging for the Federal Reserve to lower rates was a perception sign of the weakening U.S. economy. It also may have misread the extent to which Mr. Trump trusts Mr. Robert Lighthizer, who Mr. Trump respects for winning a good deal with the Japanese in similar situation of Japanese rejection of U.S. demands. Mr. Trump also thinks the U.S. has a strong economy, is the largest world producer of oil, strong economic growth in the last quarter of 2018, is also negotiating better deals with other countries including the ones with Mexico, Canada and South Korea. It is also much less dependent on exports to China, giving it a stronger position with more experienced negotiators. China has whole sectors of its economy dependent on exports to the U.S., and crucial numbers of jobs at stake.  China also misread the signals from its stronger than expected economic growth from stimulus efforts in the last quarter, leading to it staking out a tougher position than the U.S. would accept. The U.S. position was set after decades of waiting for China to change and was unlikely to be affected by any temporary considerations.  As a result the U.S. not anticipating the Chinese response of deleting key sections agreed to in advance from the 150 page written agreement gave a strong response. Mr. Mnuchin who accompanied Lighthizer in talks says Mr. Lighthizer "read them the riot act" to the Chinese side. For the Chinese side the effort now shifted to continuing good faith talks without appearing to back down. ...

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Nigel Farage is making a comeback in European Union elections in Britain. He led the Independence party and has formed a new Brexit Party to contest the elections. He says the Brexit supporters were deserted in the way the Conservative Party bungled Britain's leaving the European Union. As a result of loss of support for Theresa May with the mess created by repeated failures to pass Brexit deals in parliament, some polls show the Brexit Party surging to 34% of the vote inEuropean elections. The Conservative Party at 11%, and the Labour Party at 21%. The Liberal Democrats at 13%. The Conservative party fragments, and the Labour Party loses supporters to the Greens and Liberal Democrats. Another change is that some of the pro-Brexit supporters of the Labour Party in the middle and the north of the country may shift their vote to the Brexit party. The Conservative party's losses of support are a result of the failure of Theresa May to hold her party together. In the case of the Labour party even though it had 40%  of the vote in the last British election, it is faced with the fact that it has an odd mix of supporters. In the north and the middle of the country its working class support comes partly from Pro-Brexit supporters, and in the cities and London the support is from more liberal, better educated people. This puts both the main parties in the situation which they never thought they would be in.  Mr. Farage says its OK for Britain to leave the European Union without a deal. Prime Minister May has taken great pains to forge a deal, even a cross party deal with Labour if necessary. This has alienated the most fervent Brexit supporters in the Conservative Party who favor a no-deal Brexit. Much of this comes from caution that a no-deal Brexit would hurt Britain's economy and lower growth. A large majority in parliament believes a no deal Brexit would be disastrous for Britain. Nigel Farage does not have to deal with such distant matters as economic growth, the British pound and GDP.       ...

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It has happened before- the issues and the tactics. This article is from the Washington Post March 10, 1985. The 2016, 2020, and 2024 US campaign for president most resembles the 1952 campaign between Dwight Eisenhower and Adlai Stevenson. In that campaign Senators Joseph McCarthy of Wisconsin and Senator Jenner of Indiana made unfounded statements and criticism of of candidate Adlai Stevenson, of Gen. George Marshall, of NATO and aid to war ravaged Europe under the Marshall plan, and by 1958 of Eisenhower for "ruining the party," according to the Washington Post. Edward Jenner, Senator from Indiana 1952-1958, conducted Senate hearings in which he made spectacular criticism of public figures and US policy from 1953 to 1955. Eisenhower was elected as president in 1952 and after considering running as an Independent reluctantly accepted when New York Governor Dewey asked him to do on the Republican party ticket. What is similar is that the issues and tactics used now are reminiscent of issues and tactics in those days in the 1950's, that this is not happening for the first time- it is not new. Both Senator Taft who headed the Republican party at the time and president Eisenhower felt uneasy about this type of criticism. Then as today it was about aid to Europe and NATO. Jenner said America could not afford it and it "would bankrupt America." Jenner also called the US Supreme Court "the most powerful instrument of the communist global conquest by paralysis," and introduced a bill to limit the SC jurisdiction. Jenner said in 1951 on the Senate floor, according to the Washington Post-  "the only choice is to impeach Truman," as "this country is in the hands of a secret inner coterie directed by agents of the Soviet Union." Today's differences are not new, the rhetoric familiar, about NATO, Europe funding, about the SC, about this and the former president, and about isolationism and about extended costly foreign wars, all after a pandemic and climate change in an uneasy atmosphere about the threats to American leadership then from the Soviets now from China. ...

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The protest vote in Uttar Pradesh is just that a protest vote intended to get a message that the work of the Modi government to modernize and industrialize the economy needs to be accelerated to see its effects felt in rural agricultural areas of Indian states. Modi said yesterday- "If you work for ten hours I will work for 18 hours" showing that he sees the need for acceleration, even harder work ahead to modernize and industrialize India.  Disconnect with lower caste untouchable voters called Dalits and economic distress felt from the effects of the pandemic, decades of neglect that take time to correct in one of India's largest and least industrialized states Uttar Pradesh, led to prime minister Modi failing to get most of the 80 of 543 seats as it had done in three previous elections. Lower caste Dalits form 20% of the population, other lower castes another 40% of the population and 20% are Muslim voters. With this mix of voters and the time it takes to modernize and industrialize its economy in a state that was neglected for over 60 years the Modi government's best intentions have not delivered election results in the state in 2024 after the pandemic. Delivery on schemes for sanitation, clean running water, affordable housing, cooking gas for poor households, that have brought 250 million out of poverty nationally and about 40 million in Uttar Pradesh alone, was overlooked by voters, and younger voters. This does not change the path of modernization that countries such as China have taken and which require a strong administration with full public support working with industry and all parts of society to build infrastructure and manufacturing rapidly over 15-20 years. In China this happened from 1990 to 2010. In India this will take 2014- 2030 to achieve. In Bihar, UP, Orissa, Maharashtra, Andhra Pradesh, in all these states with large areas of backwardness in development the only path to realize the aspirations of the people is the path offered for modernization by prime minister Modi. The protest vote of 2024 is then a way of saying to prime minister Modi that the level of development needs only to be accelerated to see its benefits for hundreds of million of people in rural agricultural areas. ...

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How a new energy and environment panel created at the urging of democratic leaders and Speaker Nancy Pelosi is taking a stand on climate change and fuel economy standards for automakers. Democratic Rep Ed Markey of Massachusetts heads this panel. He is having to overcome opposition from Michigan Rep Jon Dingell who heads the Energy and Commerce Committee and who represents the interests of automakers in Congress. Right now the Senate has already passed legislation for a increase of fuel ecomomy to 35 mpg for all cars and light trucks with bipartisan support. Mr. Dingell is holding out in the House, by calling for economy wide legislation for climate change and for looking at the consequences of the Senate legislation more closely, moves that would put off any change for 1-3 years. Will Ed Markey be able to insert fuel economy standards into the energy bill that is now before the House?

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Anna Fifield says in this Washington Post report that the North Korea of 1998 with famine, and the North Korea of 2008 seeking stabilization when poverty and malnutrition were shared across the country, is not the same as the North Korea of 2018. For one thing more than half the people in North Korea work in what is essentially a market economy and most of the other half are involved in some way with private enterprise. Contacts with the outside world are also to be seen and the country is not as isolated any more. Kim Jong Un is also a leader who likes to have contacts with the outside world compared to previous leaders. 

This leaves room for change says Ana Fifield, change that could help the vast majority of North Koreans.

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Even if a automobile part for assembly is manufactured in the U.S., the subparts may be sourced overseas. This makes it extremely difficult to pinpoint the country of manufacture. Toyota Siena is 90% sourced with US and Canadian parts according to the U.S. National Highway and Traffic Safety Administration. The Ford Mustang 2005 by contrast uses 65 %US and Canadian parts according to NHTSA. There is a publicity war between the US makers and the Japanese with commercials arguing about who is more American. According to the Japanese Automobile Manufacturers Association $28 billion is the amount of cumulative investment in N. America and $45 billion is the amount of annual purchases of parts, so that 67% of the Japanese brand cars sold in N. America are made there. A graph from National HighwayTraffic Safety Association shows the Average percentage of auto parts made in the US and Canada for cars sold in N. America. It shows 2 interesting things. 1. That the US makers GM and Ford are closer to 80% and the Japanese makers Toyota and Honda are about 70%. So American makers still have more American content. Note though that Nissan is only around 54 % domestic content, significantly lower. Its always been a much weaker competitor than Toyota, and its sales recently have been sluggish in the US. The Koreans are not shown here but its quite possible that their content is closer to Nissans than to Toyota or lower than Nissans. So all foreign plants may not be the same. Notice the change in Toyota from 52% domestic content to 70% domestic content, from 2000 to 2005,an 18% jump which could only result from a deliberate strategy anticipating the controversy of who is truly American and who isn't. 2. In contrast GM has definitely shifted from 92% to 80% and rapidly moving in the opposite direction than Toyota. The sea change currently underway in the American auto parts industry is in the background, with Delphi looking to increasing manufacture and sourcing overseas particularly Asia (China, India etc), to bring down costs and be competitive in a globalizing auto parts industry. In the future as Delphi shifts overseas and GM procures from China and India one could see a continuing rapid shift to higher overseas content to add the cost savings directly to GM and Ford's bottom line. ...

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Several experts point to a dangerous change in the nature of unemployment in this downturn. Heidi Shierholz of the Economic Policy Institute, says people are more likely to get stuck with unemployment now than at any time in the post war period. Andrew Stettner, deputy Director of the National Employment Law Project, says a larger share of the unemployed are not going to be able to go to the same line of work. They will need new skills, just like an auto worker in a permanently downsized industry would have to find new skills to make a product in the renewable energy field or health care. And the law as it currently stands does not help either. Because if an unmeployed worker looks for training or goes back to school he loses his unemployment benefits, something the Obama administration proposes to change. What this means is that many of the unemployed will end up as permanent job losers. Rob Valetta, an economist at the San Francisco Federal Reserve Bank says that throughout the the last 3 decades including good times, the unemployment pool is shifting towards permanent job losers. Lawrence Katz, a Harvard University economist, points out that once workers exhaust their unemployment benefits and don't get new training, they become disconnected to the labor market, and bascially end up on disability or become permanently unemployed. The statistics bear this out. In April 2009, 47.1% of the people collecting state unemployment insurance exhausted the usual 26 weeks of benefits without finding work, according to the Bureau of Laor Statistics, that is the highest rate on record. In December 2007, there were about 2 unemployed workers for every job opening, according to Labor Department data. In March 2009 there were five unemployed workers for every opening. Mark Beaupre, 49, of Providence, R.I. lost his $8 an hour manufacturing job an year ago, one of many manufacturing jobs he has held since the 1980's. His wife Cathy lost her customer service job a year ago. This couple who together made $50,000 a year, are now behind on their mortgage payments and have applied for food assistance. At a recent job fair in Providence he says three thousand people turned up and he could not even get into the parking lot. ...

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What are the systemic effects of one of the automakers going out of business? It affects the whole supplier base. This is the case in the event of a liquidation of assets, closing Delphi and so on. This was mentioned by Wagoner as the alternative and not prepackaged bankruptcy with DIP set aside loan for warranty financing which some experts are advocating in combination with a government loan with strings attached including a change in management. Some of the strings are covered in a New York Times editorial reflecting public opinion on the democratic side on this issue, and that includes removal of current management of Detroit auto companies, and fuel efficiency targets raised higher than legislation passed recently under heavy lobbying pressure from these automakers. Contraction of automakers and job contraction should be differentiated from liquidation of assets. The contraction of automaker jobs not just at the Detroit companies but also at Japanese plants in the US is going to happen even with a government loan to Detroit as Honda is also reducing its workforce and this will happen at Toyota also. The carefully planned bankruptcy with carefully and fully addressed warranty and other issues could be made to work along with sufficient government loan money in the $50-$70 billion range in return for equity and other conditions, and its not clear why the management of the Detroit auto companies see it as impossible and not just difficult, when they are already facing considerable difficulties in this market and with public opinion. Rampell talks about how jobs lost are not recoverable, and this is fairly obvious considering that the Japanese and the Germans are unlikely to relocate in the same areas that Detroit has located its plants , and prefer to go and build green plants to specification, and hire very carefully so that workers with the Toyota or Honda frame of mind are hired to work there. This can change depending on individual circumstances but is what they generally prefer to do. Also its important to bear in mind that forecasts that are being used of 13-14 million vehicle market in 2009 are just guesses, it could turn out that the sales drop to something like 10 -12 million vehicles, in which case there will be contraction of jobs on a large scale even at the Japanese and Korean and German plants which there is even now but on a smaller scale. ...

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The resilience of Indian democracy shows in the fourth phase of the election with 70% election voter turnout for parliament. The Election Commission says 67% over all four phases with the current heat wave 45-50 degrees centigrade. 150 million more voters over 18 years will vote this time in 2024 compared to 2019. 978 million people or 70% of the population eligible to vote. And 5.5 electronic voting machines, 1 million polling stations, 15 million election workers and security personnel. Compare this to the elections for European parliament with voter turnout in 2014 of 42%, in 2019 of 51%, and expected increase in June 6-9  election to 61%. Total seats are 720 compared to 543 in India. There are 3 debates, in Maastrict, Netherlands and Brussels, Belgium, in May the last in English. With Ursula Von Der Leyen of CDU heading European People's Party, Zimmerman of Renew and Nicholas Schmit for Party of European Socialists and others. EPP met in Bucharest, Romania, PES in Florence, Italy in March, Greens in Lyon, France. Issues in EU Climate change, Security policy, Economy, Migration and Borders. In India issues are Vikshit Bharat 2047 modernization effort, State governance leakage of funds intended for development, Security, Backward Caste development. ...

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What is the Winter Fuel Payment in the UK? The Independent provides some answers. It was introduced in 1997 by a Labour government in Britain. It now provides 200 pounds to people over age 66, and 300 pounds to people over age 80. To get this payment pensioners and retired people have to be eligible for pension credits. This is possible if your income level is - Income at £11,343.8 a year if single, or a shared income of £17,313.4 for two or a couple is what qualifies one for this winter fuel allowance. The British energy authority says winter fuel costs will rise by about 300 pounds. This means a 500 pound hit to budgets of pensioners who are not eligible for winter fuel allowance under the Labour plan. The Labour plan is to do this because of the hole in public finances left by the Tories of 22 billion pounds. Starmer and Reeves say this is needed and the responsible decision. One million pensioners face a loss of Winter Fuel allowance and Age UK says: “Older people in this group often tell us they really struggle financially; the proposed change will make it even harder for them to afford to stay warm when it gets chilly. ...

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In this audio BBC Witness History talks with Shuji Nakamura, the inventor of the LED lightbulb in 1992.  Nakamura shows the resilience and stubborn persistence against the odds that has given the world an extraordinary invention. The LED bulb does great things for climate change action because for example Califonria uses 35% of its electricity for lighting. The LED bulb cuts this in half and this means many coal fired power plants are not needed. In India, Indonesia and China this means lighting for about 3 billion people, with lighting for children studying in remote parts of India and China, and in Africa and Latin America. Nakamura took an unconventional route. He did his PhD in Japan not by going to school which is allowed in Japan, but by writing a paper on White LED development. He made a single minded focus on this goal. Nakamura says it made him angry that no one wanted to try new ideas and he persisted for years of research. At the time GaN research was done by less than one percent of researchers. Nakamura decided to try the path less trodden and by 1992 developed a blue light emitting LED bulb. Add phospor particles and blue becomes bright white LED. ...

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Donald Trump remains far behind Hillary Clinton in preparation for a general election in fall 2016, and behind where Mitt Romney was at this stage of the campaign in 2012. Part of the problem is his unconventional campaign based on personality and minimal grassroots structure, which is only now being organized with field offices, large staff, and campaign experts, getting a late start, and the campaign supporters not accepting the change. Trump has about $36 million from his personal finances, and $11 million raised from donations. Hillary Clinton has spent $26 million on 1100 organization staffers and firms providing digital, strategy, and voter data services, compared to $7 million spent by Trump for 200 staffers through March 2016, and Romney's $17 million spent at this point in the campaign. Romney advisor Stevens is skeptical about the Trump capabilities for the campaign that is expected. A NYT report says a Hillary super PAC is already preparing its advertising strategy and booking television time for $125 million in April 2016....

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Ford executes new strategy for reaching the younger first time buyers of small cars in India. The car is a hatchback called the Figo designed with the help of Indian engineers for the Indian and overseas markets. It has done a$500 million expansion of its plant in Chennai, India, doubling production to 200,000 vehicles ayear, and 250,000 diesel engines a year by 2010. Mullaly says: "literally India is designing the small car for the world." Separately Ford is building a new car plant in Chongquing, China, for 300,000 cars, midsize and suv's. The change is huge and dramatic for car production. CSM Worldwide predicts car sales in India 45% higher in 2011 compared to 2007, and 39% growth in China, 26% in Brazil. In contrast, car sales in North Americaand Europe will not have returned to 2007 levels by 2011. Considering declining levels in Japan and Germany sales may be on a slow downturn. See links to this. For instance Ford predits Ford's production in North America will decline to 35% of global production by 2015 from 54% in 1997. ...

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Texas law written into the constitution of the state when it was founded in 1845 banned home equity loans. This was a result of a bank panic and foreclosures of that period when many homesteaders lost their land. The change banned lenders from selling mortgages to homesteaders. Till 1998 Texans could not take out home equity loans. New laws restricted the total debt on a home to 80% of its appraised value. This loan to appraised value limit plus the restriction that home equity loans could not be used to pay other debt kept homeowners in Texas from facing a high rate of foreclosures. Fed studies show that in 2005 U.S. homeowners took out $500 billon from their home's appraised value through home equity loans and cash out refinancing. Of this $263 billion went into consumer spending and paying off debts. This Fed study co-authored by Greenspan shows that 80% of the three fold increase in American mortgage debt between 1990 and 2006 came from home equity taken out on rising home values.

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The new head of U.S. President Obama's Council of Economic Advisors, is Princeton economics professor, Alan Krueger. Kueger is known as the academic's academic, whose office is located with other labor scholars in the Princeton library. His work has focussed on what he calls "Rockenomics" (research about which bands do well and the reasons for this), on commuting, on studies such as the one with a suggestive title, "Sorting in the Labor Market: Do Gregarious Workers Flock to Interactive Jobs?" His appointment suggests the Obama administration is looking at no new policy initiatives, focussing on an incrementalist approach in policy actions, with the hope that he can get both political parties behind smaller changes. Putting a micro-specialist in charge at a time of huge volatility in financial markets shows an administration that is likely to continue the status quo with small changes till the presidential elections in 2012- the opposite of strong action because the Obama adminstration has no idea how to turn this economy around and only hopes things will change....

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American Airlines share price ended at $1.98, down 33%, on Oct. 3, 2011. AMR averted bankruptcy protection in 2003. This is the lowest level for the share price since 2003. AMR suffers from higher labor costs than other large airlines that went through bankruptcy and realigned costs. AMR says its labor costs are $800 millon higher than its competitors. AMR says it has $4.2 billion in unrestricted cash as of Sept 30, 2011, a decline from the $5.1 billion on June 30, 2011. Debt obligations due for AMR are $2.5 billion for 2011, $1.8 for 2012 and $1 billion in 2013. AMR raised $726 million in aircraft- backed bonds to refinance part of $1.3 billion in debt obligations due in second half of 2011. AMR has ordered 460 new fuel efficient aircraft in a lease financing deal offered by Boeing that does not stress AMR's balance sheet. Fears that AMR is burning cash with its expected operating loss caused Moddy's to change its outlook for AMR to negative from stable. AMR had $17.1 billion in total debt on June 30, 2011....

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The resignation of Jerry Yang, co-founder of Yahoo, from his positions at the company on Jan. 17, 2012. Yahoo hired a new CEO, Scott Thompson, from eBay's Pay Pal unit n 2011. Yang started Yahoo with David Filo. They setup "David & Jerry's Guide to the World Wide Web," a list of favorite websites, as computer science students at Stanford in 1995. What followed was a trajectory similiar to the one observed today for Facebook- by 1999 the company was valued at $120 billion in the dot com bubble. A decade later Google, a newcomer with a search algorithm, replaced Yahoo as the most widely used search engine. Yahoo and its peer site AOL from the 1990's never recovered from the technological change in the internet with broadband and a new generation of search engines. Yang holds a 3.8% stake in Yahoo. Yahoo has a 40% stake in Ali Baba, which was formed when Yahoo turned over its Chinese operations to Ali Baba in exchange for a large stake in operations. Yahoo is planning to sell its stake in Ali Baba....

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Federal Reserve chairman Bernanke's move in January 2012 to announce detailed projections for interest rates for each of the 17 Fed Governors participating in policy meetings, is an effort to show that he operates by consensus. Names of the Fed Governors are not stated.This is a change from the Greenspan years at the Fed. Hilsenrath points to the research done by Alan Blinder of Princeton University, former Fed vice chairman, which shows group consensus based action works bettter. Another reason for this is the Fed's damaged credibility after the Greenspan years and the financial crisis of 2008, when the Fed operated under one dominant figure. An additional step taken by Bernanke is to move from the ad hoc type of policy decisions of the past decade to a longer term plan for unemployment and inflation goals. The Fed has set a 2% goal for inflation with some flexibility to reduce unemployment if it is too high. This gives businesses more information to plan ahead and improves Fed credibility....

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The artificial nature of the target of debt to GDP of 120% for Greece in 2020. This is the target being followed in negotiations by the troika of the ECB, IMF and the EU. Experts say the sustainable level would be much lower for Greece -this would be much lower because of the aging population in Greece and lower level of workers to support retirees in future years, the inefficient tax collection system and poor prospects for changing it, the degree of control over monetary policy and the rate of change of debt. A recent study by the Bank for International Settlements shows debt sustainability at 85% after studying 18 countries from 1980 to 2010. No precise source has been found for the 120% target. An IMF Report in 2011 said the 120% was the "maximum level considered sustainable." Alan Auerbach at UC Berkeley and Michael Woodford at Columbia University, say the additional factors are relevant to Greece. The many unpredictables over the course of ten years is another serious difficulty.

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WSJ's Ben Worthen interviews Leo Apotheker of Hewlett-Packard. He talks about the resignation of four board members and the addition of five new board members, by citing a joke in the Swedish parliament in the sixties. In that joke one member of parliament says the best way to move driving on the left to driving on the right was to do it gradually. That is Apotheker's way of saying why it couldn't be done gradually. He says he doesn't let the propaganda about him by Oracle CEO Ellison bother him. What matters to employees is seeing him and talking to him, and he has gone on a round the world listening tour. He will focus on profitable growth, and he sees his industry in a technology transformation with the words "cloud" and "connectivity, that will change H-P. He sees the potential to do more in overseas markets, something his background from Europe helps him understand better. He would like to fill gaps in H-P's software capabilities and speed up bringing new products.

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Unemployment in Germay has dropped from 12% 5 years ago to 7% in 2010. The largest union IG Metall (with 3.4 million members) and other worker unions showed wage restraint. IG Metall agreed to keep wages the same in 2010 except for a one time payment of 320 euros. This empasis on job preservation may change as wages have been restrained since reforms in 2005. At that time unemployment benefits were cut and people with less skills were induced to take up lower paying jobs. German recovery is also helped by the short week Kurzarbeit program with companies retaining workers, the government paying upto 67% of the wages lost from the shorter week and workers agreeing to a reduction in wages. Companies like BMW are hiring and BMW has 1000 jobs to fill in its R&D, purchasing and sales. And Germany has benefited in sales from stimulus in China and the growing demand for automobiles and equipment from China, a situation that auto executives believe may not last.

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As Britain goes to general elections in May 2015, one of the issues in the election will be new referendum on membership in the European Union promised by prime minister David Cameron. Cameron has said he will negotiate a better deal for Britain in the EU and hold a referendum by 2017. The last referendum was in 1975, in which two thirds of voters supported membership in the EU. British disapproval of the EU has increased with immigration from newer EU members since the 2008 financial crisis, and increasing unemployment. Some recent polls show 42% voting to stay in the EU, and 39% opting out, suggesting a close vote. Negotiations for better terms mean treaty change, which would be opposed by France. Germany's Merkel also opposes changes on the immigration rules that do not allow free movement of labor. Other EU leaders see Cameron's moves on the EU being an effort to counter the UK Independence Party's push for EU exit, as the UKIP could draw Conservative right wing voters in the 2015 general election. ...

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Carney breaks down Fannie Mae's 2013 earnings figures of $84 billion to show that this is due to unusual factors- such as low interest rates that it gets to access capital from the government, and the reversal of a write-down of deferred-tax assets. $45.4 billon is from the reversal of a writedown of deferred tax assets, $14.6 billion to gains not easily repeated, and about $12 billion because Fannie was able to borrow at 2.06%. (Mortgage securities generated interest income of $22.12 billion. The mortgage guarantee business generated about $12.3 billion which is a result of the 2012 change to the bailout agreement terms) He sees Fannie's core earnings that it could keep generating at about $12 billion. The additional reserve capital requirement that it would face as a systemically important or "too big to fail" financial institution at about $100 billion, making it about 8 years for it reach the reserve capital requirement. The situation at Fannie Mae is not as rosy as the 2013 earnings figures suggest. ...

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Banks in the UK are considering giving investment bankers allowances to make up for lower bonuses mandated by new EU rules. This is one of the mechanisms banks are considering to be able to pay competitively. EU rules do not limit total compensation making it possible to shift pay given earlier as bonuses to the new 'allowance' category. For instance a 1.8 million euro bonus might be dropped to 1 million euros and 800,000 euros given as an allowance. Such an arrangement means banks can adjust the allowance as markets and regulations change. Increasing fixed salary would mean effects such as higher pension costs. Most of the 35,000 higher level banking employees to which the EU rules apply work in London, England. The UK Prudential Regulation Authority has come out against the EU bonus rule and the UK has taken this up in a legal challenge at the European Court of Justice. U.S. and Asian banks are deferring parts of bonuses and paying in a mix of shares and cash.