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Putin writes to Gayne Young, a high school English teacher from Fredericksbug, Texas, who is a blogger for Outdoor Life. A lengthy interview with Putin is published in Outdoor Life. Putin talks about the period before the Second World War and the Cold War period and says a large number of barriers were unnaturally and artificially forced on the two peoples during this period. He says the two countries and peoples were cruelly kept apart from each other and only now has the relationship assumed a natural pattern where people can communicate and make friends. Young was captivated by an account of Putin's encounter with a blue whale in the summer of 2010. Young asked Putin whether he thought this was dangerous and Putin's response was philosphical and eloquent- human beings are one of the most vulnerable creatures on earth, facing disease, disaster and criminality, he says, as if covering the Russian people's experiences since the Bolshevik revolution right through the period that followed the collapse of the Berlin Wall. He adds that this does not mean one should move back from living life to the fullest, experiencing it to the fullest, which by its very nature is about some level of risk....

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The Public Private Investment Program announced by Treasury Secretary Geithner finally gets underway in October 2009. Black Rock, a group led by the Wellington Company and a group led by Alliance Bernstein are private participants in the effort to get private participation to rid banks of bad loan assets. Five of nine money management firms selected by Treasury to buy toxic mortgage related securities have raised the minimum of $500 million from investors each, to qualify for matching government loans. In total the program will allow money management firms to buy up $12 billion in bad assets. THe IMF estimated last week that financial institutions around the world have still on their books $2.8 trillion in troubled mortgages and securities. Only half of that amount has been booked in losses, which leaves $1.4 trillion still to be resolved. $12 billion is less than 1% of this, which begs the question how will this make a difference? Treasury only hopes that this will restart trading in bad assets and help establish market prices for these assets. If unemployment worsens and the economy sees a sudden relapse in the near future this $1.4 trillion in bad assets will continue to create serious problems for financial instituions and the international financial system....

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The $25 billion mortgage settlement of Feb. 2012, between large U.S. banks and state attorneys general. $17 billion will go to homeowners. Experts say this is good for the banks because it reduces legal uncertainty, and for state attoneys general- it will not be enough to significantly impact the difficult situation in the U.S. housing market.

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Morgenson cites Paul Diggle, property economist at Capital Economics in London, about why the $26 billion mortgage settlement between the state attorneys general, the U.S. government and the large U.S. banks is unlikely to make much difference to the foreclosure problems in the housing market. The agreement provides for reducing principal by $17 billion over 3 years for homeowners under water. Diggle points out that $17 billion is a drop compared to what is needed, because 11 million homeowners are now under water on their loans to the amount of $700 billion. The $17 billion is a mere 2.4% of the negative equity of $700 billion.

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The parliamentary elections in Britain have changed the environment in which the first day of Brexit talks took place on June 19, 2017. There is a great deal of uncertainty as the government of Theresa May has only a thin majority in parliament. A debate is now taking place on how much support Brexit has after the parliamentary election, and what kind of Brexit should take place, what are the risks and uncertainties for Britain. As expected the European Union negotiator Michael Barnier emphasized that some issues have to be resolved first- that Britain owes the European Union between 40 to 60 billion euros over 5 years, the rights of EU citizens in Britain, for the beneficiaries of EU policies and for the impact on borders particularly in Ireland.  Only then would the EU discuss access to the EU market for Britain. Mr Barnier handed British negotiator David Davis a hiking stick, a way of saying this will be a long hike up the mountain. In Britain there is a growing sense that the talks cannot be completed by the current deadline in 2019, that it might take 5 years. Another hurdle- Britain cannot have access to the single market if it seeks to control immigration. For the European Union there is the additional problem of how to negotiate with a government that may not be there in a few months, say experts. For the European Union Brexit is now more of a distraction, as there are other issues that rank higher such as relations with the Trump administration, NATO and Russia, refugees and borders.       ...

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The story of a company and its founder in Seattle who realized that $40,000 a year is not much to make a decent living in Seattle- that people had to work 2 jobs. In the process hurting the productivity at the company, with employees putting in less of the kind of energy and motivated work that helps companies grow. The founder decides to cut back on his own expenses and extravagant lifestyle to make sure his employees are paid a decent wage. He did the math and decided on $70,000 Five years later sales of the company have doubled. It is a payments company and the payments processed at Gravity doubled from $3.8 billion a year to $10.2 billion. The number employees have doubled. For employee productivity it mattered that they were not doing 2 jobs and worrying about credit card debt. Now 70% of employees have paid off debt. The amount of money they put into pension funds has doubled. And instead of 1% about 10% own their own homes. This suggests the old culture was bad for the economy as well as employees. More housing demand, more homes built, more cars sold, more money for pension funds to manage, all translate into a better performing economy and economic growth. Simply stated the old culture has put an artificial ceiling on economic growth and worse set a low bar fro productivity in companies. Healthier employees who could spend the time doing second jobs doing exercize instead and staying fit would also bring down the money spent on healthcare.  Ultimately it us about good common sense, and honest thinking about what works and does not work. The old culture simply fails good common sense. ...

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Felipe Caldron, Mexico's new President, addressed one of Mexico's biggest problems low tax revenue by getting passed through the legislature a tax bill that will increase tax revenues from 11% of gross domestic product to 13.5 % of GDP. This will be done by a corporate tax that taxes sales rather than profits starting at 16.5% in 2008 and rising to 17.5% in 2010. The original proposal Calderon requested would have taken this to 19%. The bill cuts taxes on Pemex which will give it an additional $3 billion a year as it is falling behind in new reserves added from exploration and drilling that would replace ones being depleted leading to a decline in output. And the tax bill imposes a tax of 2.5% on cash deposits above $2200 to attempt to collect some taxes from the underground economy which employs about a quarter of the workforce. In addition it imposes a gasoline tax of 5.5% that will go to the state governors for local spending needs. The deal was negotiated by giving the opposition reforms in the electoral process including replacing all commissioners of the Federal Election Institute, and bans radio and television advertising for candidates. Calderon wanted to increase the taxe revenue to 14% of GDP, this would increase it to 13.5%. Considering the previous administrations failure to get any legislation through Congress while Pemex production slipped, and tax revenues were some of the lowest in the world due to widespread evasion (see a similiar problem and tax reforms in the Philippines recently), this is a breakthrough. But Pemex has to turn the corner, and lags way behind Petrobras in Brazil in terms of progress in exploration and new reserves. Revenues from the oil company largely help fund state spending in Mexico. However reforms that free up the state energy sector as Brazil has done (see the recent article on Petrobras in wsj ) some years back are still for the future. How much will this help. Its a modest beginning from a low point under the Vicent Fox administration. The additional $10 billion it generates next year will go to fill the gap in declining tax revenues from state oil company Pemex, and rising health and pension committments of the state....

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Are fears of the N word or nationalization causing Geithner, Sommers and Obama to muddy up prudent decisive action, a serious plan of attack, against the banking crisis. The dithering seen so far says Krugman suggests that Geithner and company think that toxic assets that are worth 40 cents on the dollar are really worth much more, and if only things improve then a large part of the crisis will go away, as these toxic assets get priced at a higher level. This just doesn't look like its going to happen with the losses that companies like AIG are incurring. Bernanke even said there are no zombie banks, and AIG he said was not a zombie financial institution. So dithering continues with risks of a prolongation of this crisis to perhaps a decade, in the President's own words, and the cost much larger with even weaker public support as the bill gets larger.

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Matthew Slaughter of the Tuck School, Dartmouth, says that the principle of comparitive advantage should determine what America exports and imports. Under comparitive advantage each country concentrates its energies on the particular goods and services that it does better than other countries. Free trade operates under the idea of comparitive advantage, but in practice it is quite different than its textbook economic counterpart. It is constantly changing as new countries or industries in different countries try to upset the existing pattern. Under a textbook example Airbus should not exist because Boeing was the most efficient manufacturer upto that time, and new entrants in a industry are nurtured for years with support from the governments of their countries. And in some situations the governments may exclude certain companies or industries from support such as Komatsu and construction equipment in postwar Japan, and Infosys and software outsourcing in India, and still survive and grow. Under comparitive advantage Japan should still be importing construction equipment from Caterpillar in the US, and there would be no serious competition in that industry. This would work to the detriment of the principle of competition in free trade which is just as important to free trade as the idea of comparitive advantage, with new entrants in an industry upsetting the old way of doing things and creating price/quality improvements. Slaughter simply pulls back off the shelf the old idea of comparitive advantage without seriously considering its real life aspects. Without dealing with trade distortion from currency manipulation, from the impact on jobs, without considering the continuing critical role of manufacturing in developed economies to provide the standards of living for a large middle class, and creating the kind of society that people of developed countries aspire to. He mentions GE's Immelt and the President's Council on Jobs, but makes no effort to engage Immelt 's statement in his recent op-ed article in the Washington Post, that the concept of transitioning from a export-oriented economic powerhouse to a services led consumption based economy could be done without loss of jobs, prosperity and prestige, was fundamentally wrong. He has only one line for manufacturing's role in America's economy. This line says knowledge intensive industries such as education and software are just as important as manufacturing, but fails to mention that manufacturing has received less attention in recent decades. In so doing he is discounting his own profession of concern for the high rate of joblessness in the U.S., and the need for a new focus on manufacturing in the U.S. to reverse that trend. By saying that imports are not a sign of failure but can raise standards of living, and leaving it at that, Slaughter does not acknowledge that consumer debt that US consumers have taken on in the process certainly affects future prospects for the US economy. And he makes no mention of the need for rebalancing the world economy, which is exactly how free trade should work ideally. Countries that have high imports export more to rebalance the world trading system, as currency valuations are allowed to adjust makig their exports more attractive. By not taking into account the realities of free trade, and the need for practical measures to rebalance without policy induced distortions by state run economies, Slaughter ignores the idea of free trade that works as it should and for all countries. The irony is that Immelt's own committment to jobs and competitiveness has been questioned in online blogs and most recently by an editorial in the Wall Street Journal on January 26, 2011, titled "The Misallocators." That editorial refers to the outsize role of GE Capital in GE's earnings during the past decade, and the lack of credibility of a focus on competitiveness and jobs that this creates for GE. It mentions the loss of 34,000 GE jobs in the US during the last decade. ...

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After suffering a deep depression Greece's economy is in 2019 24% smaller than in 2007. It may not be till 2033 that Greece recovers to its precrisis level GDP, says Oxford Economics, a consulting firm. With the creditors of Greece maintaining a tight control and requiring high taxes and high budget surpluses of 3.5% of GDP excluding interest payments, there is very little financial leeway to reduce taxes as the newly elected government of Mr. Mitsotakis of the New Democracy party has stated. Greece spent 8 years till 2018 under an austerity regime set by the European Union overseen by the IMF with eurozone authorites in return for a financial bailout loan package. Spending cuts and tax increases of 40% of GDP led to drop in GDP of 25%. Greece had misrepresented its official spending numbers to eurozone authorites in the years leading upto the crisis, leading to a lack of sympathy from ordinary German taxpayers for the country's situation. Unlike Portugal which was able to increase exports and find ways to reduce the austerity regime with sympathy from Germany, Greece lags behind in foreign investment and is 72nd in the ease of doing business ranking of the World Bank.  Unemployment is falling very slowly and is at 18%. Greece has returned to bond markets with 10 year bond yields of 10%. Growth is stuck at 2%. Pension spending takes up most of the budget, with little left for investment, education and other needs. No parties talk about cutting pensions anymore as a grandparents pension supports many families. The high taxes have hurt the private sector with the most productive people emigrating to other countries in northern Europe and to other parts of the world. About 500,000 left from 2010 to 2017, most are college graduates, and 64% have postgraduate degrees, a survey shows. Most of them will never return as it  is difficult to live and plan a life on a Greek salary. During the financial crises affecting Latin American countries such as Mexico, Brazil and Argentina for decades, the expression lost decade became common. Some like Argentina had repeat situations of lost decade before recovering. Even the U.S. suffered badly suffering close to a lost decade with faulty mortgages causing a crisis in 2009. Only Greece has proved that this can happen for nearly three decades. Greece's experience also sullied the euro currency's image, that was further damaged by the austerity policies across the eurozone's financially weaker countries. Lack of transparency and insider groups unable to take up the national interest and pursuing narrow interests left Greece in a bad position with little sympathy from stronger northern European countries such as Netherlands, Sweden, Germany. Today's political crisis for the centre right and centre left parties in Germany and other Northern European countries such as Scandinavia, Netherlands, also stems from this flawed entry of countries such as Greece into the eurozone with poorly managed finances. A combination of Tech creating low wage jobs, erosion of working class, failure of centrist parties free market policies to protect the working class, shift of jobs to low wage countries such as China, had already eroded the situation. The humanitarian response to what was both a economic and war related migration from North Africa  to Europe only worsened the image of these parties with working class people alienating them further. The eurozone countries and the European Union are only gradually recovering from these errors.     ...

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The Dow Jones Average jumps 296 points on Dec. 7, 2016, with a broad rally including banks and industrial companies, but excluding health care shares which suffered from comments by Trump to Time magazine that he would "cut drug prices."

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Prof. Cochrane of the University of Chicago goes over the Federal Reserve's new "Enhanced Prudential Standards and Early Remediation Requirements" for big banks. He finds serious shortcomings in the Fed's proposals to regulate the largest banks. He points to the proposal that puts less than one dollar at risk for every 10 borrowed dollars as ridiculously low, and says the Fed is admitting it really does not know how to correctly measure and regulate credit exposure in today's banking system. The Fed's remediation requirements are basically ways to get regulators to take action early with "triggers," because regulators were slow to act in the last crisis. This is down to regulating the Fed, not the banks. As stated in recent editorials in the Journal, and supported by Daniel Tarullo at the Fed, the best way to protect the financial system is in having capital reserve requirements that are high enough and reliable enough for a crisis.

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What the Indian Supreme Court failed to do was ask for accountability for the nearly 3 years lost in timely delivery of infrastructure that was to be completed in 2021 for the $3 billion Metro subway for Mumbai. Work that was moving 24 hours a day 7 days a week under Ms Ashwini Bhide was stalled and left to stagnate. This is unconscionable for a country with 1.4 billion people and most under 35 years whose aspirations get repeatedly stuck in the mud by politicians and a mentality that has itself given into the way colonial powers looked at India of being undeveloped, dirty and disorganized. Mohandas Gandhi would have a hard time understanding that Hind Swaraj that he envisioned in 1910 could lead to this kind of stagnation. Mr. Jain points out that the Indian Supreme Court has left it to the Assembly Speaker to decide on the issue of disqualification of 16 MLA's- in effect leaving the new government in place which has a majority in the Maharashtra state assembly in India. The 2 party coalition was formed between Mr. Modi's party BJP in the state, the principal driver for infrastructure and 24 X 7 development in India, and Mr. Shinde's party on 30 June 2023.  From November 2019 to June 2023 for the period of the pandemic for 2 years and 8 months the state was under a government that stalled on major infrastructure projects in the state that were being done 24 hours a day. Such as a huge project that the WSJ called "audacious" run by Ashwini Bhide at MMRC with over $2 billion from the Japan International Cooperation Agency for a new METRO subway for Mumbai taking it into the 21st century from an old broken British rail system. Unfortunately neither the Supreme Court or the press delved into the loss of 3 years that added this loss in infrastructure that was to be completed in 2021 to the losses from the pandemic. The project is back to operating 24 hours a day 7 days a week under Ms. Ashwini Bhide since the Shinde government was formed in June 2023 with pm Modi's party in the state.  ...

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Because not much money is being spent the velocity of money as measured by the ratio of GDP to M2 money supply is at a low not seen since 1991, in the 4th quarter 2008. If GDP shrinks in the 1st quarter 2009 at 6% annualized rate as expected, then M2 velocity will be the lowest since 1987, even with the accelerating growth of money supply growth. The M2 money supply, a measure of money in the system including time deposits has grown by $767 billion or 10% in the past year accoding to the Fed. Money that is not being spent is building up in amountain of cash reserves. Banks have about $679 billion in reserves of cash, and this matches the $653 billion by which money supply has increased during that time as aresult of the Fed's repeated infusions. This suggests that inflation is not the risk that it would appear to be, even with the governments huge spending plans and the Fed's efforts to add so much liquidity. Says one economist, the money multiplier is just not working and is broken. Will consumers start borrowing and spending again. Not as long as they are so overstretched and with job losses mounting. And will banks continue to cautious and slow to led? Most likely as long as the bank's balnce sheets are broken, and the bad assets remain on them. This may explain last weeks efforts by the Fed to buy Treasury bonds upto $300 billion and more efforts to get credit flowing again by buying up mortgage securities and raising the ceiling to $1.25 trillion for purchases. cash...

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There is a price for a socialist state run society adopting capitalism without understanding it. Russia experienced this in the 1990's as the Soviet system collapsed and the capitalist system took its place by 1990 with flagrant abuses. Only to be stabilized in the Putin years till the war in Ukraine affected the Russian economy. China avoided this fate by continuing its accelerated path to industrialization till the 2009 financial crisis. But hidden in its seemingly successful modernization effort was the role of LGFV's and selling of land to support the LGFV's. Local governments did not take on debt themselves, they passed on the debt to Local Government Financing Vehicles LGFV's- about 8 trillion dollars of debt 80%-90% not serviceable for interest payments, zombie status requiring borrowing for annual spending.  Most city councils or mayors did not understand these vehicles were debt and some even asked "do we have to pay it back?" LGFV's were not understood by mayors and city councils brought up under a socialist state run economy. They used it to follow the central government in Beijing's orders to come up with projects to boost growth year after year to rates of growth of 10% in the 1990's and 2000's, heedless of the risks because they never really understood the capitalist system and its pitfalls.  As long as land could be sold there was some revenue for local governments and room for shifting $8 trillion in debt to other LGFV's. Once the construction industry collapsed and companies went bankrupt their were few buyers for land. The central government cannot take on some of this $8 trillion in debt. As a result China is now facing what the Russians faced - a crisis from lack of grasp of the severe pitfalls of capitalism when its risks are not understood for economies that were in the 20th century experiencing upheavals, wars and then socialist state run economies. What this means is that the Chinese economy will slow, has no choice but to slow down for the next decade to find solutions to this debt overhang over its economy and industrial plans. It also means China's support for Russia in the Ukraine conflict is also problematic for China's internal growth to meet the aspirations of its people. As long as the administration in the US continues to pursue its own economic policies for growth as Biden has done by investing in the American economy, it will have the opportunity to lead the free world and be able to hold out hope for aspirations of countries and regions such as India, Africa and Latin America. ...

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Shown here and in the adjoining WSJ interview by Ben Cohen of Morris Chang, 1985 founder of Taiwan Semiconductor (TSMC), is the story of how as textile and other lower technology industries were shipped to China in the 1990's the advanced technology manufacturing industries that were to replace them for the American workers and their families were also taken away through the back door by companies such as TSMC- leading to the dislocation of the American worker and poorer manufacturing communities across the US. Hille and Sevastopulo in the Financial Times take an inside look at the situation of TSMC as an advanced chip manufacturer that has taken 92% of the world market for advanced chips by using Taiwan's manufacturing advantages in chip yield that was in 1985 about twice that in the US when Morris Chang founded the company. Morris Chang was an immigrant who came to the US after 1949 with the founding of the People's Republic of China. After gaining decades experience at Texas Instruments by age 52 in 1982 he felt he had reached the glass ceiling at the company. See the adjoining WSJ Ben Cohen interview with Chang on this part of his life. He was recruited  by Ki Li, a technology planner for Taiwan to  build Taiwan's first semiconductor company. Chang founded Taiwan Semiconductor Manufacturing Company in 1985 and based on his work in the US and seeing the cost advantage in engineering talent coming out of Taiwan and Chinese universities, and the willingness to work long hours in the zealous drive for modernization, he made the bet on Make in China (Taiwan + People's Republic of China.) It succeeded, and succeeded, and succeeded, just as it took advanced manufacturing away from the US, and deprived the US by replacing the cotton mills and textile factories, the less advanced industries that were being shipped to China by being replaced with modern more advanced manufacturing in new technology products, as it was how it was supposed to work. Economists and politicians and business failed to see this for two decades. It left America without both the old industrial manufacturing base and at the same time took away from the American worker the new manufacturing in advanced technology base that was supposed to give him new opportunities to replace the old. It has left America poorer in ways no economist, politician or business person could see when through the benevolent hand of friendship the US advanced a helping hand to China through WTO negotiation, WTO membership and foreign investment in China following the Great Proletarian Cultural Revolution of the 1970's that dislocated China's industry. ...

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Angela Merkel and David Cameron are for sacrifices and tougher measures to deal with the crisis, including bondholder haircut, and austerity steps.

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Under the Volcker Rule setup during the global financial crisis of 2008-2009, banks total investments in private equity, hedge funds and similar higher risk funds cannot exceed 3% of high quality capital. During the financial crisis investment banks were highly leveraged leading to the collapse of Bear Stearns and Lehman Brothers, and the precarious financial condition of other banks. Goldman has pared down about 60% of such investments. Remaining are $4.8 billion in private equity investments, $1.2 billion in real estate, and about $1.1 billion in both credit and hedge funds. Regulators have given the bank till July 2017 to comply. As banks recovered from the impact of the crisis, the tearing of the social fabric that happened with high unemployment in some groups especially older white men, has remained six years after the crisis- as evident in the U.S. election campaigns this year. As a result the mood has shifted for tighter regulation and both party platforms, Republican and Democratic, now call for reinstatement of the Glass Steagall Act, which separated commercial banking from investment banking as part of the lessons learned from the Great Depression. Volcker, was chairman of the U.S. Federal Reserve during the Carter administration, known for taking a tough line against inflation. He was the principal driver of the move to restrict banks from risky activity, and faced considerable opposition from banks during the 2009-2013 period when the rule was being formulated.  ...

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Peter Coy says that as long as unemployment numbers keep going up and foreclosures keep increasing as aresult of the job losses housing prices will keep falling. He says that they may have to fall 20% more than the level they are at today. And that the foreclosure levels could become atidal wave if it becomes easier for alot of people to just hand their keys to the banks. This was what Martin Feldstein warned aginst in the WSJ oped pages several times in 2008. As more people are under water it makes sense to just hand the keys to the banks, and as long as this goes on, the economic recovery will be put off. A study cited by Coy done by Reinhart and Rogoff shows that housing crisis of this magnitude last about 6 years before all the bad effects wear off. And in addition to housing there are other things at work in this crisis especially in the job loss rate which is increasing (663,000 jobs lost in March), and the readjustment in savings rate upto 6.4% according to BW for 2009 till March, which suggests a serious drop in the consumption rate is underway and may go on for several years crimping demand and increasing unused manufacturing capacity. The stories in the media and other information reinforce this statistical information. The bit of good new from hard hit housing markets in California and Nevada and other staes has to be seen as no more than a limited play in the foreclosure markets, that does little to the broad brush strokes that are ocurring on the national and world landscapes in job losses and consumption. Coy a veteran analyst who has covered the housing market and warned during the boom of the likelihood of abust in a cover issue at the time, brings experience and reflection to the developments, and urges serious caution in interpreting signals that may have no broad meaning....

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Financial Stability FOrum will be renamed the Financial Stability Board and include 10 additional members, These additional members are from developing countries or emerging markets, including Argentina, Brazil, South Africa, and China. This forum which currently brings together regulators, central bankers and finance ministers from a few wealthy nations, will now reflect the views of emerging countries. It previously only served as aforum for exchanging ideas. Now it will be given the task of drafting the detailsfor global standards for financial institutions, including benchmarks for executive pay and how much risk that financial firms can take on. But there is still some resistance to the idea of getting ideas from different sources and including the benefit of a diversity of experiences and backgrounds, even though some of these countries, have borne the brunt of these recurring economic crises in the past, as have Argentina, Brazil and Mexico. Howard Davies, director of the London School of Economics says that you have to hear out China but objects to taking advice from Argentina, a comment which reveals the insular nature of these forums and boards in the past, with little or no representation from places where a majority of the word's peoples live. As would be expected in the light of that comment, there is resistance to giving China, India, Brazil, Russia, and other large developing countries like Mexico, South Korea, and Saudi Arabia proper representation in the IMF's governing bodies, and having the rules changed so that the head of the IMF and other important staff members could be selected from emerging countries. Each of these countries can bring adifferent perspective to the decisions made at the IMF, as most of them have suffered from these recurring economic crises in the postwar period. South Korea's experience with the IMF is the most recent and is covered in the link to S. Korea and the IMF, and if reflected in the policy making at IMF could help it perform a more constructive role in this crisis. This is also the case with some of the other countries....

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How the IMF conditionality has changed in the 2009 global economic crisis. The IMF head, Dominique Strauss-Kahn of France, is aware how sensitive nations around the world have become to the word IMF. So much so that it has even suggested removing the word IMF from loans to get takers. The IMF conditons worsened the S. Korean financial crisis in 1998. See link to this. This time Kahn has advocated that the developed countries of Europe and the USA increase stimulus spending to 2% of GDP.And there are fewer calls for cutting spending in developing countries offered help by the IMF. Pakistan was asked to increase interest rates by 3% but actually increased them by 2% to fight inflation. But to get some idea how the IMF is viewed with suspicion and hostility in many countries one has to listen to comments made. The move for Pakistan was so unpopular in 2008 that Mohsin Khan a top IMF official says he met with agroup of generals to get their backing. Some IMF officials insistend on a 10% rate increase. Something like that would have led to riots in Pakistani cities. IMF loaned Pakistan $7.6 billion. When S. Korea said no to the IMF credit line, Lee Hyoung-ryoul, a Korean Finance Ministry official said that S. Koreans tremble and financial markets turn sensitive whenever they hear the word "IMF." This time Brazil, S. Korea and Mexico, were offered condition free credit lines. But it has found no takers from these three conuntries, so badly is the IMF viewed in developing countries. Even though it appears that Kahn, in the small club of western nation's officials and staff that form the governing body of the IMF, is trying to give the IMF a new image, its just so bad and the views of the old timers at the IMF on spending or interest rates so contrary to the needs of people in the developed and developing countries, that a new generation of people in finance and economics will be needed before real change is established. ...