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Peter Eavis, in the Heard on the Street column, says something similiar to what Krugman said when the Geithner plan (for troubled assets to be bought by private investors with cheap money from the government,) was announced March 23, 2009. His point is similiar to Krugman's in that if the market is experiencing just ashortfall in confidence and liquidity Geithner's plan might work, but if the underlying properties are not worth that much, the government engaging in agame of price support can't really win. The securitizztion of mortgages ocurred in a period of easy money. Now that that period is gone the basic underlying structure that supported it is gone. With more job losses at the rate of half amillion a month does anyone think the government can make the underlying mortgages for these securities profitable even with the government putting in its money to leverage the returns? He is right in pointing out that investors would need to build abig margin or error and will likely bid well below what banks are willing to sell at. CreditSights projects collective losses of the 4 biggest US banks through the end of 2010 of $250 to $450 billion....

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Policy on China in the second year of the DJT Administration- shift from adversary positions to cooperation. A shift in policy after the meetings with Chinese leaders Xi and Wang Yi at Busan, South Korea in 2025. WSJ Analysis looks at what happened in the first term of DJT, the Biden Administration that followed and in 2025 in US-China relations and how the posture changed, how Xi and his team built rapport with DJT and his team over the tumultuous period in 2025. US turned to Xi in getting Iran to the table for negotiations in Islamabad meetings after the month long effort to take out Iran's nuclear and ballistic missile program infrastructure. This was arranged in the early hours of Tuesday April 7th 2026. Throughout the US air campaign in Iran China pursued the policy it had set at Busan of not letting it affect US- China relations and the DJT visit to Beijing believing it sets the basis for the future course of US- China that affects the whole world beyond regions such as the Middle East where little headway has been made in bringing about peace. China US, EU, India, Brazil, Latin America, Africa, Indonesia, make up most of the world's population and China remains focused on ensuring the US and China can through their cooperation maintain peace in the world overall. This is reflected in this statement of China's Foreign Ministry on Busan meeting as the beginning of something new and big for the world- "Over the past seven decades and more, we have been working from generation to generation on the same blueprint to make it a reality. We have no intention to challenge or supplant anyone. Our focus has always been on managing China’s own affairs well, improving ourselves, and sharing development opportunities with all countries across the world. And that is an important secret to our success. China will further deepen reform across the board, expand opening up, and promote higher-quality economic growth while achieving an appropriate increase in economic output, and advance well-rounded human development and common prosperity for all. This will also expand the space for cooperation between China and the United States." This relates to China's worst fear, worst nightmare - that before it can become a fully developed economy for 1.4 billion people it would find itself in the situation that faces Japan of an aging society and weak growth something Japan faces as a fully developed economy much smaller of 120 million people. Japan per capita GDP is at $36,000 2.5 times China's at $14,000 and about a fifth of Germany's at $64,000, about a seventh of the USA at $92,000. So that if China does not continue along the path of development it has followed since 1990 working with the US and EU it faces the prospect of losing forever the prospect of joining Japan and fall into lower than middle income status when large parts of the interior of China a third of its economy that is rural are still living in poor economy status with per capita GDP of $3500, which is 8% of the GDP per capita of the poorest state heavily rural state of Mississippi in the US. Even Shanghai and Beijing with about $32,000 per capita GDP are only about 58% of the per capita GDP of Louisiana in the bottom one third of US states. Xi Wang Yi, Lifeng are doing what China must do to compete with advanced US and European economies and Japan- continue to work with the US on the development model that has worked the best for China since 1990. It is not about supplanting anyone China is serious when it says here- "Over the past seven decades and more, we have been working from generation to generation on the same blueprint to make it a reality. We have no intention to challenge or supplant anyone. Our focus has always been on managing China’s own affairs well, improving ourselves, and sharing development opportunities with all countries across the world." ...

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Each year malaria kills 500,000 people mostly in Africa, including 260,000 children. A vaccine jab for malaria has finally been developed. It took 34 years for Dr. Ripley Ballou, 70 years, to refine the technology while working at GSK in Britain to get this done. Ballou himself had malaria and could experience its debilitating effect. This made him resolve to find a solution. The vaccine jab is the first for a parasite and the first developed from scratch for African children. Its effectiveness wanes over months so that its use is intended for the rainy season. By giving 3 shots just before the rainy season when malaria is at its peak it can reach 70% effectiveness, say British experts. It is cost effective as other prevention measures as nets over beds- it will cost about $2 -$10. When combined with other anti-malarial medicines it is about 90% effective. Its safety is proven after having given 2.3 million jabs of the vaccine in African countries. Experts estimate it will prevent 5.4 million cases of malaria, from Mali to Kenya, and from India to Indonesia where malaria is still a danger. Malaria can repeat itself many times for the same person over a lifetime, increasing the health risks and damage to health. The vaccine was developed using technology that produces a protein that is also found on the outside of the malaria parasites in the early stages of its lifecycle. It exposes the immune system of a person to this protein to build up immune defenses. This British discovery will help African  Asian, and Latin American countries build confidence in their health systems ability to cope with dangerous diseases. In doing this it will improve the quality of life and combined with other health actions provide a better life in the poorest countries.   ...

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Foreign investors make up only 7% of Russia's domestic bond market compared to 30% for similiarly rated Mexico. Russia is rated BBB by Standard & Poor's. Moody's Investors Services rating is one notch higher. The yield on Russia's 10 year government bond is about 7%, compared to 4.35% for Italy and 1.8% for U.S. Treasurys. Russia's deputy finance minister, Alexei Moiseyev, says he hopes changes will raise the foreign holdings to about 33%. Martin Gilman, a former IMF representative to Russia in 1998, and now a professor at Moscow's Higher School of Economics, says rates will go higher because of appreciation in the ruble and large monetary easing in Europe and the U.S. The situation has changed completely from the 1998 Russian default on debt payments of $160 billion. The IMF estimate is for overall debt to be about 11% of GDP by the end of 2014.

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The Committee for a Responsible Federal Budget is a non partisan nonprofit organization formed in 1981 by Connecticut Democrat Giamo and Oklahoma Senator Bellmon of the US Congress, senior members of House and Senate Budget Committtee. To educate the American public on issues related to the US Budgets, where money went and how it is spent. It's estimate for Kamala Harris plan for $6000 child tax credit is $10 billion a year. The existing $3600 a child tax credit in 2021 is estimated to cost $110 billion a year. Lyrarc estimate this will be offset by savings in Medicare of $36 billion a year from Medicare negotiation with Pharma as indicated by president Biden, and by $40 billion a year in billionaires paying 25% instead of 8.2% as a minimum tax per Biden, additional savings coming from very high income earners earning above $10 million. This would bring the cost of helping children in the first crucial years of life to below $44 billion a year. And making a huge investment in children at a time when everything has gone up in price from diapers, to baby food, to childcare and early childhood learning crucial for the future of America. We believe it is imperative to invest in children after the pandemic has cost 1 million lives and left for each dead person 8-9 persons in precarious situations financially. Educationally it has left children behind from missing crucial school years. These gaps will need to be filled and this is only one investment in the right place to correct this problem to prevent America from being handicapped forever by these problems and gaps in education in early years.  ...

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U.S. Defense Secretary Panetta says the U.S. will hand over provinces to Afghan government forces and complete the transition to a training role in 2013. This is part of the withdrawal of NATO forces and comes after France's president Sarkozy proposed reducing France's committment in Afghanistan. Panetta said he would tell NATO partners- "We all went in together and we will go out together." This also fits in with the changing picture in the region, poor relations with Pakistan, sentiment in the U.S. and Europe focussed on the economic crisis, and direct talks with the Taliban for a post-NATO settlement of the conflict.

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Coronavirus will add $2.5 billion to the cost of the Tokyo Olympics mostly for rebooking facilities, and paying additional wages for staff, as well as virus testing and cost for preventing spread of the virus. As is typical of these games going back to the disaster in spending at the Montreal Olympics that took the city years to recover, costs can double or more than double earlier estimates. Someone has to bear the extra costs and the national government will take on $1 billion of these extra costs.  The official budget estimate was $12.6 billion. An estimate from Japan Board of Audit in 2019 came up with figure of $20 billion. The pandemic would bring this closer to $22.5 billion or close to double. This cost to the Japanese taxpayer is leading one third of people to sour on the games saying they should be canceled in mid-Nov. TV Ashai poll, with one third saying delay it, only one third for it to go ahead. Except for $5.6 billion from a privately organized committee its all coming from the City of Tokyo with some help from the Japanese government. When it comes to financing it the IOC is not taking part. ...

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The selection of Tim Walz as VP was simply from the heart for Kamala Harris- She liked the way Walz called the former president's campaign "weird" saying we are not afraid of "weird" even if it is "creepy." Kamala Harris liked him- "he is so open" "I like him." And you could see it on the stage in Philadelphia.  “Governor. Veteran. Coach. Teacher,” Jen O’Malley Dillon, the campaign chair, wrote on X. “Winner.” Being a teacher mattered to Jill and Joe Biden and to Jen O'Malley Dillon. Jill teaches community college and did not miss class even in the days of the Inauguration. Harris really respects teachers. It helped that he was a veteran and the most senior army reserve man in the House. And his record showed for climate, for fairness for workers and families, achieving in Minnesota through legislation what Biden has done for the Nation. ...

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Shabana Mahmood UK Home Secretary  says -UK "will do whatever it takes to secure our borders," as the Labour Party seeks to meet the challenge from UK Reform Party. Across Europe, in the Netherlands, Italy, France, Germany and UK public opinion is shifting for a tight immigration system. Shabana Mahmood plans to adopt some aspects of Denmark's tight immigration system for UK. Labour MP's in the Red Wall and in places in the Midlands and northern England see this as action needed to prevent UK Reform from winning in this region of England. This has one problem in that Labour has taken too much time to arrive at this point when opinion on illegal immigrants has shifted for many years starting in Denmark. Even Wilders movement in Netherlands is now three years old and DJT's in the US is in its second term going back to 2016 and in a new phase in 2025. One could say that patience is wearing thin among the people in Europe and the US with all forms of illegal immigration whether across the Rio Grande or across the English Channel or across the Mediterranean to Greece and Italy, or across Hungarian border to Germany.  ...

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When so much of infrastructure healthcare and education still needs more funding, and when St Paul's Cathderal lacks essential funds for basic maintenance and is in danger of closing, the Greensill scandal shows how much reallocation of funds to infrastructure, health, and education to help workers, students and families is needed. How much the existing culture distorts allocation of capital in ways that are vital to the future of families, students and workers, and lobbying acts in ways that are against the national interest. Here the WSJ says the lobbying of David Cameron, former UK prime minister extended to getting access to funds for Greensill, a  company that operated in  supply chain finance, lobbying for funds from the emergency financing facility provided by the Bank of England. Treasury rejected 56 messages sent by Cameron to top British politicians over several months to have rules changed. Greensill went into bankruptcy in March 2021, stranding investors who had put in $10 billion. A parliamentary committee is now looking into this case of Greensill. The company was founded by an Australian Lex Greensill, and does little more than provide companies a cash advance to stretch out the time to pay bills. One question no parliamentary committee will ask is why when the needs for infrastructure, health and education are so great $10 billion in funds, public or private even go into something like supply finance that does so little for the country. This is an example of the kind of distortion in the uses of capital that has become commonplace today, creating societies and countries with poorly  funded infrastructure and essential services in the advanced countries of Europe and the US. ...

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Prof. Sonalde Desai questions the lack of fresh thinking on addressing inequalities in India by sticking to reservations policy initiated in 1950 before modernization of the economy. In today's economy education is a critical component for upward mobility and the ability to read at higher level is critical. In India the forward castes do better in class 1 reading for 8-11 year olds with about 70% passing, for scheduled castes this drops to below 50%. Prof. Desai argues that addressing problems at the elementary school level is needed to create a level field for opportunities throughout society.

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A 35% increase in capital spending by the Indian government and crowding in private investment will be the basis of growth in the Indian economy says India's finance minister Ms. Sitharaman at the G20 Finance Ministers and Central Bank Governors meetings in Bali, Indonesia. Sitharaman said evidence based policy making was vital for resilient economy in India.

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The Trump administration is naming a new head for the Indo-Pacific Command. He is the current head of the U.S. Pacific fleet, Adm. John Aquilino He will now head all military operations in Asia if nominated in the Senate. One of the issues facing the Congress is to provide dedicated funding to the Indo-Pacific Command.

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The Liberal Party is falling behind the Conservatives by double digits because of cost of living and housing concerns. Mr. Trudeau's popularity is dimming. His government is a minority government that depends on the New Democrats for key votes in parliament. Mr. Trudeau talks about personal sacrifices on this job. Canada will elect a new government in 2025.

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Privatization of the oil sector and corruption is leading to a new policy of president Lopez Obrador to restore the oil sector to government ownership. Obrador sees this as a priority and says it will take time for Mexico to switch to renewable energy, with the priority being self sufficiency in energy using fossil fuels at this time.

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Oil prices using the Brent crude benchmark drop to $113 a barrel this week with further declines expected as the Saudis are now prepared to increase oil production to support the US in its deterrence campaign against Russia and China. Saudis under Prince Salman will do this in exchange for security guarantees against Yemeni rebels and Iranian attacks.

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For decades the auto companies lobbied vigorously against stricter fuel efficiency standards. NYT editorial points to this failure in policy of the Detroit automakers, and the failure of Congress to do more for fuel efficiency standards with lobbying from automakers even in the recently passed legislation. That target of 35mpg fleetwide for 2020, a low target with no stretch or imagination built into it should be revised and a higher target set. If the companies build smaller cars like Europe does they could reach a target of 50mmpg fleetwide by 2020. That would be a serious target with stretch built into it. Tough conditions have to be atttached to any rescue money. This includes firing top management, no payment of dividends, limits on executive pay, tougher fuel efficiency target, reopening labor agreements on pay and benefits to reflect the new realities. If taxpayers are going to take the risks Congress must insist on these changes or the money will be wasted says the NYT editorial. Some of these steps would be painful for workers but they are necessary....

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Indian prime minister's speech in the Rajya Sabha, India's upper house of parliament presented the government's ideas behind the reforms in the agricultural farm laws. He made the point that the mandis for minimum support price or MSP will always be there, so that farmers looking for MSP would always be covered. "MSP tha, MSP hai, MSP rahega,"  his words in Hindi. Some of the main points are covered here in The Times of India. Many governments in India in the past have talked about reforming Indian agriculture. During the administration of Lyndon Johnson after famines and food shortages in India effort was made for the Green Revolution. Lal Bahadu Shastri, prime minister took up the work of the first development phase in 1965 to benefit Indian agriculture. The speech cited the work of Shastri for the Green Revolution that made India self sufficient in food grain production. India benefitted from American scientists mainly agronomist researcher Norman Borlaug. The prime minister cited the words of Manmohan Singh, Congress party prime minister preceding him, who had emphasized how important it was to bring changes to Indian agriculture. "Modi implemented what Manmohan said, You should be proud."   Manmohan Singh had said- "There are several rigidities in the whole market since the 1930's which prevent our farmers from selling their produce where they get the highest rate of return. It is our intention to remove all the handicaps that come in the way of India to become one large common market."  Other parts of the speech said about the new agriculture laws- "There are many laws. every law is amended in a few years. We are not static. Change is tradition. We should talk to the protesters, implement the changes. I will take the abuses. You take the benefit from the new laws. We can move ahead together... There are old people sitting in the cold, it is not right." The government has stated it will hold the new agriculture laws for 18 months and the Supreme Court has appointed a committee on the laws. In his speech Mr. Modi said that there was nobody to look after the small and marginal farmers, and asked who will speak for the 12 crores or 120 million marginal farmers who own less than 2 hectares of land.  In fact it was a call from these small and marginal farmers that led to Jawaharlal Nehru, son of a British trained lawyer Motilal Nehru, to join the struggle for Indian independence. This is shown in his autobiography written from jail in 1934-35.  At the time the British simply used the Indian police trained and run by the British Army to silence farm or agrarian unrest from small farmers. Nehru was asked in a phone call to come to one of the locations of the unrest during the early years. The bedrock of Gandhi's movement for independence was villages in which marginal farmers lived lives without making enough. When Vivekandanda talked about India's hundreds of millions living in poverty he was speaking of small farmers who then were a majority of the population of the country. Charan Singh, a former prime minister in 1970-80,  said that 68% of farmers were small and marginal farmers who owned less than 2 hectares of land. The government crop insurance scheme was changed to make it farmer friendly, PM Kisan scheme to empower the farmer. The Indian Rails initiative is intended to speed agricultural produce to locations throughout India taking produce from locations in southern India to places as far Kolkata. This is opening up new opportunities for farmers to increase incomes.   ...

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Rent for apartments declined in all major metropolitan areas in the US for each of the past 6 months as new supply comes to the rental market. Rents declined by 8% in the Seattle area since August 2022. This WSJ report says people may have maxxed out on how much they will pay for rent.

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Buffett's view that higher capital gains taxes will not result in less business investment. He favors a $500,000 figure instead of the $250,000 proposed by president Obama for Bush tax cuts for incomes below that level.

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Roshe gives an independent view of whats happening in the economy and sees a recession, sticky inflation that will last a long time for the US and the world economy in a semirecession for a long time. Roche of independent Strategy consultancy in London does not see the Fed's actions to increase liquidity having any effect in resolving the issues of solvency which have resulted from the overleveraging of brokerage and mortgage firms on Wall Street, only exacerbating the effects of a weaker dollar and higher inflation over the longer term. He points out that hedge fund and broker balance sheets or nondeposit financial institutions (NDFI's) half the size of banks in the USA and a quarter of the size of banks in Europe have their assets and liabilities financed by repurchase agreements. They lend and borrow against the collateral of assets that are marked to market, which means that they can borrow more and easily in a rising market cycle and can borrow less and with more difficulty in a falling market cycle. With the contracting cycle in place now they are facing insolvency issues. This may have been delayed till now because of investment banking profits and having credit lines for the duration of a contract. Till now investmet banking profits gave them leverage over lenders who made money from fees in investment banking. Now the banks hurt by writedowns of loans in mortgages and other areas are likely to tighten lending and call in their loans. What the Fed's actions will do is delay things a bit but not prevent a credit contraction and fall in asset prices. David Roche was Global Strategist for Morgan Stanley before starting Independent Strategy to provide fresh thinking and new insights on financial markets. His estimate is that reduction in available credit for corporate investment in technology, R&D and factories as a result of contraction in the financial system will require reducing corporate debt ultimately by 11-12 %. This will generate a loss of 5% points of real GDP growth for the US and put into a recession. For Europe he estimates loss of 2% points of real GDP growth. Global credit losses of $1.4 trillion would cause a contraction in world GDP of 2.5 percentage points or half the current rate of growth. For the global economy he sees a gray dull world of semi-recession and stickly inflation that will last a long time even without any major policy blunders. If this is original thinking and he is right then the Fed, the IMF, the Council of Economic Advisors, and general thinking on Wall Street that sees a short recession lasting several quarters may be in for a big shock....

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This report in WSJ looks at the Biden education, healthcare and climate change plan. It is part of the Families and Workers Plan put forward by president Biden for $3.6 trillion. This figure has now been lowered to $2 trillion and may drop crucial provisions for education such as the cost free community college which poses serious risks for working class families unable to afford community college, and skews education access even further to higher income families. It also lowers college attendance of American men, which is falling to alarming levels. The reason the plans are being whittled down is the 50-50 split between Democrats and Republicans in the Senate and the failure of Republicans and two Democrat senators Manchin of West Virginia, Sinema of Arizona to support community college access. Parts of the current bill support child care, access to affordable housing and in home care for elderly Americans. New elections for Senate and House of Representatives in 2022 would have to settle the issues related to financing assistance for families and workers as the Senate today is divided 50-50 between Democrats and Republicans. A separate Bipartisan Infrastructure package has the support of all in the US Congress to build bridges and roads, other infrastructure badly neglected by different administrations over the last 2 decades. ...

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As the August 1 deadline approached first the Japanese and then the Europeans who held out till the end sometimes treating the US with disdain and ridicule, realized that the US was dead serious about tariffs. Even the US business community tended to treat DJT tariffs with disdain not realizing that the tariff battles were first fought against Japan by Deputy USTR Robert Lighthizer under Reagan in the 1980's always to get a fair deal for the US. The recalcitrance of the Europeans and the Japanese can be understood by the non tariff barriers Japan placed on US products and the 10% tariff on US autos the European Union had in place for decades when the US only had a 2.5% tariff on German car imports.  The media in the US and Europe has utterly failed to tell the US side of the story. Here at Lyrarc we remain committed to bring out all the facts so that readers can better understand both sides. Initially the EU adopted an adversarial approach as shown in this report in WSJ by Kim Mackrael and Brian Schwartz. How is it that the Europeans and the Japanese took such a position when since 1980 there was no level playing field for the US on world trade clear for all to see? Not till late May as negotiations dragged on did Japan and the EU take stock of their own positions, DJT having to say US would impose a 50% tariff to get the EU to understand, saying "our discussions with them are going nowhere." In the end in Scotland Leyen and Sefovic for the EU accepted 15% tariff on EU imports to US. Akazawa of Japan had accepted this the week before. ...

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This report in theWSJ says Krysten Sinema received donations from the securities industry of $2.2 million and is opposed to taking out the carried interest provision that is a key source of income for private equity managers. Senator Manchin says it is time to remove carried interest and this would raise $14 billion over a decade. Sinema is in favor of climate change action and favors a tax on carbon emissions.  On corporate minimum tax Sinema has worked with Senator Elizabeth Warren for the tax change that would require a minimum 15% corporate minimum tax to be paid by corporations. On precription drug prices Sinema has worked with Democrats on what the list of drugs should be for Medicare to negotiate drug prices.  As many of these key points have been worked out with Kristen Sinema it now remains to be seen how Democrats get the agreement of Sinema and any other members in Congress to prepare for the passage through Congress of the Climate Change action bill Schumer has negotiated in the Senate. ...