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The NYT Editorial on June 2, 2009, says the Obama anti-foreclosure plan is woefully inadequate, and can't stop the wave of foreclosures. The administration's foreclosure plan that went into effect in March 2009, offers upto $75 billion in incentives to lenders to reduce loan payments for homeowners facing foreclosure. Lender participation is largely voluntary under the Obama plan, making it weak. Since March about 100,000 homeowners have been offered a modification according to the Treasury Department. This is a small dent in the plan's intent of preventing 4 million foreclosures. And it continues the Bush administration's apathy and lack of effective action to prevent foreclosures. The Mortgage Bankers Association reported that in the first quarter 2009 5.4 million mortgages were delinquent or facing foreclosure. There are 15.4 million "underwater" homeowners, those who have no equity in their homes, and with average person deeply in credit card and other debt, these people have little to fall back on if they lose their jobs or have a medical crisis. The simple arithmetic of these 15.4 and the 5.4 million, adding upto 20.8 million households, shows that anywhere near a fifth of American households are in deep financial trouble. The same numbers, or another fifth of American households, are approaching foreclosure. Drawing concentric circles of these homeowners inside a circle showing all American households, and seeing these concentric circles increasing in size with every quarter of job losses, one can clearly see why this is the biggest problem facing the economy. Job losses in January 598,000, February 681,000, March 699,000, April 539,000, totalling 2.5 million for Jan-April 2009, and 8.9 million working parttime. The underemployment rate at 15.8%. Till this foreclosure situation exacerbated by rising under employment is addressed, the credit easing and the small recovery thats been managed since December 2009, is like a mirage in the desert. A false sense of comfort. The NYT editorial makes the point that the foreclosures prevention efforts focus entirely on reducing monthly payments. Even here it falls short, in not reducing the payments enough, or programs not big enough in scope to address the millions of homeowners needing help. But an even bigger problem remains unaddressed, says the NYT, and this is not reducing the principal. An effective anti- foreclosure plan has to reduce the principal for the 15.4 million homeowners under water. This as Martin Feldstein has argued repeatedly in the oped pages of the WSJ since early 2008- the homeowners under water or approaching that situation have no incentive to hold onto their homes- has to be addressed by government taking responsibility for loan principal reduction in a carefully designed plan requiring participation of lenders. NYT points out that the mortgage industry has resisted taking this approach, and the Obama plan does not emphasize this important part of an effective plan to reduce foreclosures. By opposing this, the banks with the toxic mortgage assets and the government by going along with this, are shooting themselves in the foot. This makes any recovery at best weak, and more likely a false hope lacking fundamental support, foresight and vision....

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BHP Billiton Ltd announced it would reach a record production of 159 million tons of iron ore for the full year.

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Arne Duncan describes the improvements in K-12 education in two regions of the U.S.- the District of Columbia and Tennessee between 2011 and 2013, shown by the 2013 National Assessment of Educational Progress (NAEP). The hard work of educators, parents and school officials is paying off and offers examples for other parts of the country, says Duncan. Lessons include facing the facts, not dumbing down by setting low standards. With higher standards Tennessee students were only 34% proficient in math and 45% in reading compared to the 91-92% with lower standards. Republicans followed up on the work of Democrats in the state. Soliciting feedback from critics and experts- the feedback was used to improve systems and learning to help teachers and students. Schools chancellor Kaya Henderson says improving teacher quality was critical, and so was academic rigor. Still Duncan says more needs to be done, this only shows the right direction for states lagging behind, and one should not get complacent. The other areas college enrollment and dropout rates need to be followed carefully. International PISA results still show the U.S. at 27th in math and 14th in reading of 65 countries- making this only the beginning in setting the future course for U.S. educational improvements....

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Bear Stearns is taken over by JP Morgan Chase at $2 a share, a year ago it was trading at $170 a share. This was arranged with the Federal Reserve agreeing to protect JP Morgan from liabilities on Bear Stearns balance sheet and was done overnight in an emergency basis by the Fed and Treasury to protect the rest of the financial system from scares originating from a collapse of Bear Stearns.

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A whole range of issues can be seen in the debt crises in developing countries. The margin for error shrinks with poor governance, lack of honest assessment and transparency for finances, wars and conflicts within or outside the countries, living beyond their means, lack of focus on development, infrastructure that is unproductive or unaffordable including some Belt and Road Initiative infrastructure at higher interest rates. Countries that are dependent on overseas remittances, tourism, that were hit hard by the pandemic have seen their finances further weakened reducing the margin for error even more to the point that the smallest tipping point can lead to huge crises. Once the finances are weak all it takes is an external tipping point that creates serious crisis. The war in Ukraine with shortages of wheat, fertilizer and skyrocketing oil prices acted as that tipping point. Because this was a major blow the crises have a level of magnitude that is more than a payments crisis. One sees this in South Asia in Sri Lanka and Pakistan, and in the Middle East for countries such as Egypt and Tunisia shown in this WSJ report. It is now not simply a crisis but a crisis of great magnitude because in the case of Sri Lanka and Pakistan this WSJ report says that both countries foreign exchange reserves have dwindled to the point where they can pay for only one or two months of imports according to central bank data, analysts and IMF. This crisis has affected countries that were seeing steady foreign investment such as Turkey for decades, then a sharp falloff in foreign investment with a change in the climate for foreign investment. The crisis has taken the form of high inflation, significant depreciation of currency that makes imports costlier so that shrinking revenues from loss of remittances, tourism, or other sources will now have less value in supporting import needs. Lack of a credible path can delay setting a path out of the crisis. The $1.5 billion fuel and electricity subsidy made by the prime minister of Pakistan in late February was done without IMF approval leading to the IMF program having to be renegotiated. Lack of national political and cultural consensus on a solution simply makes it that much more difficult to find the way through it. In this regard South Korea was able to tackle the 1997 financial payments crisis effectively because of a national consensus. The situation in Egypt- Egypt has borrowed $20 billion from the IMF since 2016., placing it second to Argentina in aid from IMF since 1980's.  In 2020 and 2021 Egypt' government spent more than 40% of its revenue servicing its debt, and is forecast to do the same in 2022. The situation in Tunisia- A shortage of sugar, flour, and other critical supplies, and government delaying wage payments to civil servants. The government got $400 million in financing last month from the World Bank and hopes to secure a lifeline from the IMF. Compared to the period between the 2 World Wars the two bright spots are China and India where lessons of the past of civil wars, religious or political conflict, and poor governance, lack of knowledge of how the western countries industrialized and modernized, was replaced with the conviction that drives patient effort, courage in the face of adversity, honesty, and humility to learn including from western countries that have forged their own path through the same difficult road. The most difficult experiences have offered lessons which were learned- for South Korea the Korean War and invasion from the north, China the civil war and Japanese invasion, for India the partition of India and million of refugees. Stagnation from stumbled efforts also taught lessons, the Great Leap Forward in China, the License Raj with corruption in India.       ...

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Considering the fines and sanctions by the Financial Industry Regulatory Authority, during the time Mary Schapiro headed the organization from 2007 -2008, it did not take a serious watchdog role over the brokerage business that it was expected to supervise. NASD which she formerly headed, and FINRA, did several examinations of the brokerage business of Mr Madoff who ran a$50 billion Ponzi scheme, but failed to find anything wrong. Her agency in 2007 concluded that Madoff's firm had only violated some technical rules. Also fines and sanctions assessed by FINRA declined during the time she headed it. Fines levied by FINRA declined from $148 million in 2005, the year of her predecessor, to $40 million in 2008. Ms. Schapiro headed NASD regulatory arm in 1996, NASD itself in 2006, and FINRA after its creation in 2007. FINRA is a private agency set up by Wall Street to regulate itself. As the prevailing opinion at the time, with the SEC severely understaffed, was that Wall Street could regulate itself, agencies like FINRA had a bigger responsibility than was realized by Ms Schapiro and others. One securities lawyer who represented firms examined by FINRA, says FINRA should at least have asked more questions about the Madoff operation. In a November 2006 speech to the Securites Industry and Financial Markets Association, Mary Schapiro says, "we remain utterly committed to our regulatory mission but we should be also committed to doing no unnecessary harm or restriction to innovation in the industry and markets". Some of the stuff that went on in the name of innovation went against some basics and commonsense, and the failure to follow tested old good financial practices to separate sound innovation from unsound innovation, was a failure of that period. Schapiro's statement seemed to be a contradiction of a severe nature when examined closely, because how could she remain committed 100% to the regulatory mission if she made strong exceptions for innovations whose true logic and effectiveness only time could tell. The element of caution that should be a key part of the regulator's temperament and mental build was entirely missing. See the link to financial regulators in India, and of how this task was handled with that element of caution and skepticism of prevailing opinion. Other failure of FINRA is that it lagged behind state regulators in catching upto the mess resulting in afreeze up of auction rate securites markets. In June and July 2008, Massachusetts and New York securities regulators filed fraud charges against big firms in that matter. Another failure was the failure to look into the mortgage securites that were held in brokerage accounts and see that the valuations of these securites are sound. Finra only filed small cases against Lehman Brothers, with a fine of only $125,000 for failing to keep accurate books and records. As late as May 7, 2008 in speaking at the Financial Services Institute meeting, Schapiro was asked about what FINRA was doing to regulate complex packaged products like mortgage securites. And even though credit rating agencies had by this time been exposed as having failed, Ms Schapiro would only say, according to a financial advisor who asked the question, that "we have credit rating agencies that rate them." A pretty hands off view for a regulator when the cracks in the system were already exposed in mid 2008. Another facet of this is the high levels of compensation especially for a regulator. For her job at FINRA she received pay of $3.1 million a year including $2.5 million in compensation and $615,000 in benefits and deferred pay. In 2007 she also earned $449,000 in cash and stock grants as director of Duke Energy and Kraft Foods. All of which means that it is straining credulity for Obama to suggest that Mary Schapiro is the best person the Democrats could find for this critical job, in which the record has been severely impaired....

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Charles Scwab points out what is really hurting seniors. In Feb 2006 the yield on a 1 year CD was 5.4%, with the fed funds target rate at 4.5%. In 2010 the 1 year CD yields only 1.3%. The $7.5 trillion in these low interest accounts are earning so little hurting seniors.

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ElBaradei's father was a president of the Egyptian Bar Association. ElBaradei studied for his law degree and doctorate at New York University and was an adjunct professor of law at NYU. He joined the UN and wasn not the choice of the Egyptian government for the position of head of the UN Atomic Energy Agency. He was a compromise candidate supported by the US. As a young diplomat in the Egyptian Foreign Ministry he was part of the team that negotiated the Camp David Peace Accords with Israel. Because of his background, a nuanced understanding of ElBaradei is necessary to understand his criticism of the Obama administration's hesitant support of the protests, and his statements saying Egypt's foreign policy was a failure. For his role in the future ElBaradei says, all I want to do is share and deliver this country to catch up with the rest of the world." To understand what this means for a backward country like Egypt with a growing population of 80 million of mostly young people, which has failed to keep pace with economic progress in other parts of the world, see the article by Henando de Soto. Soto describes his effort working on a project for reforms in Egypt from 1997-2004 with the support of members of the Egyptian cabinet and the US Agency of Intenational Development, which were blocked in a cabinet shakeup by interests wanting to preserve the status quo. Failure to grasp this central fact that alone among large developing countries Egypt has failed to deliver on the rising expectations in the developing world, makes it impossible to understand Egypt. This is why De Soto describes the situation in Egypt as Egypt's Econmic Apartheid. In New York City enjoyed his time in Greenwich village, going to the opera and Knicks basketball games....

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Competition in the Chinese market between Coca Cola and pepsi is shifting from the traditional carbonated beverages to juices, teas and non-carbonated drinks. Pepsi sells pulp based juiced under the name Tropicana Pulp Sacs, and Coca Cola has Minute Maid Pulpy. The Chinese governmet has discouraged acquisitions, and did not approve Coke's $2.4 billion acquisition of fruit juice manufacturer China Huiyuan Juice Group Ltd. Growth has to be maintained by investing and developing their own products for local tastes and culture. Both Pepsi and Coca Cola plan increased investments in China. Pepsi has 27 plants, five farms, and over 20,000 employees in China and expects to double the number of employees by 2015. Pepsi executives say Pepsi is following a"seed to shelf" approach in China, growing food on farms and developing teas and snacks for local tastes. In China Pepsi has a Lay line of chips with cool-cucumber flavors and Cao Ben le line of drinks based on Yin and Yang, cooling and warming. Pepsi's 13% growth in snack volume and 10% growth in beverage volume for its Asian, Middle East and Africa operations are mainly because of this growth in China and India. By contrast soft drink sales have declined for 5 years in the USA and come under criticism because of high levels of obesity in the USA. Pepsi's strategy is to move further into the interior of China, further west according to Pepsi executives. It plans to invest $2.5 billion in about 12 new food and beverage plants in the interior of China to be built over 3 years. Coke announced a $2 billion investment in late 2009, and is a lead sponsor for the Shanghai Expo. ...

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

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Kia says it expects its sales in the United States and Canada to rise 15 percent to 350,000 vehicles in 2006, and to grow to 800,000 by 2010. Kia expects the new plant to begin production in 2009, employing about 2,500 workers and producing up to 300,000 vehicles a year. The plant will be located in West Point, on the western edge of Georgia.

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A plan appears to have been put in place by the U.S. and the European Union countries to strengthen the American position in negotiations with Iran underway in Istanbul. The impact on oil prices and on U.S. and E.U. growth as a consequence of higher oil prices, especially when the eurozone countries faced lowed growth, was one of the ways Iran hope to blunt the tightening of sanctions against Iran's nuclear program. It now appears from information released by the International Energy Agency that a plan was implemented by the Saudis in recent months to build up reserve supplies. At the same time a similiar effort was being implemented to increase production in Iraq and Libya so that it would add to reserves added by the Saudis. Daily output from OPEC countries increased by about 1.4 millon barrels in the Sept 2011- March 2012 period, as the confrontation with Iran took shape with increasing pressure using sanctions on Iranian oil, according to the IEA. Of this 1.4 million barrels a day increase, one third is from the Saudis and the rest from Iraq and Libya, according to IEA. In March 2012, OPEC oil production increased by 135,000 barrels a day to 31.4 million barrels, mostly from higher output in Iraq. The Saudis have filled up domestic oil inventories and placed an additional 10 million barrels of oil in storage close to markets in Europe and Japan. This suggests that this was part of a quietly implemented plan in cooperation with the U.S. and the EU countries to increase the effectiveness of sanctions and protect global oil supplies from disruptions; even as the U.S. pressured Japan, S. Korea, India and other countries to reduce purchases of Iranian oil. The economies of India, the EU and other countries were already beginning to feel the impact of higher oil prices in the 1st quarter of 2012....

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David Reilly warns that though the U.S. Federal Reserve's stress tests of U.S. banks showed they passed- including approval for dividends and share buyback- except for Ally Financial and Citigroup, this can be deceptive. True, the Fed used 13% unemployment and sharp drop in stock market prices as conditions. The problem is with capital ratios. The Fed used a leverage ratio of 3%. It should not be forgotten that the financial crisis of 2008 was caused by excessive leverage and risk. Tested on this measure the banks fail to achieve safe levels of leverage and risk. Under the Fed's highest stress scenario Citigroup ratio was at 2.9%, Morgan Stanley's at 3.4%, Goldman Sachs and J.P. Morgan at 3.8%- what ths means is that the leverage for these banks was at 26-29 times capital. Reilly raises the question- how is this so different than the leverage used by these banks before the crisis. The stress tests in the U.S. by the U.S. Federal Reserve are lauded for being better than the European Banking Authority's stress tests, but is this a standard by which to judge them? Before the collapse of Lehman in 2008, experts including Anil Kashyap at the University of Chicago, pointed out that for every $1 of bank losses in a deleveraging cycle bank lending goes down at banks by $10, and for investment banks at $20-$30 depending on leveraging- in David Henry and Matthew Goldstein, Business Week, July 16, 2008, How Bad Will It Get on Wall Street? Lehman's leverage ratio was between 24-31 times capital before the crisis. Worse, by saying banks are now safe compared to the situation before the crisis, is the Fed giving the green light to banks for some of the same leveraging behaviour that ocurred before the crisis?...

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The Conservative Party under David Cameron won 330 seats in the British parliament, securing a majority in the 2015 general elections. The Labor party won 232 seats, losing 26 seats compared to the 2010 election. The Conservatives gained 24 seats. The Labor party lost very badly in Scotland, winning only 1 seat. The Scottish National Party won 56 of 59 seats in Scotland. Opinion polls underestimated the strength of the Conservatives whose campaign theme was jobs created under the Cameron administration. Austerity was a theme for the Scottish National Party and Labor, yet as Greg Ip reported in his column on the British economic recovery the Cameron administration adroitly managed this by relaxing deficit targets after 2012 forecasts on the deficit cutting could not be met with lower revenues. Labor was hit by the sense that the Tony Blair type liberal economics had failed to reverse the decline in real wages and jobs for working class people, and the Conservatives were taking on a tough situation with the deficit and the 2008-2009 recession that started under Labor. This hurt Labor in Scotland and in the rest of Britain. Labor leader Ed Balls lost his seat. The UK Independence Party fared badly winning only one seat and its leader Nigel Farage lost his seat. Prime minister Cameron promised a EU referendum for 2017 during the election, and he will now have to manage this issue as his party favors membership in the EU with some changes. The improvement in jobs was a strong point for the Conservatives, yet Britain faces wage stagnation with low productivity gains which will be a challenge for the new administration....

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New home sales in the USA rise 4.7% in February 2009 from the previous month, reversing the steady decline in new home sales from August of last year. This puts them at a 337,000 annual rate and this is sharply down from this time last year when sales were in the 500,000-600,000 range. A lot of the activity in housing sales is in foreclosure sales especially in California. Foreclosure sales in California in February 2009 were 58% of total existing home sales compared to 33% in February 2008 according to MDA DataQuick of San Diego, cited in Bloomberg News. The drop in the median home price for a existing single family detached home was sharp from $418,000 in February 2008 to $247,000 in February 2009, a drop of 41%. As aresult sales of existing family homes in California went up by 83% in February from the previous year as reported by the California Association of Realtors, shrinking inventories to about a 6 month supply if the current sales pace holds from the 15 month supply existing in 2008. The government's $8000 tax credit for purchases of homes, the falling prices and lower mortgage rates, are helping to lower inventories of new homes. The number for the US has fallen to 330,000 new homes, as inventories are dropping and new construction is slowing. The housing picture depends also on the number of jobs that are lost during the rest of 2009 and into 2010. And this will play abig part in determining whether housing recovers. The current job losses of 600,000 a month are grounds for caution....

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Most of the reporting on Ukraine follows the war. Questions are asked how will this conflict end? This report in Der Spiegel is one of the rare reports that looks at the Ukrainian economy with images and reporting from the ground that answer that question. If the Ukrainian economy is surviving in 2023 then Ukraine will continue long after a peace settlement is reached. It shows for instance that supermarket shelves are well stocked. It shows energy from half a million generators keeps the lights on and companies working in Ukraine. The steel industry is mostly destroyed yet the software industry continues to grow. Unemployment is 30% even after hundreds of thousands of younger Ukrainians are at the war front. Of about $62 billion promised by US and European countries about $31 billion has actually been transferred to Ukraine. The IMF has created an exception for aid to Ukraine with offices in Kviv and Brussels. All defense needs are covered from the Ukraine budget. Before the invasion in Feb 2021 defense took up 9% of the budget, now it takes up 42% of the budget. Another 16% for public security. For social benefits 16%, and another 26% for other expenditures. By having an economy that is functioning and life even in light from generators and solar energy, with supermarkets well stocked and providing office space for workers, with aid mechanisms working. Ukraine has already emerged as part of Europe, tried, tested and come through adversity of the worst sort. It is supposed to join the European Union, yet Der Spiegel says it is already tightly integrated into the EU. Its power grid was integrated with the EU power grid before the war, and nuclear power was sent to the EU from Ukraine before Russian attacks on the nuclear plant. Then transmission lines brought energy to Ukraine from the EU. The EU takes in 80% of Ukraine agricultural exports compared to 20% before the war. Even at the risk of lower prices and hurting farmers in Poland, the Polish government has allowed large imports of agricultural products into Poland. The close links with countries of the EU that share a border with Russia have increased. The problems now are that Ukraine after this war will have severe shortage of manpower. Already with the fall of the Soviet Union Ukraine lost about 8 million people and population was 44 million before the war. About 8 million people moved to Ukraine in the one year following Russian invasion. Of this 1.5 million stayed in Poland, the rest went on to other countries in the EU or returned. The countries such as Germany, Finland, Czech Republic have labor shortages of their own and encourage refugees to stay. Rebuilding is estimated to cost $131 billion. Yet as is evident in Poland after most of the damage from the second world war in Poland it was rebuilt using modern technology. Ukraine survives, its life goes on, is the message from Der Spiegel. In this way the war's outcome is already evident. Much of it comes from the European Union having sensed that attacks made with impunity would endanger all of the European countries when made by any dominant power. This is also what Cambridge historian Brendan Simms has shown about European history for the past 500 years in History of Europe- The struggle for Supremacy 1452 to the present. No one country says Simms was able to act with impunity and pose athreat to its neighbors as all other countries in Europe rallied to prevent this. This war is no exception.   ...

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David Malpass is the choice of the Trump administration to head the World Bank. He has worked with Latin American countries at the State Department, was the Treasury official responsible for the World Bank in the Reagan administration, and worked on Argentine currency, China trade matters in the Trump administration.

Malpass negotiated a $13 billion replenishment for the World Bank in 2017, with U.S. share of $1.2 billion. This capped the bank's lending at $25 billion.

Last year the World Bank provided China with $60.5 billion in loans for 400 projects, which this WSJ editorial says is loans China does not need with its $3.07 trillion in foreign reserves. This editorial is critical of the current World Bank head Dr. Kim for taking a job with a World Bank partner the private equity fund GIP.

The World Bank has played a significant role in development for South Asia and China in the early years after World War II.

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There is a major contraction in the supply of leased cars to the used car market. This used to be the major source of used cars on dealer's lots. The contraction is so large it will take years to fix, some say 2027. The contraction of leased cars is expected to be 23% from 2024 to 2025 for expiring 3 year leases. Another factor leased cars are a good deal to buy at the end of the lease seeing how sticky used car prices are these days. A 3 year old leased car now costs $28,000 up 45% since 2020, and for new cars it is $48,000 up 25% since 2020 This is significant because a key part of inflation is not only cost of groceries (eggs for example), it is also the cost of cars and housing. For cars used cars are a major part of it as it is basic transportation needed to get to work for a majority of Americans. There are Americans where a car breakdown leads to a loss of a job because it costs too much to repair and young people just don't have the money. Stories in WSJ now point to how DJT won in 2024 largely because of immigration, fentanyl and transgender, and the frustration with high inflation. The challenge is now for action where Mexico, Canada and China cut off fentanyl flows to be able to access the US market. It is also for finding a way to cut housing and car costs. ...

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A back of the envelope kind of analysis by Robert Cyran shows that GM may not reach positive net present value even with all its efforts. The rescue package from the governmet required GM to come up with aplan to achieve positive net present value. Treasury wants GM to wipe out two thirds of its unsecured debt by swapping it for equity. Even if this succeeded it would leave GM with $12 billion of unsecured debt and $6 billion in secured debt. With the government money of $13.4 billion the debt goes up to $31.4 billion. GM has to pay $10 billion in cash into the independent fund for UAW members benefits. And net unfinanced health care liabilities for non UAW workers is $8 billion. Prof. Roth at the University of Chicago estimates GM's pension plan may be underfinanced by $23 billion after the market downturn. Cyran uses a conservative number of $10 billion Adding it to the rest gives $60 billion in liabilities. With analyst estimates of $135 billion in sales in 2008 and about 3% margin this implies $4 billion in operating earnings. This seen as a steady ten year income stream would make GM's car business worth $28 billion. These ballpark estimates by Cyran show that GM will have a tough time proving to the government that it can achieve positive net present value and that it should not be drastically reorganized under bankruptcy, which would be redefining the business from the ground up, and discarding old models and behaviours completely by bringing in new managers with no preconceived notions about the business. Actually Cyran's $4 billion in operating earnings based on a 3% margin and $135 billion in sales may be optimistic considering that its based on 2008 performance. 2009 and 2010 performance will likely turn out to be worse than 2008 as both unemployment and consumption spending deteriorate. ...

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In a aspirational country where even US president John Kennedy's grandparent's father Patrick Joseph arrived from Ireland during the potato famine in the 1850's and aspired to reaching the level of the more educated Americans over 2 generations, whose grandson JFK's father worked as a manager in the Quincy shipyards in Massachusetts, this extraordinary concentration of support for Republicans among less educated is astonishing, perplexing, and at odds with what America is. Super Tuesday results analysis of 1000 counties in 14 states in 2024 show Republican Trump getting 83% of the vote in counties with a higher share of voters without a college education. Where voters are a higher share of the college population this drops to 61%. A sharp drop in support is seen in counties with a higher percentage of voters who have college a rapid fall as one has college education.  A strange phenomena can be seen in graphs shown in WSJ of voters by counties and income, education. A large cluster of voters in incomes below 70,000 and without a college education then falling off like off a cliff. In Iowa, New Hampshire primaries it was seen as being mostly rural voters, more isolated and in less proximity to other people. The question remains how well this category of under $70,000 without a college degree reflects the country as a whole in 2024, how has the country changed since 2012, 2016 and 2020. It is easily said there is a polarized country yet this ignores the unusual nature of this support where it is concentrated so heavily in one group in this way with cutoff of $70,000 falling precipitiously in support for Trump for incomes above that. At above $70,000 support quickly drops to 80% and falls steeply with every $1000 increase in income after that. In a country like the US this means almost the entire educated population in the US and the entire population above the $70,000 per year level excluding itself from support, so sharp is the fall off from moderate income and education levels, and so heavily clustered is the support almost like a ball up in that corner of the graph with just a few specks on the rest of the graph. This is most unusual for the US and may not be reflective of the whole population of the US in 2024. This is also unprecedented in US history since 1776, may not compare to 2016, and for the Republican party even more unusual. Two questions also come up what happened to all the country club, more educated voters who voted Republican and made the party what it was an upper class business supported party, and what happened to all the factory workers, teachers, nurses and others in America who make about $70,000 or $80,000 and who are generally Democratic. These people will be part of the electorate for the whole country in 2024. ...

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A further drop in the value of the ruble would increase the cost of servicing the $500 billion in foreign debt. Fitch downgraded Russia's credit rating to BBB, the main concern being the drop in foreign exchange reserves, down by $210 billion to $390 billion in 6 months. Forward rates on the ruble imply a further depreciation of 20% in 12 months. Russia last week abandoned its committment to stick to the 2009 budget. After the first $29 billion bailout for banks another $40 billion has been assigned for the banks. All this has shown clearly that for Russia the job of reforming the economy, of changing its dependence on oil and commodities, and shifting to manufacturing and high tech industries has hardly begun. As a writer at the Financial Times put it in a CSPAN talk show, Russia is like 120 million people gathered around a oil wellhead. Or as another writer puts it, it remains a dangerously leveraged bet on the oil price. This has ominous implications for Russia, and serious social implications in terms of unemployment, social unrest, and a crisis of expectations, as for the second time in the lives of this generation hopes are raised only to be disappointed....

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Chancellor points out that economists from Irving Fisher in 1929 to Ben Bernanke in the mid-1990's have often played the role of academic shills during each successive period of "This Time its Different, " claiming that there was some new event, technology, or innovation, that justified higher valuations of assets and higher institutional debt levels. He quotes Walter Bagehot who says about merchants and bankers of his day-" they fancy the prosperity they see will last always, that it is only the beginning of a greater prosperity." The significance of the book is that it suggests an hypothesis that is quite different from the general idea in 2011 that there won't be a protracted period of slow or marginal growth after a bubble of this nature. Because the bubble is also in other countries, in countries of the euro-zone, China, Turkey, Brazil, and other countries, the situation takes a much longer time to heal.