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U.S. Treasury Secretary Geithner says Republicans are working to thwart the Dodd-Frank legislation- by slowing down and diluting the impact of rules required to be written under Dodd-Frank, crimping the resources of regulatory agencies, and blocking the nominations of heads of regulatory agencies such as the Consumer Financial Protection Bureau.

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Dilip Hiro's new book on the emergence of two states India and Pakistan in 1947 presents the story in terms of the two founding leaders Mohandas Gandhi and Mohammed Ali Jinnah. The division of the region into conflicting states is shown as a result of the divergent views and politics of the two leaders. Jinnah who was skeptical of the mass civil disobedience movement of Gandhi and preferred a legislative approach, and Gandhi who appealed to the masses and oppressed millions in British India. Jinnah and Gandhi's style and approach were fundamentally different. Seven decades later Pakistan has failed to build a genuine participatory democracy for most of this period with military actively involved in government, and India in the manner of Gandhi built institutions of participatory democracy under different political parties. Jinnah was an assistant to Dadabhai Naoroji, India's first nationalist leader at the turn of the century, when the two were in London. Naoroji passionately argued against the British policies that entrenched the poverty of millions of Indians in the countryside. Ironically it was Gandhi, not Jinnah, who took up Naoroji's call for bringing hope to the hundreds of millions of people on the subcontinent in "Poverty and Un-British Rule in India," first published in 1901, and showing how the draining of the country by the British was leaving India weak and oppressed. In 2015 that struggle of Naoroji for bringing hope and economic opportunity to millions of people is the task taken up by India's new government and the new government in Pakistan. Naoroji, the first Asian to be elected as a member of the British parliament, established the East India Association in 1867, the predecessor organization to the Indian National Congress which he founded with Hume, and is the leader Gandhi and Jinnah most respected in the first three decades of the twentieth century. Naoroji was elected to the British parliament for the Liberal party from Finsbury Central in 1892, and was assisted in his campaign and duties as a member of parliament by Mohammed Ali Jinnah. In the light of this common upbringing for Gandhi and Jinnah, the nineteen forties and their aftermath could be seen as a detour, not the substance of political life on the subcontinent- just as Mao and Chiang Kai Shek are a sort of detour for today's China. Particularly in a globalized world where technology continues to open up unbelievable economic opportunity, interchange and communication. ...

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This story in the WSJ shows how the Phase 1 deal between the U.S. and China was negotiated in November and December 2019. As a bargaining chip for negotiations on a Phase 2 deal the U.S. has preserved tariffs of 25% on $250 billion in imports from China, and the reduced tariff  of 7.5% on $120 billion of imports. In Phase 1 Mr. Trump convinced the Chinese leadership that he was serious about going ahead with further tariffs to cover all of China's exports to the U.S.by a December deadline. This was also Mr. Kushner's message to the Chinese ambassador. In talks China gave easy concessions on agricultural imports and offered to buy twice the amount of soyabeans and other food imports- which helps Mr. Trump with farmers in the U.S. At the same time difficult concessions on enforcement to change subsidies to Chinese state owned companies were put off. China formally says it is an issue of Chinese sovereignty. It is also seen as a part of the Chinese business model that is working and China is in no hurry to change this. It has offered to step back from asking foreign companies to transfer technology in exchange for market access. On technology issues and subsidies the tough negotiating issues on which the U.S. has insisted for changes, China has held back. Phase Two is not likely to happen at least not till after the election, as China wants to be able to develop its own technology rivaling the U.S. and Europe, without the kind of formal enforcement the U.S. is demanding. In the long run it plans a shift to an economy that is less dependent on the U.S. for imports which may be in the interest of both countries, as U.S. manufacturing has shriveled over two decades hurting American jobs as a result.   ...

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Greenspan testifes before the House Oversight Committee headed by Congressman Henry Waxman (D., California). Congressmen read back quotations from Greenspan where he talked about the resilience and efficiency of American free markets and defended derivatives and complex financial instruments. Some referred to the comments he made saying that housing markets would not collapse and the worst may well be over. Almost by 10 to 1 the readers responding to a WSJ poll say Greenspan was responsible for easy money for most of the decade and his lack of the most elementary safeguards for the economy instead defending derivatives and complex financial instruments, and considering the bubble in house prices as not the Fed's concern. Many used expletives deleted or the words "clowns" or "illiterates" for Greenspan and associates at Treasury. A congresswoman from Minnesota asked pointed questions about state effforts to stop predatory lending that were nixed by the federal authorites under Greenspan and Treasury's watch. She thensuggested that they the stewards of the economy try pragmatism and commonsense for policy decisions. Describing the present crisis he seemed so out of touch that when asked about rising foreclosures and need to stabilize home prices, he still was trapped in his libertarian ideology and impulses. He said transfer payments should be tried instead as modifying the mortgages would not be good in the long run when markets return to normal. He said this crisis has still some months to go. In these observations he showed that he has still not grasped the full extent of the crisis, as a realistic assessment of the economy suggests that the economic downturn has not really hit in terms of unemployment and drops in consumption, which will hit in 2009 and 2010 and years beyond. He looked old and worn out showing every bit of his 81 years, which begs the question how could he have been chairman for 17 years till he was nearly 80, as he was still Fed chairman just 2 years ago. There are term limits for mayors, and for President, how is it that there are no term limits for Fed chairman? Should'nt the Clinton administration or the Bush administration have made a new appointment to get fresh blood, fresh thinking, just as corporations do. Wells Fargo chairman Kovacevich is supposed to retire, even though he has good skills for accomplishing the merger of Wachovia having done this for Norwest. Bloomberg is fighting the term limits to stay on for another term and will need a special vote. Doesn't senility hit the best of us, and isn't there an age when people should have to retire from these positions, long before they get close to 80. An assessment of Greenspan watching him over the years would show that he loved data and data analysis, and trusted data as almost carrying infallible weight. As most of the data he looked at was for the postwar expansion of the USA economy, he saw as he himself testified this week data that showed the economy with small setbacks to be sure but on a constant upward trend. The way down he said in response to a question the data looks completely different, with fear and lack of trust and other things making this pattern have no relationship whatsoever with the way up. Greenspan and the nation's misfortune maybe that for too long the country's political leaders trusted over two decades a man who did not have the healthy skepticism of data even when it appeared to reflect certainty, and did not have the healthy impulses for safety and safeguards that surpass all ideological thinking, and a respect for basic ethics and common sense that goes beyond everything and puts it above everything else. This is a misfortune because these are qualities required for good leadership especially leadership entrusted with such huge responsibilities which can never be taken lightly. ...

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About 171,000 refugees tried to cross the 250 mile stretch of ocean in rickety boats from Libyan ports into Italy in 2014, according to Frontex, the EU border agency . Refugees from Syria, Libya, Tunisia, and Eritrea are fleeing their homelands. A smuggling trade is carried out by tribes in Libya for these refugees, with one tribe making $60,000 a week. The tribes then use the money to buy weapons in the Libyan civil war. Migrant deaths at sea and inadequate rescue efforts are leading to a humanitarian crisis for Italy and the EU.

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About 900 Arab refugees are crammed into a boat which capsizes 60 miles off the Libyan coast in April 2015, killing about 850 people. This is the worst single incident in an increasing influx of refugees from boats leaving the Libyan coast for Italy. About 171,000 refugees from North Africa made this journey in 2014, and increasing numbers are doing it in 2015 to flee the civil wars in Syria and Libya, and hardship conditions in Tunisia, Eritrea and other sub-Saharan countries.

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GM's decision to close the NUMMI plant, a joint venture with Toyota that makes the Pontiac Vibe which is being discontinued, the Corolla, and the Tacoma truck. Its a way to reduce excess capacity for Toyota but also is a sensitive point as Toyoa has pledged to keep plants open. Toyota may decide to make the Prius at NUMMI. About 4600 workerts are employed in the San Francisco Bay area at the NUMMI plant.

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Bloomberg View says it is important for the living wills for U.S. banks that are "too big to fail" to be ready by the end of August 2011. This is required under the Dodd-Frank legislation. The living wills are designed to provide the government and the FDIC with an orderly pathway for winding down the business of a bank. On August 8, 2011, when the Dow Jones Averages dropped by 634 points, shares of Bank of America and Citigroup led the decline. Bloomberg points out that investors think Bank of America's net worth is only one third of what the bank claims, and for Citigroup this is less than half. Investors view the stocks of these banks as risky because they are likely to need to raise fresh capital and this would dilute the value of existing shares.

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Kristof of the NYT says the narrative about Hillary Clinton being dishonest is clearly overdone and inaccurate. He says the gaffes about the use of personal email server have unfairly created a distorted narrative. On changing positions on trade and minimum wage- this happens frequently with all the candidates. Some are glib enough for not being noticed, Clinton not a natural politician drawing attention. On Libya, and on Syria, Clinton is blamed for the President's errors and not given credit for pushback in league with Panetta, Gen. Kean and Gen. Jones, that has influenced changes made in 2016, and the president accepting blame for errors. In this instance Clinton has been far from shifty by publicly allying herself with Leon Panetta's position in "Worthy Fights," and Gen. Jones's remarks. Far from having erred on Libya and Syria policy, Hillary Clinton, like Chuck Hagel and others in the administration including Joe Biden, showed exceptional patience in dealing with the president, national security advisor, and McDonough in policy matters- when they were right but the country was weary of what were seen as futile global engagements in remote areas setting too high a bar for any action. Clinton rightly described this as a pendulum swinging too far in the opposite direction after the Bush/Cheney years. On young women and being "progressive" Hillary Clinton is from a older generation that experienced the kind of discrimination that young women fail to grasp, according to a recent analysis of University of Massachusetts polling survey results cited in the Washingon Post. A PolitiFact Pulitzer winning fact checking site shows 50% of the Clinton statments are either true or mostly true, compared to 49% for Bernie Sanders, 9 percent for Trump, 22% for Ted Cruz, and 52% for John Kasich. ...

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Scott Shane of the NYT provides this exceptional account of how the ideology of Wahhabism on which the Saudi monarchy is based has influenced the evolution of Islam, but not in the way other religions have evolved into more moderate and open religions. Christianity evolved from the period of religious conflict, and evolved to the point that the basis of progress was based on education and technology in most of northern and southern Europe. Where the evolution did not take place because of more intolerant behaviours such as in Spain with the Spanish Inquisition and ideas from the medieval period, this development based on education and technology lagged severely behind.  Wahhabism developed as a result of a sect started by a religious cleric Wahhab in a poor desert region around Mecca and Medina, now the Saudi Kingdom, who sought the help of a tribal chief Ibn Saud. They used the religious-political alliance to gain tribal dominance in the region. Wahhabism sought to change Islam by banning worship and religious rites at tombs common in that period. It also as Brookings scholar William McCants cited here says, drew "sharp lines" and intolerance between believers and non-believers- all non-believers including other sects of Islam, Shiites, Christians. The movement spread throughout the region, but was crushed by the Ottoman Empire based in Istanbul, Turkey, by the 1850's, only to be revived in the 1920's following the collapse of the Ottoman Empire. A Norwegian expert Heggenhammer cited here says clearly Islam did not benefit from the evolution that other religions had, and Wahhabism has slowed this evolution into and open, tolerant religion because of its "sharp lines" and intolerance of other faiths and ideas with the Wahhabism from a medieval perod. In India the British rule brought enlightenment thinkers (John Stuart Mill for example was a clerk for the British East India company). But no such change happened under Ottoman rule to inspire leaders like Gandhi and Nehru to setup a new constitution that made changes from medieval Hindu beliefs such as caste and religious practices based on superstition.  The development of an oil rich state in Saudi Arabia with the discovery of oil, and the dependence from 1950-2010 of the global economy, has led say experts to the export of the Wahhabist kind of Islam to other countries in Middle East and South Asia. This they say made the evolution to democracy and peaceful coexistence difficult or impossible in the region. ...