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Oil prices are up and staying there longer in December 2011. The 12 month rolling average for oil prices for Brent crude oil is at $109, compared to $106 a barrel in September 2008, according to consultants JBC Energy. The situation is worse for eurozone countries because of the declining value of the euro estimated at between $1.16-$1.30 in 2012 depending on how the eurozone crisis is handled. The 12 month rolling average was 70 euros when Brent crude prices were at their high in 2008, compared to 78 euros today. France and Italy are seeing their current account surplus disappear with reduced exports and higher import bill for oil.

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Expectations of lower inflation in the U.S. for 2012. The Commerce Department showed inflation slowing with consumer prices up 2.5% over the prior year in November, down from 2.7% in October and 2.9% in September. The Labor Department's consumer price index went up by 0.8% annual rate in the last 3 months. Increase in labor costs are also mild. Hourly wages of private sector U.S. workers were up 1.8% in November 2011 over the prior year. Commodity demand in emerging markets is slowing with lower growth, which reduces pressure on commodity prices. The consumer price index is expected to rise by 1.2% in 2012, according to J.P. Morgan economists. The Federal Reserve in its recent statement after a Dec. 13 meeting stated it expects inflation at below 2%.

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Th Obama administration's Home Affordable Modification Program, or HAMP, is designed to provide relief to homeowners facing foreclosure. HAMP has also prevented these homes -from the seven million home loans that are delinquent -from joining the overall inventory of homes, and depressing home prices further. Eighteen months after HAMP was introduced, it looks like HAMP has failed to help homeowners to the extent needed to revive housing. Of the 1.3 million modifications extended to homeowners, about half have been cancelled, and about one third or 422,000 homeowners have received permanent loan modifications. The results for July 2010 show that it is slowing down even more. The number of homeowners receiving modifications in July is growing at a much slower rate. 17,000 new trial modifications were started in July, 2010, but 5 times that number of loan modifications were cancelled. HAMP has reduced the montly payment through a lower interest rate and longer term, with the average borrower receiving a montly modification of $500. But even with lower payments and permanent modifications homeowners still have lots of debt. The median rato of total debt payments to pretax income is around 63.5%. And analysts estimate that 20% of borrowers with permanent modifications will re-default. The program had aroused huge expectations, hoping to help 3 million homeowners. Which is why Professor Kenneth Rosen, of the University of California, Berkeley, considers the results embarrassing for the Obama administration. Adding that the Obama administration should be ashamed of these results after all the hopes that were aroused for real help to homeowners. ...

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The deterioration in the Irish banking crisis. An additional 13 billion euros will be needed by Irish banks to pay bad real estate debt, after this round of stress tests in March 2011, according to Ireland's Central Bank. This is on top of the 85 billion euros rescue package after collapse of the banks, and the 10 billion euros given by the EU and the IMF. Some estimates say the cost of the banking bust could reach $140 billion for a country with GDP of $241 billion. Ireland's interest payments on debt are estimated to rise to 13% of government revenues by 2012. Serious calls are being made for bondholders to share in the losses as the crisi escalates. Daniel Gros, Director of the Center of European Policy Studies, says policymakers in Europe saw the experience of Lehman Brothers and do not want to see a repeat of that experience at any cost. The weak banks in Germany and other lender countries are too politically connected in his view to be allowed to fail. German banks hold $62 billion in Irish Greek and Portuguese debt and French banks hold $26 billion. Hypo Real Estate, taken over by the German government, holds $14.5 billion of this debt. Bank assets in Europe are a larger share of the national economies in Europe than in the U.S. making the situation more intractable- In Britain over 3.5 times the economy, Ireland 2.5 times, in Netherlands 4.4 times, in France 3.25 times, in Spain 2 times and in Germany 1.5 times GDP, compared to 60% of GDP in the U.S. After the Irish government decided to guarantee the debt of its banks two years ago, Irish taxpayers are stuck with the entire cost of bad debt at the Irish banks....

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Under the Deferred Action for Childhood Arrivals (DACA) executive order of 2012, a group of immigrants brought to the country as children can have temporary status to stay and work in the U.S. In 2012 this was restricted to children brought in under the age of 16, with a maximum age of 30. The program was called "Dreamers." Under president Obama's executive order this will be changed to children brought in under the age of 18, with no maximum age. The number of immigrants goes up from 1.2 million in 2012 to 1.9 million with this particular change in 2014. A new group of parents of children who are citizens or legal residents residing in the U.S. for more than 5 years adds another 3.3 million to this number, with an additional 100,000 for parents of Dreamers. The total 1.9 million children and 3.4 million parents would be 5.3 million given new status to stay and work in the U.S. The 5.3 million will not be eligible for subsidies and for the Affordable Healthcare Act assistance. All will be required to pass security checks. This leaves about 6 million, including farm workers and other undocumented or illegal immigrants not touched by the new executive order. President Obama is expected to make the announcement of the executive order on Nov. 20, 2014, in Nevada, a state with a large Hispanic population. On the question of legal authority for the executive order, Prof. Stephen Yale-Loehr, an expert on immigration law at Cornell says the U.S. president does have broad authority to decide which group should get a reprieve from deportations. The decision to exclude benefits of government subsidies and subsidized healthcare was made to appeal to increased support of the American public for the executive order. ...

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A Congressional Oversight Panel said the Obama administration foreclosure plan is not addressing the problems of today. It is borrowers with good credit who ave lost their jobs or those with complex mortgages who are not getting help, and this will add to the higher default rates. THese borrowers because they are jobless are not able to afford even the reduced monthly payments. The HAMP program for reducing payments fails to address these problems.

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Sales of new vehicles are in even steeper decline in Japan than in Germany. Germany saw a boost with reunification with East Germany. Eastern Europe is next door for sales and manufacturing. Sales declined 7.6% in 2007 over 2006 to reach 3.406 million vehicles, the lowest level since 1972. With 9 new models Toyota's sales declined by 6% in 2007. Something is happening in the developed country markets that shows the markets there are declining relative to the new markets in Asia and other emerging markets. How automakers fare in the future and which survive and grow will depend on how they prepare and execute strategies for these markets focussing on new design, efficient manufacturing and new technologies These markets will bring a different set of customers looking for improvements.

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As a group Hispanics are reported to be hit hardest by this recession, harder than African Americans. In a Feb 9, Washington Post poll, both African Americans and Hispanics were optimistic about the future for the next generation, even with the dismal economic prospects, because things have improved greatly for this generation of black people and Hispanics compared to their parent's generation. And this progress is projected into the future. As a group the most pessimism was shown by white people. Whites say the Obama administration is doing very little for their families, and not doing enough for the middle class and working class Americans and small businesses. They were much more critical about the the administration's cozy relationship and doing "too much" for Wall Street financial institutions. By a 2 to 1 margin whites saw the Obama administration's economic program as harming the national economy.

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Steven Erlanger describes the mood in France as it faces problems of improving competitiveness in a rapidly moving global economy. A sense that the actions of the Hollande government will not be enough to tackle the need for deeper changes.

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Details of the $825 billion stimulus plan. Renewable energy does well under the plan including production tax credit for renewables, with $32 billion for a "smart" electrical grid for which GE makes components and lobbied for. Renewable energy producers win an extension of production tax credits now convertible into cash for companies whose losses leave them unable to use the credits. Transportation infrastructure green projects did not do so well, with $32 billion for transportation projects and only $10 billion for mass transit projects.The Natural Resources Defense Council had compiled a list of more than 80 environmentally friendly infrastructure and transportation projects worth about $405 billion. Only a small number of these projects made it. What is in the stimulus to create jobs and stimulate capital investment? Businesses get bonus depreciation, which speeds up depreciation deductions for companies that invest in plant and equipment. The stimulus doubles the amount small businesses can immediately write off for capital investments and purchasing new eqipment, and gives incentives for businesses to invest in renewable energy. States get help with $90 billion going to increase the federal share of Medicaid payments, and an additional $79 billion to help states avoid cutbacks in education and other services. And there is a "Make Work Pay" tax credit for $500 per worer and $1000 per couple. Experts say the effects of the stimulus will be felt in the latter part of 2009 and into 2010. Which is one reason the view of economists that there would be a second half recovery does not reflect conditions on the ground. Goldman has revised its view to 2010 and even that may be optimistic. One example of what has happened in the stimulus in this respect is that the earlier optimistic view of largeinvestments in science and technology, broadband networks, and transportation projects for fast rail and transit have all been trimmed down. Part of the reason may be that the bill for the nation's banking system revival may be larger than realized as an additional amount of $15-20 billion is being negotiated for Bank of America and more money will go to Citigroup. $6 billion is shown for highspeed internet access for rural and underserved areas. Science facilities get $10 billion. Repair of public infrastructure (read roads and bridges) gets $31 billion. School modernization gets $21 billion. And modernization of health information technology systems gets $20 billion which its hoped will provide equivalent or higher returns to pay for some of the universal health care costs, and preventative care gets $4 billion. There is a tax credit for R&D work on energy innovations and renewable energy production of $20 billion, and $32 billion for a "smart electricity grid." These are the proactive parts of the stimulus that create something new and make improvements. They add up to $144 billion. So much money goes to shore up the existing services and supplement incomes, and to relieve stresses on the banking system, and other ways to shore up the system, that the proactive expenditures are only a small fraction or 17% of the $825 billion stimulus. And all the time the federal deficit and debt increases with these huge outlays just to shore up the system. The Heritage Foundation Data Analysis Director Mr. Beach told Congressmen at a discussion chaired by Congressman Cantor (R), on January 16, 2009, that the federal debt would reach 92% of the nation's GDP in 2009 from 58 billion or 70% in 2008, with the $825 billion for stimulus. The federal deficit would go up to $1.31 trillion or 9.2% of GDP up from $541 billion in 2008. See the research paper on the Heritage website. ...

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Mario Monti, Italy's prime minister, tells Alessandra Galloni of the WSJ, "Germany will never let France go." French economist Sorman says Americans do not realize that the EU and the Euro were created for political, not economic reasons, and the idea was to bring peace to Europe and especially between France and Germany. He sees the EU countries staying through this crisis together, and France emerging more competitive from this experience.