LyrArc Article Gist
Joe Nocera joins Simon Johnson and other experts in saying that Fed Governor Daniel Tarullo's suggestion to raise capital requirements of U.S. banks to 14% makes sense. He quotes Anat Admati, a fiance professor at Stanford Business School, who says the only way to get rid of bailouts is to raise capital requiremets to an adequate level. The Wall Street Journal editorial on June 16, 2011, also supports the higher Tarullo capital requirements. Why is it that European banks and the Basel III accords provide a 7% capital reserve requirement phased in over many years- to as far out as 2019- if this is the case? The European banks are in much worse shape than the U.S. banks especially with Irish, Greek and other debt on their books and Basel III is designed to accomodate this. The governor of the Bank of England, Mervyn King, is also advocating higher capital reserve requirements than Basel III, including the flexibility for countries like Britain and Sweden to set their own capital reserve requirements based on their own situation and the need to protect taxpayers. The U.S. stands to gain a lot from setting its own standards if France and Germany and other European countries decide to user lower standards through Basel III....

LyrArc Article Gist
The Wall Street Journal's reporting in Sept, 2011, on France's bank BNP Paribas. Contributor Nicolas Lecaussin quoted a BNP Paribas executive saying the bank no longer had access to dollar funding. There is a loss of dollar funding to French banks from U.S. money market funds as the funds reduce exposure and shorten maturities. Analysts point to the French banks having one of the lowest ratios of liquid assets to short term funding needs in Europe. This reporting was questioned by BNP Paribas and French government officials. This happened as central banks including the U.S. Fed intervened in markets in September 2011, to ensure full availability of dollar funding to French banks.

LyrArc Article Gist
Even as huge losses continued at RBS bank bonuses remained high. After $15 billion in losses at RBS in 2013, banker bonuses were $960 million for the year. Banker bonuses declined from 679 million pounds in 2012 to 576 billion pounds in 2013. New CEO Ross McEwan, says "I need to keep people engaged." He announced another reorganization. He says RBS "is the least trusted company in the least trusted sector of the economy." This follows public criticism of RBS for not lending enough to small business and unfair treatment of customers. The new plan is for cost cuts to save 2.2 billion pounds by closing 16 corporate call centers and 11 offices in London. Sales and restructuring cuts are planned for 3.1 billion pounds in savings.

LyrArc Article Gist
Irwin says about the revised Basel III rules in Jan. 2013- one hopes that Mervyn King of the Bank of England and Basel regulators are doing the right thing, striking the right balance between pushing for higher capital requirements and adjusting this to take into account the stalling economies of Europe and the U.S. Banks were given till 2019 to meet capital requirements. More assets are now eligible to meet capital requirements (including lower rated corporate bonds) under revised Basel III rules. The large legal settlements and speculative losses of large banks in Europe and the U.S. in 2012 put more pressure on banks with the risk of reduced lending.

LyrArc Article Gist
China's current account surplus has declined to 2.8% of GDP for 2011 from about 10% in 2007, and will be around 2.3% of GDP in 2012, according to IMF estimates. The U.S. current account deficit is down to 3.1% of GDP from 5.1%. By controlling the exchange rate China was able to keep the competitiveness of its exports, resulting in a five fold increase in exports from 2000 to 2010, according to the IMF. The decline could be temporary say experts, as the the recession in Europe and the U.S. resulted in slowing exports, with its infrastructure buildup sucking in imports of machinery and other goods from the western countries at an accelerated pace with its 2009 stimulus measures. Another reason is that in the last decade China has developed its own high tech and other companies which will now increase exports. IMF forecasts show a pickup in China's trade surplus to 4.25% by 2017. This could be lower if the renminbi is allowed to appreciate. Estimates of appreciation of the renminbi are 8 percent in nominal terms since June 2010 against the dollar. Including inflation, which is higher in China, the renminbi has appreciated by 13% since June 2010. ...

LyrArc Article Gist
Hundreds of thousands of people rallied in Barcelona in favor of independence for Catalonia on Sept. 10, 2012.

LyrArc Article Gist
This Journal editorial says both Hollande and Sarkozy fail to address the issue of competitiveness in the French economy. Much of the election campaign in April 2012 has focussed on taxes on higher incomes and too little on measures that would improve competitiveness. Some of the action taken in recent years such as raising the retirement age to 62 from 60 are being opposed by Hollande, which gives the electon a fairy tale quality says the Journal.

LyrArc Article Gist
The issue of high youth unemployment. The bulge in demographics and the emphasis on increasing the number of college graduates without increasing the jobs available, or providing apprenticeship type training and degrees in areas where jobs can be created, has created a major problem in the Middle East. High youth unemployment in the US, Spain and the UK also poses serious problems. Former primer Minister Giuliano Amato of Italy recently told Corriere della Serra: "The older generations have eaten the future of the younger ones." Older workers tend to hold onto their jobs as long as possible as retirement ages are being raised, and they have negotiated higher retirement pensions. In Spain the younger part time workers and immigrant workers are the first to be laid off and unemployment is highest in this group, which is also why the high unemployment has not attracted as much attention there. Younger workers will eventually have to support a higher proportion of these workers in retirement because of the demographics. The shift to higher parttime employment and employment at low wages has also created a class of workers who have no future, as their incomes are low, and are easily laid off. This shift has been taking place in the US, Europe and Japan over the last decade. Germany has fared better because of its long tradition of apprenticeship training, and employers working directly with young students at universities to provide on the job training. The financial crisis of 2008 in the US slowed down many industries and created a shift in industries creating jobs, the result was a larger mismatch of skills of job seekers and new jobs created. One way to address this is more on the job training and working directly with employers, and assistance to community colleges to fill education gaps. ...

LyrArc Article Gist
The U.S. Defense Department is about to move forward with a plan to store battle tanks, infantry fighting vehicles and heavy weapons, for about 5000 American troops in Baltic countries and Eastern Europe. The move is in response to calls from Baltic republics to prepare a rapid reaction capability in response to any Russian action.

LyrArc Article Gist
Th cost of cancer drugs Avastin and Erbitux and the need for putting life savings at risk for a few months of treatment create tension among families, doctors and treatment providers. A course of Avastin could run $56,000 and take 90 days for reimbursement by meicare or pricate insurance, and a 20% co-pay comes to $11,200.

LyrArc Article Gist
This WSJ editorial says president Obama's inaction, including the smaller step of not putting in place a safe zone in Syria, comes at a price for Liberals. The recent action by Governors in Michigan and other states turning down Syrian refugees, it says is one of the moral consequences of Obama's policies. For Liberals it says a policy of inaction and turning America's back to the needs of ordinary Syrians during the Arab Spring is not neutral, it also has consequences. The consequences for Liberals is the steady stream of refugees to Europe, and the greater intolerance in western societies as the safe havens created by these policies in the Middle East lead to terrorist actions in Europe or the U.S. In short doing little or nothing carries risks for the kind of society liberals want to see. Through developing policy in response to the Bush Administration's policies the Obama administration makes a series of errors of its own that compromise liberal values, including the collapse of the Arab Spring without American and western support, and the creation of a huge refugee crisis in Syria, Iraq, with a spillover to Jordan and Turkey, and further spillover to Europe. Liberals in Europe also face a similiar situation, including Liberals in France....