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The situation in Boise, Idaho. Home to many electronics and high tech companies like Micron Technology, Boise has weathered many downturns with unemployment rates well below the national average. This time things are not looking at all like previous downturns, as the unemployment rate in Boise climbed to 6% from 2.7%- it has already approached the national average of 6.7%, and is climbing. This suggests that high tech is also being affected seriously. Unemployment is expected to reach 8% in 2010, about the same as the national average forecast according to Moody's Economy.com. Goldman Sachs forecast is for the 2009 savings rate to be between 6% to 10% by 2009. Families like the Capps and Muirs that have young children or children in teenage years, are now serious savers, as profiled in this description. Down to getting their meat from a calf grown on a family farm in the Rocky mountain region where Boise is located, cutting their own wood in the mountains, buying 11 dozen eggs and freezing the insides of the eggs, buying on deals like $8 winter coats at Old Navy's store, bulk purchases of sugar and staples, growing and canning vegetables, handcrotcheting hats and scarfs for sale on Craigslist and local bazaars. All this from Mrs and Mr Muir including starting a Moneysavers Club, an email group of 30 people. The Muirs are a young family with their first child 5 years ago, who have stable employment, with Mr Muir working as a grape researcher for the state Dept of Agriculture, and his wife a dental assistant. But having taken 2 mortgages to buy their $144,000 home because they could not afford the 20% down payment. The wife's 401K of $3000 going for insulation and fence , and the husband's 401 K savings down to $13,000- reduced to half by the stock market. Suggesting poor decisions on housing debt with low savings for a couple in their thirties. The Capp couple in its forties has also low savings, having $40,000 in student loans, and credit card debt of $11,000 just paid off by using the $10,000 severance package for Mr Capp. The Capps are economizing on everything from skiing to using washable rags instead of paper towels. He worked as a field service engineer for Electroglass, a semiconductor equipment manufacturer based in San Jose which fired two thirds of its field service engineers, including Capp. They also used a $25,000 line of credit on their home to buy a used Toyota 4Runner. Considering their economizing skills, their responding to the downturn by paring down debt as quickly as possible, the information of Mrs Muir's skills at saving, the Capps continuing to use their 253,000 miles Toyota Corolla- these are families that were not crazy spenders, but just families that did not take saving seriously. The Capps made $65,000 from Mr Capps salary and $10,000 from Mrs Capps work at a mental health clinic (after getting a BS in psychology), yet their $2700 in savings suggests no effort was made to save for a rainy day. What this saving and economizing means is that restaurants are closing in large numbers in Boise. Retail stores, including electronics and clothing, are shuttering, All this is leading to higher unemployment, leading to saving measures like those used by the Capps and the Muirs. Meanwhile the numbers for savings accounts at Home Federal Bancorp in Boise, Idaho, a $725 million bank with 15 area branches, shows savings accounts up 26% in December from the previous year. And says the banks consumer banking head, the balances are increasing even as the unemployment rate is going up. Which suggests that Rodriguez and Goldman Sachs may be right (seee link) that the savings rate may reach 10%, and even higher, from what is happening in Boise. Views on currency valuation and the dollar as indicated in the analysis of the article about Rodriguez /Grantham/Scheiff, WSJ, January 2, 2009, may have to be separated from the analysis of what is happening in savings, as the weakening of the dollar relates also to the weakening of other economies and currencies. This steep upturn in saving is likely to affect Chinese exports severely and the Chinese economy. This also affect the German economy, as China imports less from Germany, especially its midsized manufacturers. See links. What is happening on saving, on the other hand, is very real, and happening before our very eyes....

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A black supporter of Obama, Ms. Hart, tells him- " I'm exhausted of defending you, defending your administration. I've been told that I voted for a man who was going to change things in a meaningful way for the middle class." This encounter happened at an hour long town hall meeting on CNBC, which John Harwood moderated. Harwood asked Obama whether he was having difficulty connecting with average Americans because of attending Ivy League schools and spending part of his youth overseas. The incident reflects the frustration and disappointment felt by average Americans with the Obama administration and with Obama.

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The Basel 3 Rules and the extra capital cushions required by 2019, will double the amount of core equity a big bank holds as a proportion of assets. This is happening earlier because markets are making banks increase their capital cushions. But more needs to be done to make "too big to fail" banks in the U.S. and Europe safer, says the Economist in a May 2011 special report on international banking. An independent commission in Britain has suggested an additional equity buffer of 3%. The Economist says the Basel committee should consider similiar rules for the largest banks. Another proposal is being considered by Swiss regulators who want to see their banks holding the equivalent of 9% of their risk weighted assets in convertible capital. This kind of buffer is considered essential to prevent the kind of sudden collapse of the global financial system that was seen in late 2008.

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Inflation in the eurozone is running at 0.7%, well below the target of 2%. In a opening speech for a 2 day conference organized by the ECB in May 2014, ECB president Draghi said the increase in the value of the euro since 2011 has made commodities like oil cost less in euros, contributing to lower inflation. A key concern referred to in Draghi's speech is the data from Spain and Portugal about the difficulty for business to get loans in Spain and Portugal. About 25% of Spanish businesses and 33% of Portgual's businesses have difficulty getting loans. Even profitable companies have difficulty getting loans. One way the ECB could tackle this is to make cheap loans available to eurozone banks conditional on the money being lent to businesses and not invested in government bonds, as has happened during prior ECB efforts to capitalize banks.

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A study by the National Employment Law Project shows most of the job creation in the economic recovery to 2014 in the U.S. is replacing the better paying jobs with lower paying jobs in fast food retail and similiar low paying industries.

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German chancellor, Angela Merkel, appeals to members of the Christian Democratic Party to support the European project at a party convention in Leipzig on November 14, 2011. "We live in times of epic change. Our political compass has not changed. But the context is constantly changing," said Merkel. The 2 day convention used the motto: "For Europe. For Germany." Her message was that it will take years of hard work to fix the crisis and yet this has created an opportunity to put the European project on a sounder footing. Finance Minister Schauble put it succintly as he supported Merkel's appeal: "We now need to build the political union in Europe we never managed to build in the 90's." This comes as changes are taking place in Europe with new unity governments being formed in Greece by Mario Monti, a former EU commissioner, and in Greece by Papdemos, another EU official. And it comes as a head of Italy's central bank, Mario Draghi, who had pushed for stricter controls on spending by the Italian government, is now the head of the European Central Bank. Merkel also hit on the theme of a stricter financial union, and the need for courage to change the treaty underlying the European monetary union to allow strong, automatic sanctions for violations of the treaty. She also emphasized that the government had ruled out issuance of eurobonds that makes the EU as a whole responsible for the debt of individual countries. On that point she said: "Everywhere we look we find behaviour that cannot go on for long. Everywhere people are living as if there is no tomorrow."...

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Andrew Ross Sorkin points out that investors are sitting on their hands and money is moving out of the stock market. About $171 billion has moved out of mutual funds over the last year, according to the Investment Company Institute. About $208 billion has gone into the bond market in the same period. There are now fewer long term investors and the market is dominated by professionals which increases the volatility. There is a lack of confidence in the economy, the same reason that businesses in the U.S. are sitting on $2 trillion in cash that could be invested, and for investors the feeling that the market is rigged to favor insiders. The Financial Literacy Group surveyed 878 students at 18 high schools in 11 states in the U.S. It found that three fourths of the students agreed with the statement: "The stock market is rigged mostly to benefit greedy Wall Street bankers."

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Lt. Gen Zahir ul-Islam takes over as director general of the ISI, Pakistan's Inter-Services Intelligence Directorate, a key part of Pakstan's Army. The role of Army chief Kayani and ul-Islam now become critical in forging a U.S. peace settlement in Afghanistan.

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In a shift from statements at earlier summits which focussed on fiscal restraint, the Camp David summit continued the "firm committment to fiscal consolidation," yet emphasized jobs and economic growth as "imperative." There is new flexibility to address needs for economic growth and no specific timetables for fiscal balance as in previous summits. Obama had many one to one encounters with the other leaders. He discussed the euro crisis with Cameron while working out on a treadmill, and watched the Champions League soccer final between Chelsea and Bayern Munich with Merkel and Cameron. Each leader of the G-8, Harper of Canada, Monti of Italy, Hollande of France, Medvedev of Russia, Cameron of Britain, Noda of Japan, Merkel of Germany, was assigned a cabin in the rustic wooded setting of Camp David's mountains. A special effort was made to see that Germany's Merkel did not feel isolated in the setting because of the growing sentiment that austerity policies pushed by Germany are not working. On Iran, Obama stated that he was "hopeful that we can resolve this issue in a peaceful fashion that recognizes their sovereignty, but also recognizes their responsibilities."...

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The American Treasury Secretary who handled the 2008 financial crisis, Henry Paulson, gives the new US financial reform legislation an incomplete grade. His main concern is that the too-big-to fail risk in the US banking system continues, and without clear rules a lot depends on the regulators. He does not see higher capital requirements doing much to ease that problem, and sees another crisis in a few years as inevitable. Former SEC chief, Harvey Pitt, gives it an F for failure or an I for Incomplete. He sees it as a boon for lawyers, because it is not clearly written and leaves so many loopholes, to a degree that is simply astounding. He says it does nothing in the way of preventing another crisis. Does nothing for transparency, nothing for monitoring and action by regulators, all factors that led to the crisis of 2008. Nouriel Roubini gives it a C+, because it does little to fix the reasons why securitization failed and caused the crisis, and in this way will keep credit creation and expansion in a weak state. He sees this financial reform bill as a failed effort that is laying the ground for the next crisis, with little action in the "too-big-to-fail" area, a huge dilution of what former Fed Chairman paul Volcker had advocated in the Volcker rule, and no real impact on the risky trading of derivatives. Bill Gross of PIMCO gives his frank assessment in no uncertain terms. A D+ for this bill. It shows how lobbyists for the banks still control Congress he says. It would have been better to let Paul Volcker take charge completely, than to have the lobbyists dilute the critical reform proposals. Simon Johnson gives it the lowest passing grade at MIT, a B. The only large change he says, is the Kanjorski Amendment, which give federal regulators the authority to breakup the large banks. But he cautions that it may require another crisis for the regulators and Congress to "get it," and do what they should be doing....

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Gordon Brown, former prime minister of Britain from 2007 to 2010, chaired the April 2009 G-20 meeting that came up with ways to tackle the global financial crisis. Brown also led the way by recapitalizing British banks, a step the U.S. followed. He comments on the volatility in financial markets in August 2007 following the S&P credit downgrade of the U.S.. Brown gives an incomplete grade to the tasks the 2009 G-20 set out to accomplish. He points to three goals the G-20 had set in the middle of the financial crisis in April 2009. The first was to prevent a recession from becoming a depression. The other two were to establish a financial stability regime, and a compact for growth. These two became paper promises says Brown. Brown sees the best approach to prevent a lost decade is for U.S. and Europe trading their way out of a downturn as the Asian market absorbs more industrial goods from Europe and the U.S. This includes policies that would keep commodity prices low and ways of coping with currency shocks. Analysts have pointed to an export led recovery as one of the solutions the U.S. was hoping to achieve with a lower value of the dollar. This has had only limited success because of deep structural problems- high consumer indebtedness, bad debt at the banks, weak housing sector following the mortgage crisis, and a rising U.S. deficit- which will take some time to clear. Brown does not come to grips with these underlying imbalances built up during the boom years of the last decade, both in Britain and in the U.S., during which he was the finance minister of Britain....

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Areas in the "too big to fail" part of Dodd-Frank U.S. financial reform legislation where work remains to be done to prevent a future crisis include: the creation of living wills by the largest banks so that they can be dismantled in an orderly fashion, and the designation of which banks are systemic risks by the Financial Oversight Stability Council. The FDIC and the Federal Reserve have yet to finalize the rules for creating "living wills" for large banks. The rules are expected to be finalized by fall 2011. The FOSC is working on the designations and what criteria to use for selecting the non-bank firms that pose systemic risks. Progress has been made at the FDIC by finishing several rules for implementing a new system to wind down a large failing bank. The FDIC is hiring staff for a new office that focusses specifically on large complex financial firms. Fed Governor Daniel Tarullo has led the effort for higher capital reserve requirements for U.S. banks, requirements that would be closer to 14% for capital reserves. In an editorial on June 16, 2011, the Wall Street Journal said that if the Federal Reserve is serious about controlling systemic risk then it should support capital reserve requirements of 14%....

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Lower amounts for financial aid available offset the lower rise in tution costs to leave students just as worse off as before with large amount of student debt in 2013-2014.

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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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This article in the Economist describes the different perspectives on the Greece crisis in July 2015 as seen inside Germany. It cites a poll showing German 51% to 41% favoring a Greek exit from the eurozone. About 85% reject further concessions in a July 1, 2015 poll, including 68% of the supporters of The Left, a post-Communist party. Social Democrats leader Sigmar Gabriel, said of the Greece timeout from the euro proposal by finance minister Schauble- that it was the appropriate thing to consider all options. And 78% polled see Greeks not keeping their side of the deal. Some experts see stronger sentiment about Greece after the events in July 2015, and the raising of the issue of the debt haircut given to Germany in 1953, because Germans see themselves as having gone to great lengths to build a strong Europe after their own troubled history in the 20th century. If the goal was to win German support in 2015, this has come across as poor tactics and poor strategy, considering how it has changed German opinion across the spectrum of political opinion....

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Once again the unemployment statistics lie- women's unemployment at 5.7% in 2014 does not reflect the real story. The number of women employed in 2014 is 55.2%, worse than in Oct. 2010. Many women looking for work give up and drop out of the work force, these women have not vanished, they are simply not being counted in the frequently quoted unemployment statistic. This spells bad news for Democrats in the midterm 2014 elections- today the households making less than 30,000 are almost evenly split on whether they vote Republican or Democratic 43% to 46%, according to polls by Pew Research Center, compared to the 2012 presidential election figures of 35% to 63%. Interestingly the reverse is true for voters with incomes over $100,000 where voters are about evenly split for Republican or Democratic choices for Congress. In 2012 presidential elections the Republicans had a 10 percentage point lead for this income group. Democratic advisors Carville and Greenberg advise not even mentioning the word "recovery" for the U.S. midterm 2014 Congressional elections. About 6.7 million people had multiple jobs in 2010, the figure now is 7 million. About 2.62 million people say they had part time jobs because they could not find full time work in April 2014 up from 2.57 million in Oct. 2010. A separate piece in the WSJ May 20, 2014, shows 10 million U.S. households under water on mortgages and another 10 million households having less than 20% equity in their homes in 2014....

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This WSJ editorial calls the ISI and Pakistan army's playing both sides of the game- acting as an ally of the U.S. and supporting the Taliban- unacceptable. The editorial points to the Taliban and its leader Mullah Omar running the operations out of Quetta, in Baluchistan. And the Taliban faction loyal to Jalaluddin Haqqani having sanctuaries in North Waziristan and the tribal regions of Pakistan. Al Quaeda's No. 2 Ayman al-Zawahiri, it says, could very well be in Pakistan in some compound in the manner of bin Laden.