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For a decade America's leaders remained silent on taking action on all fronts including trade on countries that were sources of fentanyl. The largest and most advanced economy in the world did not take action to protect its people when countries acted with impunity on fentanyl flows. That action is being taken now. A 25% tariff will be imposed on imports from Mexico and Canada, an extra 10% tariff on China, till the illegal flow of fentanyl and smuggled migrants from these countries stops. The new president DJT said on Truth Social media- He will impose by executive order on the first day in office tariffs on Canada, Mexico and China, “on ALL products coming into the United States, and its ridiculous open borders”, which would not be lifted “until such time as Drugs, in particular Fentanyl, and all Illegal Aliens stop this Invasion of our Country."   ...

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A Yale Brown universities study in 2024 shows the huge dividends from investments in childcare in the early part of schooling years- $1 invested in free full time daycare for preschoolers generates $6 in economic benefits. It only includes the economic benefits from the lack of affordable childcare for parents that lead to cutting back on work hours and changing careers. This does not even include the results decades from today in 2050 when these children provide the Nation with a strong educated workforce to propel industry and the economy forward in new ways. Catherine Rampell in the Washington Post shows that these economic benefits are  just the beginning, as the effects ripple through to local economies, touching on kids, parents, employers, local tax revenue. This is not counting the effects on mental health of parents struggling with childcare and the overall mental wellbeing of the Nation knowing that it has got the priorities right for a better future.   ...

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Strikers at a Honda transmission factory in Hoshan, 100 miles northwest of Hong Kong are asking for raises of $117 or 800 renminbi in cash above the $132 a month or 900 renminbi that they are now paid. About 950 of 1900 workers at the plant are trainees, young people from vocational schools or high schools earn $132 a month. Older employees earn upto 1500 renminbi or $220 a month. The significance of this strike is that the Chinese government is tacitly encouraging the strike as it begins making moves to increase domestic consumption and make the economy less dependent on exports. This requires consumer's having larger purchasing power and higher wages. It also means that China will not remain the low cost manufacturer for manufacture goods makers around the world for very long. Consider the size of the increase and the policy change of the government and this implies a significant shift by China.

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The second proposal by the DJT administration is described by the WSJ as being one that may be worse than the first for Ukraine as it opens up repayment of the money US gave as aid to Ukraine to defend against Russian invasion. DJT administration maintains it is $350 billion not the $100 billion Ukraine and the EU say Ukraine received in US aid. In this report Ukrainians say the Ukraine parliament would never be able to pass such an agreement and it sets up more difficulties in US Ukraine peace negotiations if released. The US proposal would set up an entity called the US Ukraine Reconstruction Fund. This fund would have first right to all infrastructure and minerals projects in Ukraine. It's approval would be required for other investors to invest in Ukraine infrastructure and mineral projects. It is written as a commercial agreement, not as a nation to nation agreement. Scott Bessent who runs Treasury is a finance executive overseeing the negotiation and this proposal. He worked for George Soros Fund and provided advice for the bet on the British pound during a difficult time for the UK economy that led to a billion dollar gain for Soros Fund. DJT is a real estate developer. As a result their thinking is based on their experience in the US real estate and capital markets.     ...

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Vice President Harris speaks at Carnegie Mellon University in Pittsburgh, Pennsylvania, about a fundamentally different economic vision for the country- one for the Middle Class and the other for the wealthiest in the country. "For Trump our economy works the best if it works for the people who own the skyscraper, not those who build the skyscrapers, those who wire them, the people who mop the floors." "I have pledged that a strong middle class will be the defining goal of my presidency. It is not about ideology, it is about common sense. It is just common sense." "Like generations before us let us be inspired by what came before us. I believe in what FDR called "bold persistent experimentation." "I believe in free and fair markets- in transparent rules of the road. To respect the rights of unions, and workers, and fair competition. And where this is violated I will hold them accountable. I believe the active partnership between the government and the private sector is the best way to unlock the opportunities in our Economy." ...

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By large margins voters have favorable opinions of Harris and Walz. For 52% of the WSJ survey Harris has the right temperament to be president, for Trump this was 42%. 40% of voter sample have unfavorable views of Walz compared to 50% for Vance. 82% of the voter sample say they know enough information about Harris to make a firm opinion. Even though media presents it as people not so familiar with Harris. A big difference is seen in views about Project 2025- only 9% have favorable views of Project 2025 that would terminate civil servants, restrict abortion access, and end the Department of Education. 57% have unfavorable views of Project 2025, 53% very unfavorable views.

These are general trends. Harris is changing perceptions on her handling of the economy and cost of living by outlining her plans for specific action on housing, child care and food costs.

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A complete reversal of the Monroe Doctrine (US president Monroe 1817-1825) policies -that kept the American continent north and south free of colonial European powers- is an affront to the US and has cost the US in Latin America. With fentanyl deaths and drug trafficking, migrant trafficking, interference by foreign powers in the Americas In Cuba, Venezuela and other countries, and ports owned by China in South America.  Hong Kong magnate Li Ka-Shing's Hutchison Holdings sale of Panama Canal ports to Black Rock for $23 billion takes place on March 4, 2025. The two ports on both sides of the Panama Canal will now be in American hands. Li Ka Shing started out fleeing from the devastated China of the Sino Japanese war to the British colony of Hong Kong, left school at 15 to work and started out with a small plastics factory in 60's Hong Kong. He then branched out into real estate as Hong Kong's economy expanded, and in the 2000-2020 period with rapid growth of China with US assistance (Clinton and Bush administrations) moved to acquire most of the ports and container terminals in the world. It is these ports that are now being bought back by the US. 23 ports and container terminals in 43 countries will now be sold back by Li Ka-Shing's Hutchison Holdings back to Black Rock under an agreement. None of this could have happened under the lackadiasical policies of previous administrations that led to first affront and then disastrous effects of migrant trafficking and drug trafficking in this hemisphere.   ...

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The contrarians not just then, but still today, as many economists shrug off facts about the new savings rate and predict a bounce back in 2009. Jeremy Grantham, co-founder of Boston money mangement shop GMO LLC, got the date right, predicting real risk to the financial system in October 2008. He pointed out for years since 2000 that the Fed's moves and the government's fiscal actions (including 2 costly wars) after the 2001 terrorist attacks, had simply postponed "a sensational bust". Its useful to see how these three, Peter Schiff, President of EuroPacific Capital, Bob Rodriguez of the FPA New Income Fund, and Jeremy Grantham agree and where even they disagree, and where the common thread of logic runs. Currency valuations including the US dollar, are the hardest to predict, and the predictions in this regard are also hardest to state for their timing. When separated from the rest of the picture, they give a better sense of what this common thread of logic in most of the crisis picture is. Grantham saw this crisis coming, but its not clear that he sees this running for a long period of a decade. He agrees with Rodriguez and Schiff about another 30% fall in the S&P 500 stock index, but at the same time he predicts over the next 7 years returns in the US stock markets will be 7.5% annually. Rodriguez sees this going on far beyond periods 1 and 2 to periods 3 to 10. And he sees government efforts to jump start the economy leading to some progress and then sputtering out because consumers are turning frugal. The savings rate will grow eventually going up to 10% by 2010. What this means is that as 70% of the US economy depends on consumption spending, and consumption spending has been too deeply damaged to recover in a few years, the downturn will only deepen in 2009 and 2010. This is his central point, and the analysis free of clutter and controversy. Basically he says the policy makers do not fully grasp that the US consumer has turned into a saver, and while the Obama administration puts one foot on the accelerator to stimulate spending, consumers will be pushing on the brakes. Schiff sees difficulties in financing the debt leading to higher interest rates and a serious drop in the value of the dollar. The views on the dollar face a lot of uncertainty as to timing, the relative strength of currencies in countries in Europe which have weak economies (UK, Ireland and Spain), and the rapidly weakening Chinese economy. But the common thread of logic runs through Rodriguez's argument about the savings rate and consumption spending, with debt and the overstretched consumer in the US running through every discussion about a weakening economy. Something much like what is happening to the auto industry because of its extraordinary degree of oversupply (with capacity reaching 94 million vehicles worldwide and demand inflated by the boom years and easy money now deflating) playing out in a few quarters, is likely to happen across the whole economy. In a gradual pattern playing out over a few years, as consumers postpone purchases of retail goods. Already this is showing up in the inventories of electronic goods that is building up. See links. Kelly Evans in the WSJ front page on January 6, 2009, confirms the signs of a seriously frugal American consumer....

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The view from Qureshi, Foreign Minister ofr Pakistan at the Journal's offices in New York of a sudden withdrawal when the Pakistani Taliban are threatening Pakistan and so close to Islamabad. He fears "more misery, more suicide bombings, and adramatic loss of confidence in the economy as investors fear that an emboldened Taliban , no longer pressed by coalition forces in Afghanistan, would soon turn its sights on Islamabad. Pakistan faced with a withdrawal would lessen cooperation against AlQuaeda and the intelligence that made drone attacks so precise in targeting Taliban leaders may be withdrawn. Pakistan may then strike adeal with the jihadists.

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The resistance to serious government assistance to make a large impact on foreclosures stems from arguments like these. They only tell one side of the story, as the mortgage industry and politicians pushed high cost loans on minorities like Hispanics and Black people who did not understand the risks, and dispensed with even the basic requirements for ability to pay on a sustained basis. Instead pushing them into higher amount loans which raised the chances of aquick default on the loan. See the link to this, a detailed article on Hispanics experience in the WSJ, with a graph that shows that more subprime loans were made to minorities than whites in 2004 and 2005, and especially to Hispanics. The other thing about this is that its a very shortsighted approach and one that will end up costing more money. Its also ending up having effects on the global economy which comes back to affect US exports, and make this a severe prolonged downturn that could last anywhere upto ten years if its not tackled in its most serious dimensions, with this one being crucial. Its crucial because the bank bailouts which are approaching a trillion dollars as the bill mounts after each passing month, and the lack of lending thats crimping businesses and leading to huge job losses of 500,000 a month are directly a result of the inability to fix this problem. Its like trying to find out who started the fire when irresponsible borrowers, speculators, the mortgage industry, the credit rating agencies who signed off on irresponsible securtization, the regulators who fell asleep on the job, and central bankers and treasury secretaries who lauded the innovation and the depth and sophistication of the US financial system ignoring the risks of too much liquidity in markets, all lit the matches that got the fire going. The longer the fire burns and bigger it gets, the harder it becomes to put it out the and more fire fighting resources it will take....

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The protest vote in Uttar Pradesh is just that a protest vote intended to get a message that the work of the Modi government to modernize and industrialize the economy needs to be accelerated to see its effects felt in rural agricultural areas of Indian states. Modi said yesterday- "If you work for ten hours I will work for 18 hours" showing that he sees the need for acceleration, even harder work ahead to modernize and industrialize India.  Disconnect with lower caste untouchable voters called Dalits and economic distress felt from the effects of the pandemic, decades of neglect that take time to correct in one of India's largest and least industrialized states Uttar Pradesh, led to prime minister Modi failing to get most of the 80 of 543 seats as it had done in three previous elections. Lower caste Dalits form 20% of the population, other lower castes another 40% of the population and 20% are Muslim voters. With this mix of voters and the time it takes to modernize and industrialize its economy in a state that was neglected for over 60 years the Modi government's best intentions have not delivered election results in the state in 2024 after the pandemic. Delivery on schemes for sanitation, clean running water, affordable housing, cooking gas for poor households, that have brought 250 million out of poverty nationally and about 40 million in Uttar Pradesh alone, was overlooked by voters, and younger voters. This does not change the path of modernization that countries such as China have taken and which require a strong administration with full public support working with industry and all parts of society to build infrastructure and manufacturing rapidly over 15-20 years. In China this happened from 1990 to 2010. In India this will take 2014- 2030 to achieve. In Bihar, UP, Orissa, Maharashtra, Andhra Pradesh, in all these states with large areas of backwardness in development the only path to realize the aspirations of the people is the path offered for modernization by prime minister Modi. The protest vote of 2024 is then a way of saying to prime minister Modi that the level of development needs only to be accelerated to see its benefits for hundreds of million of people in rural agricultural areas. ...

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Spain's finance minister, Luis de Guindos, announced a two year plan in which Spanish banks are required to set aside 50 billion euros for losses on bad real estate and other loans. This is part of the effort to restore the flow of credit in the economy. He told a news conference: "At the moment credit is falling by around 5% or 10%." Banks have been slow in Spain to get rid of bad assets and proceed with a bank cleanup.The provisioning for losses required under the plan is by type of asset- for undeveloped land this will be raised to 80% of value from the 31% used currently, for new homes this goes to 35% from 25% used currently. The idea is to get banks to sell these properties at today's prices and give Spaniards an opportunity to buy these homes as opposed to letting this remain on the bank's books. Banks that merge will be given one year, other banks will be required to do this in one year. The cleanup will make it easier for Spanish banks to obtain financing in international markets, and in turn improve the flow of credit in the Spanish economy. ...

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The problems in the commercial real estate bad loans that make it too hard for the government to rescue. An adjustment here could slow the economy in the years ahead and expose banks to big losses in the $3.4 trillion outstanding commercial real estate debt. Big banks benefitted from the gvernmet TARP program, and after the stress tests raised funds. But big banks held only 29% of the $1.84 trillion commercial real estate debt on bank balance sheets in the 2nd quarter of 2009, according to Foresight Analytics. Smaller banks with $1 billion to $10 billion of assets had $450 billion in commercial real estate exposure in the second quarter equivalent to 330% of Tier 1 capital. For the largest banks that ratio was much less at 99%, according to Foresight. And the smaller banks did not get stresstested the way the larger banks did and so wer not able to raise enough equity. Governmet plans to deal with this coming crisis are to hopwe that real estae prices recover. a recovery of 10% could cut those loans underwater to 37% from 68%. And regulators issued guidelines to encourage banks to restructure, not foreclose on problem commercial mortgages. But even if prices rise banks would want to pare exposure not refinance these loans. Meanwhile the $700 billin market in bonds backed by commercial real estate loans is moribund....

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Russia stated at a meeting of OPEC oil producers that it would not accept cuts in oil production to stabilize the oil market. The coronavirus effects on the world economy have resulted in a sharp decline in demand for oil. This lack of an agreement among oil producers is leading to a steep drop of 30% in oil prices on March 9, 2020. The Russian position in talks was that it was too early for deep cuts considering that the  true impact of the coronavirus on the world economy was unknown, and that the loss of 1 million bbd from Libya had already reduced production. Experts say the Russians wanted to stabilize oil prices around $50 a barrel and the Saudis a bit higher. Under the OPEC agreement Russia would have to reduce its production by 1.5 million barrels per day (bbd), in addition to 2.1 million bbd from previous cuts that would be extended to March, which it found unacceptable. The impact of the double whammy of continued increase in coronavirus cases around the world and the drop in oil prices as a reflection of business confidence was also felt in world stock markets.  Russia's budget is less sensitive to oil prices than the Saudis. The Saudis need somewhere near $80 per barrel to breakeven. Analysts say Russia does not want to lose market share to American shale oil companies which do not have output cuts and benefit from lower oil prices. Shale oil companies in the U.S. are struggling in the present situation of low prices as many of them need $65 a barrel in price to breakeven. About 208 shale oil companies in the U.S. made bankruptcy filings since 2015.  The oil importing countries with increasing oil imports such as India will benefit from the drop in oil prices. Japan and other oil importing countries in Europe, Africa and Asia will also benefit as Russia and the Saudis go all out to increase production. ...

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As in the US with Harris investment in America vs Trump cuts there is a distinct difference between the Tory spending plans that allowed capital spending investment in the economic future of Britain to decline from 2.5% to 1.7% of GDP over 5 years to 2030. Rachel Reeves, Britain's finance minister, says the government will adopt a new rule that changes the way it measures debt- public sector net liabilities as a percentage of GDP is the new fiscal rule. What it does is free up 50 billion pounds Britain badly needs to invest in things like climate change action, education, and other needs of the economy that will brighten Britain's prospects in the future.  “If we continued on that path, we would be embracing a path of decline. The real debate now in British politics is whether you are on the side of investment or on the side of decline. I don’t want to see public sector net investment as a share of our economy decline in a way that is currently set out. Under our current fiscal rules, we would not be able to reverse that path.” The stability rule goes with this that says strictly this money will not be used for tax giveaways, and not for public sector pay deals or the day to day functioning of government. In addition th government will borrow 25 billion pounds to  keep 30 billion pounds of headroom so that debt will keep falling over the first term of this Labour government.   ...

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India's inflation rate declined to 4.4% in Nov. 2014 and 5% in Dec. 2014. Price pressures are moderating throughout the economy. With lower oil prices in 2015 and long term trend for lower prices the outlook has improved for controlling inflation. The central bank governor Rajan cut rates by one quarter of a percentage point in Jan. 2015 and indicated further rate cuts are ahead to boost economic growth. The financial markets reflect a 1% decline in interest rates and the stock markets were up 2% in Jan. 2015

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The changes taking place in Saudi Arabia under Prince Mohamad Bin Salman are the subject of this article from Prof. Mohsin Khan of Jindal Global University. Similar changes were initiated earlier under MBZ Mohamad Bin Zayad in the UAE which inspired the changes in Saudi Arabia. The effects are easy to see for Upward Mobility, Diversity, the economy, the relations with the EU and the US and other countries, the shift away from oil to renewables, women's participation in the workplace, and education in science and technology. During the last 50 years the wars in the Middle East have wasted resources in unimaginable ways, human and in trillions of dollars that could have improved the quality of life and ease of living of people. The result is that like Britain in the nineteenth century the US in the 21st shows no interest in Afghanistan or regions of South Asia which have scattered its resources. The shift now is to the seas and the region that covers the west coast of Africa through the Indian Ocean to the Pacific past Indonesia to Japan and the Hawaiian islands, the western coast of the US- called the Indo-Pacific. With the US, India, Australia, and Japan committed to freedom of navigation and international law in the region. It is all about investment, new supply chains, trade and growth, science and technology. And the UAE, Saudi now fit in within this larger framework, along with the European Union, and other countries in this region. ...

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Oil and gas, pharmaceuticals are not affected by the 26% US tariffs on India in April 2025. The domestic market in India is large enough and growing. India could use this opportunity to get its manufacturers in shape to compete with US products. It is making a huge effort to improve manufacturing, infrastructure and logistics base that will make it a completely different competitor by 2030. Having a stable government focused on grwoth and the economy, infrastructure, farmer's welfare, was a major step for India in 2024. Much of the base for industrial growth and modernization will be laid by 2030.

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Sunderland in the northeast of England voted 69% for Leave in the Brexit referendum. It is one of the most deprived cities in the UK and after years of neglect by leaders and political elites it voted Leave to express its resentment of its treatment. Following the collapse of the shipbuilding industry the northeast of England has suffered from high unemployment with a third of the children living in poverty. Yet today there is a marked shift and cooling of the sentiment for Leave, as many of the promises made by the Leave campaign that more money would go to National Health Service, the economy would improve, and contributions to the EU would be diverted to England, appear to be broken. About $445 million was sent to the northeast of England from 2014 and helped the local economy. Benefit cuts, and austerity measures were continued by the May government in the northeast causing people to have doubts about the Brexit Leave campaign's promises. The EU's requirement that people of EU origin could work in the UK had riled residents in the northestern England deprived areas. Now a more realistic assessment of withdrawing from the EU is now taking place. About 60% of the exports of the northeast of England go to the European Union. The effect of this will be felt in this part of England and the costs of Leave are finally sinking in  for Sunderland residents. A Nissan factory in the area is a major employer and the government has stepped in to protect jobs. ...

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Hard Brexiters include Boris Johnson who insist on this at any price. Soft Brexiters include Treasury Secretary Hammond, who want to minimize disruption to the economy. Liam Fox and Michael Gove just want to make it work, that is all. A list of ministers on either side is shown here as prime minister Theresa May faces a split in her Conservative party in June 2018.

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The effect of Russia's economic problems in 2015, including the drop in oil prices to below $50 a barrel, would cost Russia about $200 billion, according to Russia's finance minister Anton Siluanov. In addition to lower oil prices, Russia faces higher inflation from the decline in the ruble to 67 to the dollar on Jan. 28, 2015, western sanctions, capital flight, credit downgrade and reduced access to financing for Russian companies. Siluanov says $35 billion will be spent in 2015 for anti-crisis measures to stabilize the banking system, financing for companies with lack of access to financing in capital markets, and cushioning the impact of the crisis. Russia's economy is forecast to decline by 4% in 2015, by the Bank of Russia, with double digit inflation from a weaker ruble.

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Feldstein's thoughts in April 2009, on Treasury's Public-Private Investment Plan. First, he says this plan will only remove $500 billion of impaired assets. The banks he says now own $3 billion of residential mortgages, $1.5 trillion of corporate real-estate loans, and $1 trillion of consumer debt. Not all of this is impaired but the banks will have to sell much more than $500 billion to regain confidence in their solvency. And with one third of all residential mortgages exceeding the value of the houses, and thie many homeowners under water, likely to default, the negative feedback loop of foreclosures begetting falling prices begetting foreclosures, threatens the whole effort to shore up the defences. If no workable solution is executed quickly to prevent this then even larger pools of mortgage debt will be impaired irretrievably. Feldstein suggests that the Obama administration seriously look at his plan suggested in March 2008 to provide government loans at low rates of interest like 1- 2% for 20% of the principal amount of the mortgage and then reduce the mortgage principal by 20%, thus keeping millions of homeowners above water. But this needs to be done quickly. All voluntary efforts have failed and have become asmokescreen for banks and lobbying groups with support from Congress to make it appear that this problem is being addressed. Thirdly Feldstein says that if banks sell these impaired mortgage assets at a loss- say 40-60 cents on the dollar on the upside with government and the FDIC picking up alot of the risk and financing for private investors under the new plan- they will now have to show the loss whereas they could have previously shown these assets at unrealistic price levels but still not taking losses. This might push banks into insolvency, so banks will need more injection of capital by the government to make this possible. What are the risks in this situation? Without an effective plan to prevent the negative feedback loop of foreclosure waves and falling houseprices, the quantity of impaired assets will simply grow larger. In effect even if some private investors take out some of the impaired assets from the banking system, it is possible that a new set of assets equal to or larger than these assets that are taken out are added to impaired assets in the banking system as house prices fall steeply from new foreclosures. That only means the economy is in the same hole as before, or in a slightly larger one, even with all the well intentioned steps. At some point the private enterprise argument has to be seen in the correct light. It is not that there is any argument that private enterprise can function better or far superior, it is only that the banks as private enterprises are in such an enormously stressed situation that the bank executive's cannot execute a way out of this mess. ...

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A look at graphs showing how much and where the $1.9 trillion aid for the pandemic is going for households, businesses, local governments and programs. This package of aid is ready to pass the US Congress in March 2021.

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The Biden administration has announced a 100 day review of strategic vulnerabilities in America's supply chain. President Biden has said he supports funding of incentives for production in the US, to become independent of China and Taiwan. From 1990 onwards chip production in the US went from 37% to about 12% today. It will now go back up. Biden's National Security Adviser noted in an article in Foreign Policy that advancing industrial policy like Japan and France once considered out of tune is now essential, "something close to obvious."  At one point in the post war period America's most advanced jet engines were made in West Berlin, surrounded by the army of Russia and its ally the GDR. There is new realization that dependence on Taiwan which makes 22% of semiconductors worldwide and 50% of advanced designs cannot go on the way it is exposing a critical vulnerability for American industry. A 40% tax credit for the cost of new semiconductor fabrication plants and other incentives are now supported in the Biden administration. The whole idea is to turn this around quickly where US no longer depends on uncertain supplies from overseas. Four critical areas of strategic vulnerability will be reviewed- pharmaceuticals, semiconductors, batteries, and strategic materials. ...