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11 Pacific Rim nations form the Trans-Pacific Partnership in 2018. The Obama administration supported the trade pact alienating supporters in its union base particularly in the midwestern states. Mr. Trump opposed the TPP in his election campaign and made it a significant issue for swing voters in midwestern states after job losses in the auto industry. With the opposition of president Trump the U.S. decided to withdraw from TPP.  The 11 nations agreeing to join a revised agreement are Japan, Canada, Mexico, Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore and Vietnam. So far six countries have formally approved the deal, Australia, Canada, Mexico, Singapore, New Zealand and Japan, setting the stage for two rounds of tariff reductions starting December 30, 2018. Agricultural products duties will be duty free within 3 to 7 years including for Japan and Mexico. Australia, New Zealand, Canada are major agricultural exporters. Japan supported the deal as a way to counter China's influence in the region. In the U.S. the gains would be in intellectual property rights but losses for workers in the auto and manufacturing industries, a point Mr. Trump recognized in his election campaign as he campaigned in the midwestern states. Mr. Obama pursued TPP over objections of workers organizations and unions including auto workers union, with his advisors suggesting this as a way to counter China's influence in the region. By 2018 the Democratic party support base fractured on this as one of the major issues.   ...

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The best that can be said about all the efforts to stabilize the housing markets is that they help in the context of the credit crisis that hit the economy hard with the Bear Stearns crisis and help to provide an orderly retreat for housing prices and ways to soften the blow to homeowners and lenders caught up in the wave of foreclosures. But housing prices themselves have not declined anywhere near what one would expect. In fact BW, p17, April 7, 2008 shws percentage changes for existing homes from Feb 2007 to Feb 2008 with data from the National Association of Realtors. And they are surprising when you consider sales for the northeast down 26% and prices up slightly 0.4%. Elsewhere the sales are down 29% in the Western states for a 13% price decline, sales down 20% for a 7% price decline in the Midwestern states, and sales are down 22% for a 9% decline in the Southern states. Jobless rates are 3.9% in Austin, Texas and Birmingham, Alabama and only Detroit, St Louis and Cleveland have jobless rates above 6%. What this suggests is that the unemployment situation has not seen the brunt of this credit tightening and drop in capital investment. As house prices have not declined much declines over 10% mostly in the western states and places like Detroit but not in the northeast and across the south, and unemployment still low across many regional communities, consumption spending has not seen the brunt of this credit tightening. Once tightened credit conditions hit payrolls as companies cut their workforce and unemployment moves up then expect to see greater housing price declines as more houses go into foreclosures, and then expect consumption spending to feel the impact which would reduce sales and further trim payrolls as companies run their factories at less and less production capacity. This sequence would continue and bring the economic crisis to more and more parts of the country in a manner that we have hardly see upto this point. What we have seen is the unfolding of a collapse of mortgage securities firms and of mortgage securites insurance providers like ACA, and with it the huge writedowns about $150 billion taken by the investment houses and the banks. And this has happened as a wave of foreclosures took place in 2006. And the collapse of Bear Stearns with the effects felt in global stock markets. In the communities themselves in the areas of consumption spending and in jobs the conditions will only now begin to be felt and the real impact not felt till the end of 2008 and into 2009 with the Fed action to shore up confidence adding several months in slowing the process. See the link to BW, Bernanke the Reluctant Revolutionary, where the BW estimate is that Americans took on about $3 trillion in additional debt between 2000 and 2006 from what they would have taken if they had followed the trajectory of spending patterns that had prevailed upto that point, with their recent free spending ways. It would take abot 3 to 4 years conservatively for Americans to work down all that debt. Another way of saying this is that consumption spending is going to take a big hit and with it sales of companies and consequently higher unemployment and more part time labor force with less benefits, which would tend to depress consumption even more. The winds of housing, credit, consumption and unemployment would all hit the economy in about 12 months time. Credit will further tighten as BW estimates about $130 billion of additional writedowns still expected....

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Peter Coy of Bloomberg Business Week points out that the debt ceiling and proposed deficit reductions in the range of $4 trillion really obscure the real size of the problem which is much larger. The real problems hit when the U.S. faces a larger graying population by 2020 with sharply higher per capita health care spending; and at the same time workers from this generation retire and become beneficiaries of Social Security and Medicare with fewer younger workers to support the system with tax revenues. Another problem is that older Americans are likely as a voting bloc to vote themselves benefits that will cost the younger generation, benefits that the younger generation will not be able to enjoy. Even the Paul Ryan plan with its cuts to Medicare insulated todays seniors from the sharp cuts, as it becomes political necessity for both Republicans and Democrats to shy away from touching the current beneficiaries.

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Erskine Bowles, a former chief of staff under President Clinton, and Alan Simpson, former senator from Wyoming, say the U.S. Supercommittee members should remember that their personal priorities and the common good are not at odds. The authors of the Bowles-Simpson Presidents Commission for deficit reduction say there is growing discontent among voters with politicians who are obsessed with gaining partisan advantage. Using issues of national importance that require a common approach from all parties as a way to score political points will only backfire on these politicians. Personal priorities of members of Congress are now no longer at odds with the common good, they are converging. It is upto the Congress, members of both parties, to push back against the special interests and partisan politics, and show leadership on the deficit. The eurozone crisis has shown the dire consequences of any sluggishness or procrastination. The failure of the political class and leadership in Italy and Greece, and in other nations of the EU, has put the fate of these countries in the hands of markets, which have relentlessly pushed up the borrowing rates of Greece, Italy, Spain and other countries, and taken future direction out of the hands of politicians. Erskine and Bowles say don't wait for a fiscal crisis to take action because it will be disastrous economically and politically, with everyone as losers and no winners. Timidity is not an option, leadership is required to take action that is big and broad, tackling tax expenditures, entitlement expenditures, defense, across the board....

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The TPP as negotiated by Nov. 2015 gives biologics drugs 8 years of protection. Senator Hatch of Utah and the pharmaceutical industry seek 12 years of protection to recoup costly investments in these drugs. Japan says the agreement would be difficult to renegotiate. There is opposition to extending it beyond 8 years in many TPP countries.

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New York state governor Andrew Cuomo says the turnaound in the last 15 months for the state budget shows that things went from "a model of dysfunction to a model of function."

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Yannis Palaiologos, a journalist at Katherimini newspaper in Greece, gives his assessment of the situation in Greece before parliamentary elections in Jan. 2015. He says Samaras's New Democracy Party coalition with Pasok has lost momentum ever since the European parliamentary elections. Yet the left party coalition led by Alexis Tsipras is unlikely to win outright and will need to ally with the centrist parties or the Communists, even with the 50 seat bonus given to the winner under Greek election rules. Tsipras will need to ally with centrist parties and moderate his policies to stay in the eurozone. Chancellor Merkel has said a Greek exit will be manageable. A majority of Greeks want to stay in the eurozone, but find the high unemployment of 25% and steep decline in the economy with a loss of 25% of GDP under continuing austerity policies difficult to accept.

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With high unemployment at 11% in France, only 41% of the people in a Pew Research Center poll gave favorable impressions about the European Union. This is down from 60% in 2012. In Germany 60% of those polled gave a favorable impression of the EU in 2013. The number remained steady in Britain at about 43%.

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Reports from the Sixth China North-South Lung Cancer Summit meeting of 300 experts focusses on controlling tobacco use and promoting early detection and treatment of lung cancer. Lung cancer is now the leading form of cancer in China, with 22.7% of cancer deaths each year. Currently about 1 million die in China from smoking related illness each year. CCTV reports this is increasing by 26.9% a year. Causes cited are aging population, air pollution, and widespread smoking. About one in three of China's people smoke, or about 350 million. Awareness of the dangers of tobacco use is not high outside two or three major cities. China manufactures about 1.7 trillion cigarettes a year, according to CCTV, and tobacco contributes 7-10 percent of state revenues.

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GDP per capita levels in the U.S. expected to return to pre recession levels in 2007 by the end of 2013. Gradual recovery in housing and consumer spending expected in 2013.

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This report says fewer jobs alone is not going to reduce inflation, US inflation is propelled by factors beyond economic theory. The Phillip's Curve is a inverse relationship between unemployment and inflation that was a convenient tool for the 1960's to get the economy to do well with low unemployment at 4% with moderate inflation. It was torn apart by high inflationary expectations in the 70's. In today's world Robert Gordon of Northwestern University suggests central banks consider inflationary embedded expectations, supply shocks and cost push as in the pandemic 2021-2022, and demand changes. The job that Mr. Powell at the Fed has is lowering inflationary expectations by reducing private sector investment and job creation by raising the cost of capital through interest rate increases. Yet today the government is a huge partner in capital investment for America in clean energy and infrastructure building which means job creation remains strong as it has in America. President Biden's effort to reduce pharmaceutical costs and for inflation reduction by fighting price increases through stealth fees, has at the same time cut into inflation. So as lower demand and increased supply in 2022 as the government better manages the supplies of energy, including release of oil stocks from the national reserves. Explained- The Phillips curve is an inverse relationship between unemployment and inflation observed by a New Zealand economist William Phillips in a paper in 1958 based on British unemployment and inflation data1861-1957. Economist Robert Samuelson turned it into a textbook concept as a simple tradeoff in 1960 more inflation gets you less unemployment- which fit the period of the 60's- but warned that it could change over time. Milton Friedman and others during the 1970's period of high inflationary expectations setting rejected it. In reality Mr. Phillips never meant for economists like Samuelson to generalize from his statistical observation of data on the British economy before 1958 and apply it to the US for the closing decades of the 20th much less the 21st century. ...

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Coral Davenport of the NYT provides some of the basics of the Paris climate change agreement. This includes an effort to cut greenhouse gas emissions by half to avoid a situation in which atmospheric temperatures rise by 2 degrees Celsius or 3.6 degree Fahrenheit.  The earlier effort to negotiate an accord failed in 2009 in Copenhagen. This time all 186 countries were asked to signup with the USA and China, the No. 1 and No. 2 polluters and India leading the way. Germany is well on its way to self sufficiency through development of solar and wind energy with the German government leading the way, and France leads in the use of nuclear energy. How did this happen now? As Davenport points out there are scientific studies. But this is not the primary reason China is shifting.Davenport fails to emphasize the health concerns and pollution concerns that motivated China to shift away from coal. China's industrial revolution of the last 3 decades has come at a huge cost in pollution of air and water, and president Xi Jinping has decided to make the shift away from coal a top priority. It is estimated that mortality rates for areas of high coal use north of the Yangzte river have higher mortality rates than areas of lower use of coal south of the Yangzte river. The other big polluter India is shifting because it is learning from China's experience. Davenport mentions the resistance to the scientific evidence in the Republican party. As a result it is already clear that it lacks support in Congress and under a future Republican administration. In a fashion similar to healthcare, president Obama failed to create a consensus before proceeding in the hope that this would be better than waiting. However American industry is already moving away from coal as documented in Links- "The Trump executive order on coal and the continuing shift to natural gas." Utilities in the U.S. are making the shift away from coal because of the economics and planning ahead as governments can change every four years. ...

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Oil prices in the U.S. drop to $55 a barrel on the New York Mercantile Exchange, and $65 a barrel for Brent crude price. Earlier expectation of the impact of reimposed sanctions on Iranian oil shrinking global oil supplies have been reversed with increased production from Saudi Arabia, Russia and the U.S.

Another new development that caused this reversal in sentiment is that the Trump administration granted waivers to some buyers of Iranian crude oil. The U.S. trade dispute with China has also added to this with lower growth forecasts. Unlike in previous years OPEC or Saudi Arabia cannot by itself shrink global supplies with production cuts. The U.S. and Russian output also plays a significant part.

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This report in The South China Morning Post in Hong Kong, gives insights into the Chinese position in trade war with the U.S.  China has its own internal groups which support China being able to take a leadership role in world affairs. Xi Jinping made giving China a prominent role in the world a feature of his presidency. China  has this internal audience and its own sense that China's resurgence was won with hard work and cooperation, plus dedication of the Chinese people. In the past Japan and South Korea also used state subsidized industries, and subsidies to gain leadership in key business sectors involving high technology. China would see this state subsidies model as its own model of development. From this standpoint the U.S. demands on subsidies as unfair competition could be seen as changing a key part of its economic model.  Asking China to put everything in writing and show tangible proof of enforcement as the U.S. insisted in talks, was too much for the Chinese side. China said trust us to do this, and lift the tariffs based on our verbal assurances. The U.S. having seen decades of no progress on this point, wanted tangible proof before tariffs were lifted. Added to the demands on subsidies were the demands for no more of what the U.S. calls stealing of U.S. technology through forced transfer of technology by U.S. firms as a condition to operate in Chinese markets. With the U.S. lagging in 5G technology and Huawei ahead the issue resonates on the U.S. side. Add to this Mr. Trump's key voter base includes the former Democratic party supporting workers who have shifted to him because of trade agreements and policies of Clinton and Obama that hurt American workers through seemingly endless closure of manufacturing plants from Chinese competition.   ...