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Private equity firms loaded their companies with a lot of debt and now the debt payments come due at the worst possible time when they are frozen out of the credit markets. While experts like Kaplan at the University of Chicago think that while things may not be pretty it may not be as bad as 1986-89 when a lot of companies defaulted on their debt, and private equity firms like Blackstone and others are more long term investors than hedge funds, this downturn may be different from any other in the postwar era in its prolonged nature and depth and global impact. Already even the most optimistic experts like Rogoff are saying it could be ten years.

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The lengths airlines are going to reduce fuel costs including using 757' s on long haul routes and short haul planes on long transatlantic flights.

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With 14,000 sold in the USA and a year long waiting list Smart cars have taken off even in the USA. MOst buyers are status conscious and buy it for the statement it makes about them and being affluent they go for the more upscale version of the Smart cars. Toyota is also coming up with acar like the Smart called the iQ and it will seat three but sits lower than the Smart.

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Showing how much the Social Democratic party in Germany needed to show progress on key issues Martin Schulz of the SPD was ordered by the party to bring up contentious issues in negotiations relating to social cohesion. One was the two tier system in healthcare where some are able to pay for more privileges in the nation's health care system with private insurance and others are in the public health system. The other issue is the ability under current German law for companies to issue 2 year temporary contracts. The SPD party did badly in the last elections because working class voters do not see it fighting hard enough for worker rights and ensuring an equitable system.On the health issue a commission will look into how the system can equalize medical fees between people privately and publicly insured. On the employment issue companies can only terminate without cause in 1.5 years instead of the 2 years. Small compromises, yet in long negotiations with a 24 hour session for a breakthrough and everyone exhausted, the snail's progress over 13 days and one night worked to set up a new coalition after all. Still one hurdle remains- getting the SPD membership to vote yes even though its youth wing is opposed. ...

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This editorial in the WSJ points out that it is not enough for a country to vote to leave the European Union. It must be ready to leave the EU, as it says happened in the case of Greece. Greece was willing to leave the EU but not capable of going it alone. This is true of Britain as Britain cannot bear the economic cost of losing the advantages of trade and commerce without serious consequences. Mrs. May's deal for a permanent customs union, a trade deal that mimics Norway's one with the EU, is not fully supported within her own party. Preserving relations with Ireland and Northern Ireland are important and some Brexit Leave leaders have alienated the Irish.  As the WSJ puts it GDP growth obscured regional disparities and shortfalls in productivity and innovation- so that businesses are right to warn of the consequnces of a hasty Brexit or a no deal Brexit. In short, Britain cannot afford to lose the trade benefits of EU membership. This should have been known from the beginning on all sides to avoid what has been a 2 year long fiasco which will affect Britain's future. A strategic error has been made by Brexit supporters in not thinking things through before launching out into the referendum. ...

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President Trump announced that he is declaring a national emergency to bypass Congress and pursue building a wall on the U.S.-Mexico border. This comes as the president accepted $1.4 billion, a fourth of the $5.7 billion he had asked for from Congress. Mr. Trump hopes to add additional funding by declaring a national emergency as the U.S. Congress turned down his request for a longer wall. Congress only included funding for a 55 mile long fence along the Rio Grande River at the border with Mexico. To keep a campaign pledge to build that wall Mr. Trump acted with the support of Republicans including Senator Graham. Trump said he expected that "we'll be sued, and they will sue us in the ninth circuit, and then we will end up in the Supreme Court and hopefully we will get a fair shake." Under Trump's declared national emergency about $3.6 billion would be taken from the Pentagon's military construction fund and $2.5 billion from the Pentagon's drug interdiction programme. This will be challenged in the courts. Trump is under pressure from his support base to show that accepting the Congress offer of $1.4 billion and a 55 mile fence was equal to surrender. ...

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Francois Hollande, Socialist candidate for president in France, has led the Socialist party for many years. He started his career as a junior politician in the Mitterand government, and regards Mitterand his mentor. Another mentor is Jacques Delours, who was president of the European Commission. He has many years of training, and has persevered thorughout with a certain sense of humility in the midst of colleagues and politicians in France with larger egos. That inner strength and courage has emerged in the recent campaign appearances and the final debate with Sarkozy in April 2012. He has shown this in the recent campaign by not overstating expectations as he looks at the long term, and at the same time not understating when courage demanded a stronger statement. He has taken timely and effective positions in the current debate of austerity vs growth, or growth coupled with restraint in fiscal spending vs austerity, that is raging in Europe. He was quick to call the situation in Greece, a failure of governance in Europe, as well as a failure of governance in Greece. With the new voices of Premier Monti in Italy and ECB president Draghi from Italy, pushing for growth coupled with fiscal responsibility, a president Hollande in France, would add another voice to European aspirations for growth in the debate with Angela Merkel's Christian Democrats in Germany. ...

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U.S. Federal Reserve governor Daniel Tarullo tells the Council on Foreign Relations that so much remains to be done four years after the financial crisis. The law firm of Davis Polk says 67 percent of deadlines were missed for new rules required to be set in place by the Dodd-Frank legislation, including the Volcker Rule. Tarullo said: "It is sobering to recognize that more than four years after the failure of Bear Stearns began the acute phase of the financial crisis, so much remains to be done." Tarullo fears that crucial momentum may be lost because of the long delays stemming from resistance by the banks. Tarullo met with bank CEO's in April 2012. Banks have protested that Fed stress tests have not revealed the parameters for the testing. Tarullo's response given at a recent Fed conference in Chicago were that this would let banks game the exercize by running the Federal Reserve model and not improving risk management and capital planning, making this a mechanical compliance exercize. Banks have particularly opposed a requirement that limits the risk in business between two banks to 10% of their credit risk....

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US differences with Pakistan are based on two different perspectves that are not reconcilable. Recent events and the relationship between the US and Pakistan's army chief have confirmed that this is not going to change. US sees militants and Taliban inside Pakistan as havens for the short term as the US disengages from Afghanistan, whereas Pakistan's army sees them as useful elements in Pakistan's security interests in relation to India for the long term. Whe Kayani met with Obama in Washington, he handed Obama a 13 page document showing Pakistan's strategic perspective and emphasizing the gap between short term US interests and Pakistan's long term interests. The Wikileaks cables show Kayani discussing with US officials a possible removal of President Zardari and his preferred replacement. This made Kayani, normally reticent, to rant for hours on the irreconciliable differences between the US and Pakistan with a group of Pakistani journalists. He described Pakistan as the US's "most bullied ally," and said the frames of reference of the US and Pakistan regarding regional ssecurity "can never be the same," according to news accounts. And added that "the real aim of US strategy is to de-nuclearize Pakistan." Holbrooke and Admiral Mullen had hoped to reverse "a trust deficit" between the two sides. But this has not happened. General Petraeus is taking a tougher attitude and patience is thin on both sides. According to a Kayani friend, air marshal Chaudhry, Kayani is always asking Petraeus what the strategic objectives are in Afghanistan. US officials say they have given up on changing Kayani's thinking and that Kayani has told them: "I don't trust you." Kayani's position makes sense when one looks at the strongly anti-American public in Pakistan. Pakistani military and intelligence officials say a campaign against militants inside Pakistan incites domestic terrorism and uproots local communities. And by following Pakistan's own interests and frames of reference Kayani sends signals that win esteem among the Pakistani public. Opinion polls now show the military held in higher esteem than the Zardari administration. This puts the US in a no-win situation in Afghanistan with no clear objectives for the long term. This leaves the US in a time of tight budgets stretched thin to meet the needs in other defence areas that need attention, such as modernization of forces, trouble spots such as Korea, Iran and elsewhere, and resources needed for modernization of US infrastructure and supporting new technologies and industries. The lasting solutions that will take time, careful thought and preparation would be to integrate South Asia as a whole into an economic zone, extensive infrastructure building, and bring India and Pakistan closer through diplomacy and negotiations. See the articles by Richard Haas and others on the need to redirect resources. ...

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John Hills, a law professor at Indiana University and author of "The Political Centrist," says tough political exchanges are endemic to the American political system. Others say putting crosshairs on representatives in Congress like Giffords on websites or its equivalent wasn't the practice since the times of Jefferson and Adams. We looked at the letters of George Washington during the long struggle with the British and it showed composure and civility even in dire circumstances and difficulties. Criticism by Washington of the lack of help and risks he was exposed to throughout the war was worded carefully, with civility and yet conveys the great urgency. What about the letters of Jefferson and Adams who were on opposite sides of the debates of that time, a time more infused with momentous issues because of the French revolutionary tide in those years? A letter to Abigail Adams, from Washington, June 13, 1804, gives a glimpse of that relationship: "The friendship with which you honored me has ever been valued, and fully reciprocated, and altho' events have been passing which may be trying to some minds, I never believed yours to be of that kind, nor felt that my own was. Neither my estimate of your character, nor the esteem founded on that, have ever been lessened for a single moment, although doubts whether it would be acceptable may have forbidden manifestations of it. Mr Adams friendship and mine began at an earlier date. It accompanied us thro' long and important scenes. The different conclusions that we had drawn from our political reading and reflections were not permitted to lessen mutual esteem, each party being conscious they were the result of an honest conviction in the other. Like differences of opinion existing among our fellow citizens attached them to the one or the other of us, and produced a rivalship in their minds which did not exist in ours." Jefferson in this letter says that one act of Adam's gave him a moment of personal displeasure, the last appointments by Adams as President "from among my most ardent political enemies." This says Jefferson "laid me under the embarrassment of acting thro' men whose views were to defeat mine, or to encounter the odium of putting others in their places...If my respect for him did not permit me to ascribe the whole blame on the influence of others, it left something for friendship to forgive, and after brooding over it for some little time, and not alwasys resisting the expression of it, I forgave it cordially, and returned to the same state of esteem and respect for him which had long subsisted...I maintain for him and shall carry into private life an unform and high measure of respect and goodwill, and for yourself a sincere attachment."...

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Roshe gives an independent view of whats happening in the economy and sees a recession, sticky inflation that will last a long time for the US and the world economy in a semirecession for a long time. Roche of independent Strategy consultancy in London does not see the Fed's actions to increase liquidity having any effect in resolving the issues of solvency which have resulted from the overleveraging of brokerage and mortgage firms on Wall Street, only exacerbating the effects of a weaker dollar and higher inflation over the longer term. He points out that hedge fund and broker balance sheets or nondeposit financial institutions (NDFI's) half the size of banks in the USA and a quarter of the size of banks in Europe have their assets and liabilities financed by repurchase agreements. They lend and borrow against the collateral of assets that are marked to market, which means that they can borrow more and easily in a rising market cycle and can borrow less and with more difficulty in a falling market cycle. With the contracting cycle in place now they are facing insolvency issues. This may have been delayed till now because of investment banking profits and having credit lines for the duration of a contract. Till now investmet banking profits gave them leverage over lenders who made money from fees in investment banking. Now the banks hurt by writedowns of loans in mortgages and other areas are likely to tighten lending and call in their loans. What the Fed's actions will do is delay things a bit but not prevent a credit contraction and fall in asset prices. David Roche was Global Strategist for Morgan Stanley before starting Independent Strategy to provide fresh thinking and new insights on financial markets. His estimate is that reduction in available credit for corporate investment in technology, R&D and factories as a result of contraction in the financial system will require reducing corporate debt ultimately by 11-12 %. This will generate a loss of 5% points of real GDP growth for the US and put into a recession. For Europe he estimates loss of 2% points of real GDP growth. Global credit losses of $1.4 trillion would cause a contraction in world GDP of 2.5 percentage points or half the current rate of growth. For the global economy he sees a gray dull world of semi-recession and stickly inflation that will last a long time even without any major policy blunders. If this is original thinking and he is right then the Fed, the IMF, the Council of Economic Advisors, and general thinking on Wall Street that sees a short recession lasting several quarters may be in for a big shock....

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Politicians, militant groups, intelligence agencies and security forces, unsettle the Kashmir valley, at a time when Pakistan faces a serious economic crisis, and India faces a slowing down and inflation also. Changing the demography of Kashmir and the dispute over 99 acres seems rather phony and it shows that political unrest can be whipped up when there is such a long legacy of conflict even when the conditions worldwide in developing Asian countries are shifting to modernization.

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This WSJ editorial on the sliding scale with lower capital gains taxes for investments held for a longer time frame proposed by Hillary Clinton, says there is no economic theory that shows one or two year investments are worse than longer term investments, and says investors who invest in startups and cash in after a year or two can then invest in other startups increasing investment capital. It points out that new startups are fostered better in an environment where capital gains taxes do not promote holding investments for a longer term. Hillary Clinton is calling for higher capital gains taxes on shorter term investments. The current rate is similiar to the 20% rate under Bill Clinton. George Bush lowered it to 15%, and president Obama increased this to 20% for couples earning more than $484,851 a year, and added a surcharge of 3.8%. Under Reagan it was initally 20% in 1981 and in 1987 as part of tax reform cutting the top income tax rate to 28%, it was 28%. Hillary Clinton's plan is for it to be based on how long investors hold their investment discouraging 1-3 year investment horizons- Year 2- 43.4%, Year 3- 39.8%, Year 4- 35.8%, Year 6- 23.8% or the current rate for the highest income bracket. Investments in infrastructure and long term research projects leading to new technologies and products require a longer horizon encouraging such investments. The Clinton plan appears to be a response to the tech bubble with investments in small tech changes and software improvements that have led to surging investment in startups in social media and other areas which have not yielded the productivity gains needed to support increase in wages- resulting in low productivity and low wage gains in the last decade....

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The Economist magazine points out that the higher reserves in emerging markets (estimated at $7.7 trillion total by The Economist), flexible exchange rates, and smaller current account deficits, make this a different situation compared to 1997. Only countries like Argentina, Turkey, and Thailand pose higher risks because of political uncertainty and failure to adopt the lessons of the 1997 crisis. China, Russia and Brazil have large reserves to cope with the crisis. Emerging markets will have to adapt over time and the gradual tightening anticipated under an employment levels conscious Yellen would give them the time to make the changes needed.

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Tokyo has the reputation for being the city with the longest working hours. Overwork leading to death has a term for it in Japan- "karoshi." But this is changing. Recent studies show Mumbai as the city with the longest working hours per worker per year at 3315 hours. The Japanese government had a law passed this year limiting legal overtime work to 45 hours a month, with an extension in busy periods to 100 hours for a maximum of 6 months. Yet the culture is taking time to change, even though long hours often leads to low productivity. It does not mean productivity is high in Mumbai or Tokyo. Dublin, Ireland has one of the highest productivity scores, workers in Dublin worked 1856 hours a year and still created $84 in GDP every hour- compared to this in Mexico City the third hardest working city had only $18 in GDP per hour. This is calculated by dividing GDP by the hours worked. Occupational health psychologists say working longer hours can be less productive because of the drain on performance, resulting in poor concentration, memory and compromised problem solving and creativity. The lack of rest means resources are not replenished with rest, and can deteriorate physical and mental health. Singapore a fairly liveable city has the highest percentage of people working more than 48 hours per week, in a Kisi study. Suggestion for work life balance include taking holidays and short breaks, and switching off from work mentally, using mindfulness and meditation. Practicing self-compassion and prioritizing self-care is needed. ...

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AARP shows 29 million Americans working and taking care of older parents. Many work 40 hours a week and work an additional 20 hours helping elderly parents. About six out of ten people of this 29 million work full time. In 2024 a lot more people are living longer and older people prefer staying in their own homes and need help from family members. A simple fall or a cancer diagnosis can lead to long hospital stay, months of treatment, and worrying for family members. Company benefits in 2024 do not include senior or eldercare support or even accomodating employees caring for their parents. In America today federal and state laws do not protect people caring for elderly parents from discrimination in the workplace. Consider how this is affecting companies, as about one third who are caregivers say they are going to leave, and half of the employees leaving are senior manager and executives with much experience. This comes to about 5 million senior managers and executives that American industry can ill afford to lose as it competes with China, India and Europe. About half of all companies are making this a priority in 2024, according to Care.com. Citigroup added 2 weeks of paid leave to care for immediate family member. Companies allow employees to add older parents on their health insurance. These benefits are being added to maternity and paternity leave. The fact that Congress and state legislatures have failed to enact laws protecting caregivers is one more reason for the discontent and unrest in the US after the pandemic. ...

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Roland Arnall who sold his Long Beach Mortgage Company to Washinton Mutual which became WaMu's subprime arm, and ran his own mortgage company Ameriquest. He helped start the whole subprime business when in the early 1990's his company Long Beach Savings and Loan began selling subprime mortgages to financial instituions on Wall Street, where the mortgages were packaged into securities and sold to investors. This packging of securites backed by mortgages and later the shopping for ratings which enabled these securites to get the the AAA rated seal of approval was to get this business the financing and backing on Wall Street. Ameriquest was invoved in questionable practices in its lending. His company and its 270 offices closed in 2006 and $325 million was put up by his holding company ACC Capital Holdings to settle regulators claims of charging excessively high mortgage rates. His origins are with a family that survived the Holocaust by taking refuge in a Catholic church and he became an altar boy, and later immigrating to the Los Angeles area. He was diagnosed with late stage cancer in March 2007 and died the same month. This is one of the individuals who pioneered the whole business of packaging subprime mortgages as securities. ...

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The port of Long Beach which takes in 20% of the container shipping of the USA,, and is next only to Los Angeles port in container shipping, is becoming a story of two economies, the American and the Chinese. Thousands of cars from Toyota, Nissan and Mercedes are piling on port property turning it into one huge parking lot, as dealers across the country say they have no need for them, and piles of paper and metal baled together to be shipped back on these ships to China to be recycled into cardboard for export boxes are also piling up as China no longer needs them. The drivers who drive the trucks are also being laid offf and looking for new jobs, which are signs that a deeper economic downturn is underway and the the Detroit automakers GM and Ford CEO's who told the Banking committee that they are making their estimates for 2009 on the basis of a 13- 14 million vehicle sales year may be in for another rude shock. The figure for the last quarter may be running at 10 million, and if this continues into 2009 as its expected to do, even the producton of cars after accelerated plant closures may have nowhere to go in 2009. Which is why there are so many questions about what is going on in the auto industry and so much need for candour and frank discussion that was missing in the evasiveness apparent in the Senate hearings on November 18, 2008, as CEO and union president skirted around the issues and senators failed to ask many other questions like these on what is happening on demand as well as many others....

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This editorial in the Wall Street Journal says the U.S. presidential election in 2016 now looks like a referendum on safety after the Paris attacks. Rand Paul's chances are seen as nill because his policies, says the Journal, most resemble U.S. president Obama's. Hillary Clinton's comments about the need to defeat not just contain terrorism are seen as distancing herself from Mr. Obama, but the situation in Libya is seen as happening under her watch. The WSJ editorial lists a long list of the situations it has warned against in 2012-2015 since the Arab Spring led to the current situation in Syria, Iraq and Libya, the millions of refugees in camps in Jordan and Turkey, and the refugee movement to Europe.

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Tom Friedman makes the case for a gasoline tax. As the US engages in Afghanistan, Iraq and considers the cost of health care and a large deficit, he argues that 45 cents of each dollar of agasoline tax should go to paying down the deficit, 45 cents to pay for healt care, and 10 cents to pay for cushioning the burden of agasoline tax on the poor and people who need to drive long distances to work. Energy Economist Phil Verlager says that a$1 tax on gasoline and diesel fuel would raise $140 billion a year. Mention of the gasoline tax is considered risky by politicians of both parties though it would reduce gasoline consumption and dependence on imported oil.