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Niall Ferguson, a history professor at Harvard, and Moritz Shularick, a economic history professor at the Free University of Berlin, coined the term Chimerica, to describe the Chinese export machine and the American overconsumption right down to negative savings. Now they call it an economic monster that needs to be given a burial. It does little good for America. For America its a 10-10 deal the authors say, 10% growth for China and 10% unemployment int the USA. The mood in the USA is no longer to go on with this arrangement they warn, and ask that the Obama administration take steps to end this arrangement. The USA should ask China to make a 30 % depreciation of the renminbi say Ferguson and Schularick. Krugman makes a similiar point and warns of dire consequences in aworld out of balance on the same page of the NYT, see the link. Ferguson and Schularick point out that unlike China, both Germany and Japan let their currencies appreciate by 60% for Germany and 50% in Japan, at a similiar period in their country's development. China's renmibi is pegged at 6.83 renminbi to the dollar, and China's government used $300 billion in reserves to keep the renminbi from appreciating this year. Throughout the 1980's and 1990's it was pegged at around 8.28 renminbi to the dollar. For the USA this has been very costly, with a distortion in the global cost of capital significantly reducing long term interest rates, and helping create the real estate bubble in the US. They point out that with Japan and Germany dollar reserves increased roughly in line with growth of American GDP at about 1% and stable before moving slighltly higher in the 1970's. By contrast China's reserves have grown from about 1% of Ameica's GDP in 2000 or $165 billion to 5% in 2005 and 10% in 2008 and headed for 12% in 2009 end. This is simply unsustainable any longer; carrying on any longer risks China losing the very basis of its economic success which is the open global trading system....

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Most of the problems in Eastern Europe follow from overborrowing by the privae sector , consumers and corporate borrowing, in foreign currencies. According to David Roche of Independent Strategy, private sector foreign currency debt rose to 126% of foreign exchange reserves between 2002 and 2007. Roche is former head of research and global strategy at Morgan Stanley. As a result he says, 50% of household debt is in foreign currency in Hungary, 30-40% in Poland and Romania, and over 70% in the Baltic states. The debt in lowcost foreign currencies like Swiss Frances, Euros, and even yen, also expanded in the corporate sector. BY mid 2008 non-financial corporate debt in foreign currencies reached over 45% of corporate laibilities in Bulgaria, over 30% in Ukraine and Baltics, and over 20% in Hungary and Russia. To get an idea of the way the foreign subsidiaries of major western european banks expanded their lending, note that lending to homeowners between 2002 and 2007 doubled each year in Romania, rose 60-80% in the Baltics and Bulgaria, rose 20-30% in Poland and Hungary. And lending to corporations grew 20-30% a year. There is aclear suggestio of reckless lending and reckless borrowing in these numbers just as was seen in the way mortgage lending ocurred in the USA. The history of this kind of lending goes back to the reckless lending in Latin America in the eighties that led to lost decades many years before, and is a recurring story. Now Roche sees loss of GDP of 5%-6% for Turkey, Russia, Romania, Czech Republic and Poland, and 8-10% in Hungary, Bulgaria and the Baltic states. That would take 40% of foreign exchange reserves in Turkey,Czech Republic, Poland, Hungary and Ukraine. And this will have a human cost in jobs lost, crime, poverty, and years of progress lost in these countries. And it will ricochet back to the parent companies of the European banks that did a lot of this lending, with $130 billion additional losses, and a loss of 10% of tier one capital (equity capital plus disclosed reserves) of Western European banks....

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Brexit Leave was only supported by a minority of Northern Ireland voters, only 44%. British prime minister May insists that the open borders established through the 1998 Good Friday Agreement will be maintained between Northern Ireland and Ireland. May met with Northern Ireland's leader, Martin McGuiness, following a meeting with Scotland's SNP leader Nicola Sturgeon, to assure other parts of the UK that opposed "Leave" that their views will be respected. May says the union is very important to her, and says about the  border- "We had a common travel area between the UK and the Republic of Ireland many years before either country was a member of the European Union. Nobody wants to return to the borders of the past."

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Ayn Rand's philosophy. She writes in "Capitalism: The Unknown Ideal" - "Economic crises and runaway government power grabs don't just happen by themselves; they are the product of the philosophical ideas prevalent in a society, particularly its dominant moral ideas." Rand says the message in our society is always "selfishness is evil; sacrifice for the needs of others is good." But Rand's message is selfishness rather than being an evil is a virtue." Adam Smith wrote about this but in adifferent way, saying that man looks to people around him and is looking for the respect of his peers, this itself is a needed good, something that men and women need badly, the respect and esteem of their peers. For this reason they temper their selfish actions for the common good, or this motive can be tapped for the common good to emerge from self interested actions. The question and the answer not like Rand's which is categorical, is put by Smith in the context of how a man views his actions, and what is best in his enlightened self interest. The answer depends on the values in a society at a particular time, because if everyone is pursuing this self interest by distorting things so that he can pretend to himself that he is doing something for an enlightened motive when there are the crasses motives behind it, like Mr Mozilo of Countrywide promoting mortgages for the poor and unqualified, and society or his peers don't call him to account, or others of more respectable background like Mr Thain and Mr Rubin and many others do the same in nore fashioable ways, then the whole fabric of society is corroded. When the fabric of society is corroded then it doesn't matter which philosophy is held, Marxist, libertarian, free enterprise, right or left as used up terms, because its moral underpinnings which are the only true support are corroded. This may be the reason Smith wisely talked about this in somewhat moral undertones such as winning the respect of peers in society for what you do, given that society had the moral element built into it its mores, customs and ways. This is the difference between Smith and Rand, and Smith and Marx, and Smith and other philosophies that are categorical and rigid. That Alan Greenspan was a member of the Collective or group that was closely associated with Rand, and with Rand's philosophy, may have put blinkers or concealed things from him, which he might have seen if not biased by such views of categorical and rigid nature about the virtues of laissez fairre capitalism in all situations. Reagan's admiration for Rand also may have created a bias in favor of laissez fairre capitalism, when what was needed was an effort to avoid excesses in the other direction of state involvement, without getting tied down to some rigid philosophy that might seriuously impair one's ability to respond in a very different situation of excess in another direction, of individuals promoting their self interest to the ruin of the economic fabric of American society....

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The startling truth about health "reforms," - they won't control spending, and without that the whole system of health care will rapidly become unaffordable and unsustainable. Obama's Council of Economic Advisors points out in new report that since 1975 annual health spending per person, adjusted for inflation has grown 2.1 percentage points faster than overall economic growth per person. At this rate health spending which was 5% of the GDP in 1960, and is 18% of GDP today, would grow to 40% of GDP in 2040. Medicare and Medicaid would increase from 6% of GDP now to 15% in 2040, or equal to three fourths of federal spending. Employer paid insurance premiums for families which grew 85% in inflation adjusted terms from 1996 to $11,941 in 2006, would increase to $25,200 by 2025 and $45,000 in 2040. This would force employers to reduce take home pay. Samuelson says the uncontrolled health spending is singlehandedly determining national priorities, reducing discretionary income, raising taxes, widening budget deficits and squeezing other government programs, while it is producing large amount of waste in medical spending. See the link to Prof. Tyler Cowen of George Mason University in NYT, 6/14/ 2009, who cites the habit of doctors to write many expensive tests as one of the prime culprits in the wasteful spending. And in the process it delivers higher cost for lower overall quality of health for the American people. This at a time when many European countries provide live examples of doing it in a better way- lower cost, better health. The serious problem with the Obama health reforms says Samuelson is that it talks about restraining spending but may end up increasing spending. Its talk about controlling spending he says is good intentions, but based more on hopeful thinking, public realtions and risks becoming cosmetic reform. Because to really control spending will require coming to grips with its fundamental cause- hospitals and doctors are paid mostly on a fee-for-service basis and reimbursed by insurance, private or governmental. Such a system encourages doctors and hospitals to provide more services, expensive tests, favors heavy use of expensive medical technologies to increase profits, and for patients to expect them. Samuelson puts his finger on the root of the problem - there is no incentive and every disincentive for all the players in this game , doctors, hospitals and patients to seek reform of this system. For doctors and hospitals the hope would be that this cosmetic "reform" would leave the system basically unchanged, and patients to continue with a lifestyle and expectations that do not not acknowledge the fact that a lot of healthcare does not come from spending but from preventative care, education, good eating and exercize habits, and healthy lifestyles. And the uninsured are no exception, they would simply start consuming the expensive care for lower quality of overall health like everyone else. With this kind of situation confronting us, the views of Samuelson, and Professor Tyler Cowen of George Mason University, as welll as a growing chorus of informed public opinion on this subject, is that insuring the uninsured is a good idea, but doing it within the bounds of the present system, can only increase the costs. And too much is at risk, to rely on what Samuelson calls a scattershot of measures to control costs made up by Congress such as "evidence -based guidelines," "electronic record-keeping," "bundled payments to hospitals, to give the illusion of progress that won't make a serious difference. A sweeping restructuring of health care is needed, that would overhaul "fee-for-service" payment and reduce the fragmentation of care. It will also need what has not even be touched on adequately in the debate. This is the massive need for education in the schools about nutrition, eating, exercize, healthy lifestyles. It would also require opinion leaders in each field from sports and other fields to lead by example and with constant public presence, the media, and companies to form a partnership with private institutions to change existing eating habits and lifestyles that encourage obesity, smoking, fast food eating habits, large portions in restaurants....

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Parussini describes the different style of new RBI Governor Urjit Patel, who is no rock star economist like his predecessor Raghuram Rajan. Rajan is quoted as once saying; "My name is Raghuram Rajan and I do what I do." Rajan engaged widely with the media. At his first press conference Patel made a short statement thanking RBI staff, and turned it over to staff at RBI who talked about financial supervision, banking regulation and other issues. Patel's answers were short without follow-up questions, the whole event over in 20 minutes. Patel was chosen by the new government of prime minister Modi to run RBI in 2016.

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Hillary Clinton attacks Trump's policies in an address in Warren, Michigan, saying this was another version of failed trickle down economics. She called Trump's idea of taxing pass through entities such as small business reporting business income on individual tax returns at 15%, as a "Trump loophole." On trade policy Hillary Clinton said she would oppose the TPP or Trans- Pacific Partnership Trade Agreement that president Obama has supported. She put it flatly- " I oppose it now. I'll oppose it after the election, and I'll oppose it as president." And pointed out that too many companies have moved jobs overseas and "moved operations overseas and sold back into the U.S." after pushing for trade deals. The answer she said 'is not to rant and rave- or to cut us off from the world," in reference to protectionist policies Trump has supported. 

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The Chinese government is concerned that lack of a safety net, fears about a general access to health care, and lack of other assistance for the farmers, elderly, rural poor, lack of unemployment protections and welfare, all are making Chinese to cramp up and spend less. Chinese households save a quarter of their income in normal times, now unless the government steps in a big way, which it has done only in small faltering steps, savings will increase even more in response to fears about the future. Lu Mai, secretary general of the China Development Research Foundation, says China has reached a point where it has to make a big decision, does it spend more on security and the police or on social benefits. He put out a report last week which estimates the government needs to spend 2.6 trillion yuan or 380 billion dollars by 2012 for the first phase of a social safety net. With a further spending of $838 billion dollars by 2020 to complete the improvement of health care, education, pensions for the elderly, low income housing, disability benefits, unemployment protections and welfare for the poorest. And these estimates may be low depending on the assumptions made, as the situation has taken a steep descent from the time these estimates were probably made. In the last few months tens of millions have been added to the jobless, and the severe drought has created a difficult situation on the farms in rural areas, even while millions of migrants return to these rural areas as businesses dependent on exports collapse in cities in coastal areas. What is the government allocation at this time? A target for health care overhaul of $124 billion was set recently. But the actual stimulus package is heavily skewed in favor of infrastructure and investment in construction. About 1% of the big stimulus package that was announced goes to health care and 7% to public housing. Says Zhuang Jian, an economist with the Asian Development Bank, this excessive investment in infrastructure, heavy industry and manufacturing will cause serious problems, if there is not strong consumption to match it. And Eswar Prasad of Cornell University, who was head of the China division at the IMF, says that an ambitious agenda is needed for higher social spending to take away the fears of average Chinese about the future. Chinese premier Wen says the government needs to do more, but the instincts of China's planners, and decades of development with built in incentives for promoting investment in construction, infrastructure and industry, have left China with huge unsustainable underinvestment in basics like education, health care and social benefits....

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Dallas Fed president, Richard Fisher, says the Fed cannot create jobs, and why he is opposed to the Bernanke quantitative easing policy.

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The U.S. National Security Agency is going through four separate reviews- one by a White House internal review team, by the Review Group for Intelligence and Communications Technology setup by president Obama in August 2013, by the Privacy and Civil Liberties Oversight Board setup in 2004, and by the Senate Intelligence Committee. Sources say the head of the agency Gen. Alexander offered to resign but this was not accepted because it would be seen as a win for Snowden. Proposals being considered are having a civilian head the agency, setting up a process where a determination is made balancing the potential value of the information with any political implications. Decisionmakers at the NSA are trained to be apolitical in collecting intelligence making it difficult for them to make such determinations. The recording of conversations on Merkel's mobile phone was made at the request of the State Department. Mr Ledgett, a senior NSA official says there are 36,000 pages of "requirements" or intelligence requests from all parts of the U.S. government, including State, Defense, and Commerce. What to do with such requests and how to assess them will now be important questions for NSA. One of the risks of the NSA revelations is that individual countries will impose restrictions on the internet to protect information leading to a fragmentation of the Worldwide Web. U.S. relations with Iran have remained stuck in the original atmosphere of the period under U.S. president Carter in the late seventies with the Islamic revolution with the most recent president Ahmadinejad being one of the activists from that period, the isolation and sanctions have also created a siege mentality in the Islamic republic. The U.S. and the world has changed since that period after over three decades. The Obama administration sees an opportunity to gradually resolve the Iranian nuclear crisis by relaxing tensions and giving small wins to moderates in Iran like Mr Rouhani. Rouhani may see a way out for Iran's isolation and falling behind other countries in the region in developing its oil resources and economy. The moves also helps to reduce new sectarian tensions in the Middle East as the different countries take sides in the Syria....

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Young people in Taiwan voted against the Koumintang party government's policy of building stronger trade ties to China. This has weakened the administration of president Ma Ying-jeou, and turned it into a lame duck administration till presidential elections in 2016. Voters focussed on income inequlaity and wage stagnation. The issue of ties with China also were part of the campaign. DPP party won 13 of 22 seats for city and county heads in the election.

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Bernanke in reflections on his policies for quantitative easing in response to the 2008 financial crisis, says the policies were intended to protect Main Street and the average American, even though this is not readily apparent. He says the policies did not lead to inflation as critics have stated, and one has only to look at today's inflation statistics to know this- referring critics to the government CPI report in Jan 2014 that consumer prices went up by 1.5% in 2013 and less than 2% for 2012. Bernanke says he hopes he took the right actions, and still retains the conviction that the American economy will recover losses from the 2008 financial crisis- even though the answers to this questions won't be seen for some time.

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The U.S. Census Bureau shows incomes of American households, the median household income, surged in 2015 by 5.2%. This increased by $2800 to $56,500. This is the largest increase since 1967. It shows that steadily improving employment and hiring is leading to improvement in incomes for the middle and working class. Ris in minimum wage has also helped . The largest increase was for the lowest 20% of the income tiers. Full time working women did better than men, with increase annually of 2.7% for women, and 1.5% for men. Nocitizen incomes increased 10.5% to $45,100, native born households went up 4.4% to $57,200. The number of people without health insurance also declined from 33 million or 10.4% of the population to  29 million people or 9.1%. Another way the changes are helping lower income households is the decline of the official poverty rate to 13.5% in 2015 by 1.2 percentage points from 14.8% in 2014. Through a series of small incremental steps the path is being set for a recovery of household incomes for the middle class and working class. A bright spot is that the improvement has affected all age groups, household types, regions and ethnic groups, though among full time workers women did better than men. In this recession older white men have had more difficulties getting back into the workforce. This is reflected in the political scene in 2015-2016 for the election season. ...

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U.S. Federal Reserve chairman Bernanke, says the Fed will keep interest rates low till unemployment reaches 6.5%, as long as inflation remains at about 2%. If unemployment reaches 6.5%, and this is because more people are dropping out of the labor market, he will take this into account. If unemployment stays high the Fed indicated in its statement that it would tolerate a higher inflation of 2.5%, as long as the longer term outlook was for inflation to be at 2%. Bernanke said this doesn't mean monetary policy is on autopilot, because the Fed will watch conditions carefully and will leave room for flexibility- keeping an eye out for new asset bubbles that could develop, and monitoring labor market conditions and inflationary pressures and inflation expectations. If inflation falls well below 2%, or unemployment rate falls mainly because of people dropping out of the labor market, the Fed may continue to keep interest rates low. This policy was announced as U.S. fiscal cliff deficit negotiations continued in Dec. 2012 with one scenario being considered by both political parties being going over the Jan. 1 deadline before coming to an agreement. Bernanke pointed to this, saying "this is a major risk factor right now." The Fed's activist policy in economic policy has given financial markets and business a measure of stability not provided by government and Congress. Fed policy is to buy $40 billion of mortgage securities, and $45 billion of long term Treasury securities for each month in 2013. It will fund the purchases by adding reserves to the banking system, which is to say that it will print money to buy more bonds. This is a major decision by the Fed in that the Fed has shied away from unemployment targets in the past. Bernanke described this action as a new"automatic stabilizer" in the U.S. financial system- if unemployment rises investors know this pushes the Fed's interest rate increases further down the road and would drive interest rates down, if unemployment drops sooner than expected, investors anticipating Fed's rate increases would drive long term interest rates up, to keep stable growth....

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Anti-immigrant sentiment in the city of Dresden,in the former East Germany. Sentiment is muted compared to places in the western part of Germany, because only 2% of the population in the east are foreigners. It is also muted in comparison to France, because of low unemployment.