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Of 21 reader comments to this piece on banker pay, all except for 4-5, were very critical of the bankers behaviour, including many of their colleagues in the financial industry who commented. The lack of any response from the FSA on the grounds that its not the FSA's job, or from the Treasury, is disconcerting. Treasury is said to have not said a word, when RBS hired a head trader for a rumored 7 million pounds. All this coming on the heels of the RBS and Lloyds debacle, makes the Labor government open to attack from the Conservatives under Osborne and Cameron. and from Mervyn King of the Bank of England. They have expressed strong disapproval of the busines as usual attitude of bankers.

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ZTE of Shenzen, China has 3% global market share and has a new model the F230 which can show streaming video at broadband internet speeds. ZTE will double its cellphone sales to 60 million this year. In the mobile phone business things can change very quickly. The market for mobile phones can change very quickly, is defined by a younger demographic that loves to try new things, and where new technologies and capabilities get incorporated very quickly and in new combinations, navigation, video, broadband, different market segments from the lower end to the upper end especially in developing countries of Brazil, India and China, and the constant competitive churn that brings in new technologies and new companies like ZTE into the market. Upper management at Nokia realizes this as Motorola twice came up with hit models the Star-Tac and the Razr in 1996 and 2005, and each time falling behind after the one time hit. Motorola is even looking at exiting this market. New competitors are in the field with Apple's I-phone in 2007 and with Google and Microsoft developing new software for this market. It requires not just a product hit but a management team and a structure for manufacturing and distribution that is strong and resilient enough to respond to the changing market and to anticipate market trends that are just taking shape and to have the cultural mindset in management at upper and middle levels to deal with huge fast growing markets like India and China, and also Brazil, Russia and other developing countries in Asia and Latin America and Africa where the nature of the demand is different and varies among the different regions also. Nokia has come closest to putting this capability together. It has market share of 40% in this global market with sles in India of 8 million phones a month. There is room for competiton as competitors like Samsung sell about 200 million cellphones a month and are growing at 25% a year. Nokia is also taking a new approach to stay ahead. Its buying smaller companies and developing in-house technology to build its own mobile services business named Ovi. It acquired a number of software companies, acquiring Navteq for $8.1 billion for software on satellite location services. It has its own web portal and and lets wireless providers like Vodafone and Verizon offer their subscribers the option of using portals of Vodafone, Verizon or Nokia's....

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Sheila Bair says she fears the next crisis will start in Washington. Bair points to the need for urgent action along the lines recommended by the Bowles-Simpson Deficit Commission. Areas identified by Bowles-Simpson should be tackled as early as possible, she says - tax subsidies for housing and health care that lead to misallocation of resources, defense spending, special-interest provisions. She points out that the increase in the deficit is a result of the unwillingness of governments over the last two decades to make the hard choices necessary to control the structural deficit. Total federal debt doubled in the last 7 years, to almost $14 trillion, or about $100,000 for every American household. Bair, as Chairman of the FDIC, played a critical role in the efforts to control the US financial crisis of 2008-2009. Relentless federal borrowing she says, undermines the confidence private investors have in US government obligations. The cost for bond investors and others to purchase insurance against a default by the US governmet went up from 2 basis points in January 2007 to 100 basis points in early 2009, and is now at 41 basis points. With 70% of US Treasury obligations held by private investors scheduled to mature in 5 years, a decline in investor confidence would lead to higher government and private borrowing costs. She writes this just as the debt crisis in Ireland is taking place, following the one in Greece, and contagion to Portugal and Spain is feared. Bair fears a similar loss of confidence in US public debt. High and volatile interest rates could lead to losses for financial institutions holding Treasury debt and raise funding costs for depository institutions....

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Investors put in $136 billion into startup companies in 2018, and $141 billion in 2019, as reported in this WSJ article on startups. Before this it peaked at $75 billion in 2000 and did not recover after the 2009 financial crisis till 2014 when it reached about 75 billion dollars.  Much of the increase in money that did not go into infrastructure at low interest rates below zero appears to have been wasted as the ideas for startups declined in quality in the years 2014-2019. Softbank put up a Vision Fund which has run up billions of dollars in losses including a disastrous investment in WeWork. The resistance to shifting all the money at low interest rates to infrastructure has faded with the election of president Trump supported by a Republican party that puts the American worker first for job retention and expansion, and America first in world trade. The pandemic has changed the environment for startup companies as most startup companies are not likely to survive the environment they are in. The big ones such as Uber have built up losses, and ones such as Airbnb are borrowing $2 billion at 10 percent interest in emergency funding. Experience and sound thinking for investments were left behind as capital was wasted in many projects. The time has come to return to investments that have built the basis of the twentieth and twenty first century's advances in quality of life, in infrastructure and strong public services. ...

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Arne Duncan describes the improvements in K-12 education in two regions of the U.S.- the District of Columbia and Tennessee between 2011 and 2013, shown by the 2013 National Assessment of Educational Progress (NAEP). The hard work of educators, parents and school officials is paying off and offers examples for other parts of the country, says Duncan. Lessons include facing the facts, not dumbing down by setting low standards. With higher standards Tennessee students were only 34% proficient in math and 45% in reading compared to the 91-92% with lower standards. Republicans followed up on the work of Democrats in the state. Soliciting feedback from critics and experts- the feedback was used to improve systems and learning to help teachers and students. Schools chancellor Kaya Henderson says improving teacher quality was critical, and so was academic rigor. Still Duncan says more needs to be done, this only shows the right direction for states lagging behind, and one should not get complacent. The other areas college enrollment and dropout rates need to be followed carefully. International PISA results still show the U.S. at 27th in math and 14th in reading of 65 countries- making this only the beginning in setting the future course for U.S. educational improvements....

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Portfolio manager Robert Arnett, who manages two of PIMCO's funds, has some alarming things to say about the environment retirees face in the future. In ten years for every working age person added to the workforce there will be 10 new retirees, the complete reverse of what it was ten years ago when there were 10 new working age persons for every new retiree. The impact of this will take the shape of many more retirees selling stocks and bonds to live on and fewer buyers for the bonds and securities, lowering the prospects for higher prices for bonds and securities. He expects the demand for goods and services to continue with higher prices. He sees stocks giving a nominal return of about 5%, bonds a nominal return of 2-4%, for a balanced portfolio yield of about 4%, during the next 10-20 years. After inflation and taxes the returns will be very thin. Expectations of 10% returns do not take into account deficits, debt, and demography in developed countries, says Arnott.

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About 53% of the uninsured Americans disapprove of the Obama health care law, in comparison to 51% of the insured with health care coverage who disapprove of the new law. About 35% of the uninsured say they are likely to pay the penalty for not carrying insurance, and six of ten uninsured say it will make their health better. Overall the approval of the law is at 39% and disapproval at 50% in the Dec. 2013 poll. A striking part of the poll result is that 57% of the uninsured say it will increase their health care costs, compared to 52% of the insured. Only 20% say it will decrease their health care costs. This reflects the lack of serious controls on the surge in healthcare spending in the law. A separate research shows that more of the costs are passed on to users who will pay higher out-of-pocket costs after the law.

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Makes several critical points about the chinese stock market. First its low in transparency, very little accurate reliable information is available to investors. A gambling type atmosphere characterizes the appearance of brokerage houses and places where people invest. This gives room for part superstition and part good luck focus on lucky numbers such as the number 8 and unlucky numbers such as the number 4. It is a very immature market with 60-80% of investors who have no understanding of financial concepts. Second its a very large number of people who are entering the market every day, about 100,000 investor accounts are opening every day. As interest rates are so low in China more and more people are putting savings into the stock market. This adds to the 100 million investor accounts already open. At this rate there will be 36.5 million new accounts a year from now and 173 million investor accounts in 2 yearsand most of them caught up in this gambling type atmosphere with so little reliable information available about each stock in addition to the other problems China faces of corruption, and possibilities of deception in stock dealings and companies. With daily stock trading at $50 billion, this could grow to double that and the kinds of numbers that could lead to a crisis if stocks take a tailspin. With the huge liquidity in the system from China's large trade surplus with the US this problem can grow rapidly and get out of control. See other articles in May on this issue and on negotiation with the US on currency revaluations....

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The Economist looks at real estate markets in the U.S., Canada, Britain, Germany, Hong Kong, India and other countries in May 2013. It looks at price to disposable income and price to rent ratios and sees if these ratios are higher than historical averages to determine if prices are based on sound foundations. Canada's real estate market looks set to face problems of a bubble bursting. The U.S. recovery is seen to be based on firm foundations. Property prices are undervalued in Germany and set to rise.

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The loss of state support in the 1980's resulted in the gradual withering of the health care system in China as individuals bore the brunt of health care costs. Hospitals and clinics shifted to pay as you go system, with the emphasis on prescribing treatment that would boost income including costly tests.

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Luigi Zingales of the University of Chicago Booth School of Business, compares the growing cronyism in the U.S. and the lack of social mobility to the situation in Italy where he grew up, and where the economy has stagnated over the last decade with fewer opportunities for the younger generation.

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Stevenson and Caselli describe the mood in Buenos Aires as negotiations with hedge fund holdout bondholders fail in July 2014.

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Inflation was a little above the eurozone average of 0.7% for Jan. 2014 in Germany and below the average in Portugal, Spain, and Ireland.

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The U.S. Federal Reserve announced on Dec. 13, 2016, that it would increase its benchmark short term interest rate by 0.25 percentage point, to between 0.50% and 0.75%. The increase will also be reflected in business and household borrowing costs. The Fed also announced its intention to make 0.75% percentage point increase in 2017, possibly in 3 quarter percentage point moves. The Fed's forecast is for the fed-funds rate to reach 2.1% at the end of 2018, and 2.9% at the end of 2019. The Fed's policy is based on a sense of strong labor market with unemployment falling, and says it is based on discussion at a 2 day meeting, and "in view of realized and expected labor-market conditions and inflation." This reflects a view that there is now not that much slack in the labor market, that further improvements could trigger higher inflation. Fed forecasts for inflation are for it to increase from 1.5% in 2016 to 1.9% in 2017 and to the target of 2% in 2018. The unemployment rate of 4.6% in 2016 is forecast to go to 4.5% in 2017 and remain at that level till 2019. Economic growth is forecast at a median annual rate of 1.9% in 2016, 2.1% in 2017, only a slight improvement from last forecast in Sept. 2016. Support for chairwoman Yellen's policy decision was unanimous. See the link on views of NYT's Binyamin Applebaum and Neil Irwin on how Fed rate policy and economic growth under the Trump administration is likely to play out, and Ian Talley's report on impact on exports with a stronger dollar in WSJ. These views also are in line with the Fed's forecasts and policy decision as they reflect the concerns of the Fed about inflation, and also reflect the Fed's view that growth will be close to 2% in 2017-2019, and not the 3-4% stated by Trump and Treasury Secretary Mnuchin. Fed rate policies to keep inflation at about 2% tend to counter stimulus spending by the Trump administration and effect of tax cuts. The size of the stimulus and the tax cuts are also likely to be much smaller than stated because of Republican concerns about the deficit in the U.S. Congress, according to these views. The stronger dollar also has the paradoxical effect of making trade gains more difficult while increasing trade friction in tougher bargaining supported by Trump, making the higher growth targets harder to reach.   ...

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The Trump administration's early proposal for NAFTA moves away from campaign pledges to completely renegotiate the treaty, instead taking the approach of working to improve the U.S. trade position in relation to Mexico and Canada. It includes seven objectives for tougher rules for labor and the environment favored by Democrats in Congress, and it also has support from Republicans with its effort to update NAFTA for changes in technology and in other areas since the accord was signed during the Clinton administration. The area in which U.S. and Mexican business are wary is one in which the Trump administration still seeks to keep the option of imposing protective tariffs, and a border-adjusted tax to level playing field for differences in taxes, as well as other measures to protect American jobs and interests. Because any renegotiated NAFTA also has to pass both houses of Congress this proposal took into account the different constituencies and interests for this issue. Robert Lighthizer, trade representative under president Reagan is likely to become the next U.S. Trade Representative and lead negotiator. We first profiled Lighthizer in a group in Lyrarc for pointing to the need for a level playing field in trade. As early as 2010 Lighthizer argued in op-ed articles that globalization and trade practices should ensure a level playing field for the U.S., and was covered in Lyrarc. ...