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The toal loans held by the 15 largest banks declined by 2.8% in the second quarter, 2009. More than half of the new loans in April and Maycame from refinancing mortgages and renewing credt to businesses, not new loans, acording to an analysis by the WSJ.

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A Wall Street Journal Survey of how the credit ratings firms have performed in prediciting looming defaults. The Journal's Matt Wirz looked at 35 years of data. He found the ratings firms did not do an effective job with predicting defaults in the 12 month period before an actual default. Of the 15 government defaults since 1975 tracked by S&P, S&P's sovereign ratings division rated 12 of the countries single B or higher in the 12 months preceding the default. S&P says a single-B rating on sovereign debt signifies that the government has only a 2% average default rate in the next 12 months. For Moody's Investors Service the figures show that of the 13 governments rated by Moody's, 11 were rated B or higher one year before an actual default. By contrast the investment grade ratings of the credit ratings firms have worked better- as no government defaulted within 15 years of having a tripe-A, double-A, or a single-A rating. Ratings firms say that the ratings indicate a relative default risk for countries and not an actual default probability, a rank ordering for different countries and their relative risk. Research chiefs at investment management firms point out that once a crisis develops the ratings firms are not much help. They also say the ratings firms use static indicators like current account balances and other critical indicators for countries in emerging markets such as political sentiment and bank deposit flows get less attention. Historically bond yields have priced in higher risk premiums into government bonds before a default and investors look at the bond yields in assessing risk conditions, and not at the ratings which change only slowly. Brazil and Argentina both had a double B-minus rating in Jan. 2001. A year later Argentina had defaulted....

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Chief Justice Roberts let the Obama healthcare law stand arguing that the individual mandate for everyone to carry health insurance acted as a tax, and was on these grounds constitutional. Justice Roberts found middle ground by first rejecting the Obama's administration's argument that asking every American to buy health insurance was legal under the commerce clause, and following this with the a non partisan approach that found the mandate legal under the tax clause. Roberts was guided by the writings of an eminent legal authority, Justice Oliver Wendell Holmes. Roberts referred to this in his opinion saying: "It is well established that if a statute has two possible meanings, one of which violates the constitution, courts should adopt the meaning that does not do so." Legal scholars speculate whether Roberts changed his vote later on or whether the Justice had used the questions in the hearings on the law to explore the idea that the law could be constitutional on different grounds. During the arguments in the hearings Roberts said: "The idea that the mandate is something separate from whether you want to call ita penalty or tax just doesn't seem to make much sense."...

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A former chairman of the Council of Economic Advisors during 2010-2011 offers his reflections on the quantitative easing policies of Fed chairman Bernanke. He points out that the Fed was simply offsetting the effects of tight credit channels when it employed QE to prevent this from damaging the economy at a sensitive time. Inflation would have increased as critics say, only if the Fed did not reverse its policy with tapering as it is doing now. Bernanke offers a similiar assessment and says Fed critics refuse to look at todays inflation numbers which are below 2% for 2013- and also below 2% for 2012.

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India's lower house of parliament passes a Food Security bill which provides subsidized rice, wheat and other grains to the poorer sections of society, covering about 75% of people living in the rural areas and 50% of the people in cities. The legislation increases the cost of food subsidies by $4 billion to $20 billion a year. Because of high levels of malnutrition in rural areas in India, especially among children, the program helps the needy. Brazil's Bolsa Familia program is more far reaching in helping the poor because it also requires vaccinations of children and making sure children attend school.

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David Cote, CEO of Honeywell International, says U.S. corporations have $1 trillion sitting on the sidelines ready to be invested if business can be provided with more certainty about U.S. finances through successful deficit reducion negotiations. He is the most active CEO behind the Fix the Debt organization and is respected by both sides. In the fiscal cliff negotiations he has taken messages in both directions from Democrats and Republicans. Cote is a former executive of General Electric, who has led a turnaround at Honeywell. Large business stayed out of the deficit negotiations in 2011 which brough on the fiscal cliff arrangement of deep cuts in defense and automatic tax increases if no agreement is reached by Jan. 1, 2013. Cote and CEO's behind Fix the Debt have decided to engage with both political parties in the negotiations in 2011-2013.

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As Obama faces the situation FDR faced, between political popularity after election in 1932, and loss of some political capital in the first year by 1933, and a lot depends on political will and courage. He has to execute and implement plans for efficient government spending that builds jobs to replace those lost, and to use the investments in really productive ways including projects that provide returns for years into the future. As David Axelrod points out in the Frank Rich column in the NYT, people sometimes live in a parallel universe, which may be completely at odds with what the rest of the country caught in the economic currents of layoffs and collapsing businesses is thinking.

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Somini Sengupta reports on the Green Revolution and its aftemath from Jalandhar (Jullundur in Hindi) in the Indian Punjab wheat belt. Problems facing farmers here are the shrinking water supplies as more of the table water is exhausted through pumping from tube wells, lack of government investment in agriculture, the low grain prices paid to farmers by the government, and poor storage and transportation to market. Also affecting the suuply of grain and lentils and agricultural produce is the progress of industrialization as more farmers either grow crops that are in demand in the cities like baby corn instead of wheat, and the farmers who sell of land for industry or commercial use. Only 40% of the land is irrigated so too much depends on the monsoon and other rainfall, which is why India's large agricultural component in the economy affects the growth rates depending on the monsoon rains. What happens here affects food supplies worldwide and prices. When India is self sufficient or able to export there is less pressure on prices. Two years ago the situation deteriorated and India imported about 7 million tons for its grain stockpile. Since then the government raised prices for grains the situation has improved, farmers planted more wheat and sold more supplies to the government for building up buffer stocks of grain. Now the emphasis shifting to USA-India cooperation in the field of agriculture for a second Green Revolution. Agreements for the agricultural improvements were signed as part of the agreements signed for cooperation during President Bush's vist to India. The government of Manmohan Singh was elected for another 4 year term and is committed to helpiong Indian farmers. A more organized funded effort is needed especially with the economic crisis. The rural areas are the fastest growing part of the Indian economy. See link. ...

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Karen Elliott House, a widely respected expert on Saudi Arabia, gives her assessment of the Saudi situation as the Obama administration completes a nuclear deal with Iran in July 2015. She says the Saudis have few options in the short term. She also points out that the unfreezing of $100 billion in assets of Iran by the end of 2015, and the lifting of economic sanctions, could exacerbate tensions in the Middle East if Iran uses the money to increase support to proxies in the Middle East. Saudi Arabia has a large population of young people and high youth unemployment, increasing political risks, says Karen House.

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The moderate positions of both parties in political life in Australia and New Zealand compared to the U.S.

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The FDIC with help from the Treasury would bail out the creditors and the counter parties in the event a large financial institution fails. And then the FDIC would collect the money from some 120 banks. This is the idea behind a Geithner- Rep. Frank proposal. But critics point are skeptical whether the FDIC can collect the money from banks, which would be too weak themselves in a financial crisis. One critic said it allows the government to spend another $1 trillion to bailout banks, and then perhaps in one year or a hundred years collect that money back.

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Interview with Levinson of Genentech and answers to a wide range of questions about ther drug discovery process at Genentech, the cost of Avastin to treat cancer, the long years taken to develop the drug, the development and pricing of Lucentis for macular degeneration from the basic process of blocking the VEGF protein that helps the macular degeneration develop. The reasons for the pricing of Avastin- $55,000 for one year. And of Lucentis $2000 for one shot and the possible equivalence of Avastin and Lucentis so that doctors can take a small fractional dose of Avastin and use it in a tiny opthalmic syringe for cost of $50. The research budget of $1.86 billion. And the philosophy of Levinson about attracting the best scientists to Genentech by giving them opportunities as he puts it for "doing great science." And his emphasis on making Genentech a great place to work. Genentech was on Fortune's top twenty list 4 years in a row and No 1 in 2007 and No 2 in 2008 behind Google. Can Roche keep this up without Levinson and his team and the culture they have fostered, and the way they have created a great place to work ? ...

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Frank Rich on the ticking bomb in the banking system and the bank lobbying that has kept reform from happening. Phil Angelides leads the Financial Crisis Inquiry Commission which is due to begin hearings soon. But says Rich, Angelides who is following in the footsteps of Ferdinand Pecora who investigated the 1929 crash as chief counsel of the Senate committee that did the investigating, will have to deal with a lot of resistance as he tries to alert the public to the need for action before a new crisis develops. For this to happen there will be aneed for more awareness of what happened, and a serious investigation, and prosecutions where necessary. Interestingly National City Bank was investigated then by Pecora. It is the predecessor of today's Citibank. At the time National City repackaged bad Latin American debt as new securities which it sold eaily to investors who later lost badly. Weill and Rubin at Citigroup made a series of bad decisions at Citigroup leading to huge losses at the bank, for which they have not accepted responsibility....

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This WSJ article provides a detailed account of the positions of Clinton and Trump on Wall Street, the financial industry, banks, Dodd-Frank, regulatory reform, 6 weeks before the U.S. presidential election.