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Feldstein points out that Obama economic plans missed the real target, which was on the home front where it came down to addressing the problems of 15 million homeowners under water- with mortgages exceeding the value of their homes- and lack of solutions to deal with the $1.5 trillion in troubled commercial real estate loans. Administration plans really did not help more than a couple of hundred thousand homeowners to reduce their monthly mortgage payments. Getting banks to start lending again by selling impaired loans to nonbank investors, also failed to work, as banks were reluctant to do so and reduce their accounting capital. Health care legislation simply distracted attention from the real problems. See the links to Feldstein's repeated insistence that the new administration (and even during the late stages of the Bush administration) focus on these problems. Health care legislation that passed simply would not control the increase in health care spending, that the public correctly perceived as the real problem if the other health care issues were to be resolved. Instead Obama's health care legislation offered to increase the deficit to unsustainable levels, with no solutions to more pressing home front problems in sight. Feldstein, is one of the most eminent US economists....

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China's July 2012 exports were up barely by 1%, over the same month prior year. Exports to the European Union declined by 16.2%. A big problem is cost increases for land, labor and electricity. By 2004 China's exports were growing at a peak rate of 35%. Since then prices of inputs have increased- wages by 150%, land by 70%, and electricity prices by 30%, according to Dragonomics. The yuan appreciated by 30%. Productivity is increasing by about 8% a year, according to the World Bank. As a result of the price increases of inputs the competitiveness of China, with products exported mainly on the basis of price, is deteriorating.

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Yale's Robert Shiller, founder of the of the Shiller-Case survey, says that he does not see a turning point in the housing market at this time, based on the 5000 mailed questionnaires he sends out each year. He says this is not visible and hard to conclude from the responses. He also describes the bubble thinking and behaviours he sees from the responses, especially how people extrapolate into the long term the short term gains being made. Nowhere in these responses does he see the term bubble being used by respondents, as if it never existed.

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There is over $150 billion of additonal spending on education in the Obama stimulus plan being worked on in January 2009. There are several important aspects of this plan. One action will prevent literally hundreds of thousands of layoffs of teachers, according to Education Secretary Arne Duncan, as revenues of local districts drop. In a response to requests from Democratic party governors Congress has allocated $79 billion to help states facing large fiscal budget gaps to maintain government services, and especially to prevent cuts to education services fro kindergarden to college. Another aspect is the effort to reinforce Title 1, a program of specialized classroom efforts to help educate poor children, by increasing 2009 fiscal year spending from $14.5 billion to $20 billion, and raise spending for disabled children from $11 billion to $17 billion. This helps meet the unmet needs of the No Child Left Behind program. Another effort on the stimulus side which would create jobs for construction activity and do this with spending that will bring benefits in future years for along number of years in the future, is the federal government now taking abig role in the building and renovation of schools. The federal government will now spend $14 billion for the renovation and modernization of elementary and secondary schools, and $6 billion for the same for higher education. The stimulus also has tax provisions under which the federal government will pay the interest on construction bonds issued by school districts. The Education Secretary says that the $20 billion for this will create a huge number of construction jobs because so much of the school system building infrastructure needs repairs. In the area of higher education the allocation for Pell Grants used for student aid is increased to $27 billion from $19 billion. These aspects of the stimulus program are ones that will pay off over a number of years into the future. ...

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A look at two crises in 1918 and 1957 of virus pandemics shows early and decisive action to prevent public from gathering and intermingling, are critical. In today's densely populated urban environments this translates into lockdowns and quarantines that are strictly enforced. The 1918 pandemic took 50 million lives worldwide, the 1957 pandemic took 1 million lives worldwide, says this report based on some estimates. MIstakes were made then and science was not as developed for vaccines and new drugs. Which is why health authorites are taking this very seriously. Greg Ip of the WSJ looks at coronavirus health crisis in relation to earlier disasters- SARS 2003 originating in China, 1957 flu epidemic, 1918 Spanish flu epidemic, to draw insights on what measures have worked best. Previous epidemics and crises provide clues on what makes things worse or better and the long term consequences of actions. The more health and safety are prioritized there is some impact on the economy. But crises have proven that the economic impact is temporary and short lived with the economy and jobs bouncing right back once the crisis has passed. The second insight is that early on in the crisis there is a great deal of uncertainty, leading to fumbled or delayed, or timid response. Sort of like lets wait for more information coming out of China, or now Italy, which happened first in February, and then again in March. Tim Adams who worked in the U.S. Treasury Department during 9/11 and Hurricane Katrina, and is now the president of the Institute of International Finance, says if you look to plan a perfect response you lose valuable time. Time is of the essence. Learning to make speed the priority, to think in tranches, be visible, and worrying about how to pay for it later, is what he says he has learned from these crises response efforts. In the case of the coronavirus, some valuable time was lost becausee of the uncertainty and lack of early information, making speed and rapid comprehensive action very critical. The Spanish flu epidemic of 1918 infected over 500 million people worldwide and killed 50 million or more, including 675,000 in the U.S., according to the Centers for Disease Control and Prevention. During this epidemic the Chicago public health commissioner flatly opposed closing businesses, saying worry kills people more than the epidemic. A 2007 study shows cities that took that attitude saw higher death tolls in the Spanish flu epidemic of 1918. Philadelphia waited 16 days before restricting social gatherings, St Louis took just 2 days. The result: the daily death rate from the epidemic peaked at level five or more times higher in Philadelphia than in St. Louis. Social distancing was not much of an issue then as people worked in jobs that required less contact, such as farming, fishing and forestry, as well as other jobs that did not require that contact in large offices.   ...

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Inflation in China and rising wages are pushing up costs for American manufacturers. The pressure on China, most recently in Congress, is helping to push up the value of the yuan. This combined trend is making it attractive for some manufacturers to bring factories home to the U.S. A trend in the U.S. towards non-unionized labor and the new trend to a two-tier wage level- with lower wages for entry level workers- and the shedding of legacy health care costs, is creating a more cost competitive labor force in the U.S. This extends from older industries such as furniture and auto components to newer industries and technology. The new factories setup in the U.S. use technologies that require a smaller number of workers, in most cases less than half the number of workers that were employed earlier. This adds another element in cost efficiency, though it means fewer jobs are created with new plants.

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Wealth for top 7% of U.S. households averaged $3.2 million in 2011, compared to $133,817 for the other 93% of the population. Third quarter 2013 household net worth is 615% of after tax income, up from 570% in 2012. The uneven distribution of household wealth and the gains from the stock market recovery going disproportionately to wealthier investors, does not provide strong enough underpinnings for robust consumer spending.

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The recent appointment of fast food executive Andrew Puzder as Labor Secretary has caused great concern among union leaders. Puzder supports a $9 minimum wage compared to $15 supported by Democrats. Unions now represent 7% of the labor force, down from a high of 20% during Reagan's time when Reagan appointed a construction company executive as Labor Secretary and cut regulations.  Globalization has thinned the ranks of workers in unions. And the failure of Democratic administrations to stem the shift of factories overseas to China, Mexico and other places, as part of global supply chains focussed on cost, has weakened Democratic support among workers since the period of Bill Clinton. It eroded to the point where Obama won 65% of support among unions and Hillary Clinton won 56% in 2016. Interestingly the Republican Romney gained 33% versus 37% for Trump, showing voters were more inclined to move away from Democrats and only a smaller number willing to support Republicans, but the shift enough to give Republicans a win in 2016 for the presidency. The figures are from a Election Day survey of trade union AFL-CIO, and a larger proportion in midwestern states showed disaffection with policies from Clinton to Obama. In fact Obama spent years promoting another free trade agreement TPP that favored tech more than auto and older industries, just as Bill Clinton had promoted NAFTA, without giving thought to what this was doing to its worker base of support. A similar situation happened with Social Democrats in Germany as a SPD administration moved to the centre and handed Christian Democrats led by Merkel a win in parliamentary elections. As Democrats such as former Labor Secretary Reich, a professor at UC Berkeley who served under Bill Clinton, describe the problems of working class people their is less reflection on the impact of the changes from globalization and how Democrats handled or mishandled it, and more on the politics between the two parties.   ...

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The U.S. unemployment rate drops from 5.8% in Nov. 2014 to 5.6% in Dec. 2014, according to the Labor Department. But hourly earnings failed to register growth. Average hourly earnings declined in Dec. 2014 from the prior month, and increased by only 1.7% over the prior year, just a little bit above the inflation rate of 1.3%. Overall 2.95 million jobs were created in 2014. Yet 8.7 million Americans looking for a job could not find one. The U.S. Federal Reserve officials see tepid wage growth as a sign of slack in the labor market. The Dec. 16-17 Fed meeting minutes show that "most participants saw no clear evidence of a broad based acceleration in wages." The labor force participation rate is also stuck at a low level- 62.7% in Dec. 2014. The U-unemployment rate that includes involuntary part time workers and workers marginally attached to the labor force was at 11.2% in Dec. 2014. This includes workers too discouraged to look for work and people working parttime because they could not get full time work. It is steadily dropping from 16.6% in 2010 to 14.4% by 2012, 13.1% by 2013, and now 11.2% in 2014, showing steady improvement but still high....

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Alan Mulally talks to Charlie Rose about cost competitiveness, negotiations with the UAW, creating jobs, and the repayment of $20 billion of the $23.5 billion borrowed in 2006. Mullaly points out that 70% of R&D is connected with design and manufacturing- all the technology that goes into designing and building and the associated R&D.

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Jennifer Steinhauer of the NYT says the U.S. Congress is acting as a counter balance to  president Trump to maintain America's postwar policies common to both Republican and Democratic presidents and seen as part of core values- support for NATO and the mutual defense enshrined in Article 5 of NATO, support for the trans-Atlantic alliance. Senators in Congress are now voting overwhelmingly to support these values. This is seen in the manner the leading Republican on the Senate Foreign Relations Committee sees his job- to retake the important role Congress and the Senate Foreign Relations Committee has historically played in making foreign policy. His view is that the committee he chairs had become a kind of debating society. It is also seen in the way Corker handled a Russia sanctions bill giving Secretary of State Tillerson time to seek improvement of relations, and when time had run out pulling together all members of the Senate to pass the Russia sanctions bill. That bill passed the Senate by 97 for and 2 against in an overwhelming show of support for Congress to make its own foreign policy moves.  ...

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Security is at the heart of India's foreign policy. S. Jaishankar points this out at Thiruvanathapuram. He says this was true of the effort at Balakot and even in the midst of Covid at the Line of Actual Control with China when India sent up enormous numbers of troops to defend the border. This is also behind the stand with China that security and LAC comes first in all relations with China. Trade and exchanges all come in the context of LAC, settle the LAC issues first then we can proceed with better bilateral relations, this is what India is telling China.  There are good reasons for this. India has a large border in the most formidable terrain of the Himalayas which is also close to the plains of India in the LAC with China. Any difficulties at the border would weaken India's secuerity and weaken development efforts in the same way that Japan sought to weaken Chinese development through invasion in the 1930's. Tibet looms out of the past. When China invaded Tibet Nehru's couple of pages in Discovery of India on China show that he had no idea of the China that had emerged with Mao and the CCP in its historical struggle against Japanese nationalists and imperialists. He had an idea of China that came from the Buddhist period and India's links from the past. The ruthless Japanese invasion that China confronted on its soil, and British colonial incursions before that, had already transformed the China of the past, which now under Mao in 1948 may have sought more defensible borders by extending them to Tibet as a buffer state. Historically the British had never tolerated Russian or other European or Japanese interference in the border states such as Tibet. There was also the question of capacity. By the time of the invasion of Tibet in the early 1950's China had already fought the Korean War with the US. India's army and defense forces were just coming out of partition and ill equipped for the task of defending the borders in Tibet region. Current governments in a more normal setting cannot change this part of history, yet can take full recognition of the facts that this has created. A strong defense has to be created for defending a border that extends for thousand of miles now that China has unlawfully occupied Tibet. On it also depends a strong and vigorous development effort that helps build the kind of modern defenses as the economy grows and absorbs new technologies rapidly. Both defense and development go together, one cannot have defense without rapid modernization and development, and one cannot have rapid modernization and development without defense. A weak defense would lead to distractions in development leading to the lack of rapid modernization and development as the intruding power interferes in insidious ways in the internal and external links of the country. This is the lesson of colonial interference of western powers in Asia. As Brendan Simms shows in his new book, Europe - Struggle for Supremacy 1500 to the Present, it is also the lesson of a different kind of colonialism inside Europe since 1500, where weaker states inside Europe fell behind with interference in turns by the imperial powers of France, UK, Austria-Hungary, Prussia and Russia. Poland, Finland, Czech Republic in the past and even Ukraine today are just some examples of what can happen when one loses sight of this principle. Poland and the Polish Commonwealth in the 19th century, Hungary right down to 1956, and China in the 1910-1930, India in the 18th and 19th century were weakened internally even after recognizing the problem, so that recognition of the problem is not an adequate condition to prevent countries from facing such foreign interference. ...

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Natural gas prices declined to $3.144 a million British Thermal units on the New York Mercantile Exchange for January delivery. Natural gas prices dropped sharply by 30% in December 2014. Earlier forecasts of $4.50 per million BTU by 2014 end underestimated the decline in natural gas prices in the U.S.

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Fitch Ratings Agency says that 65-75% of homeowners getting home loan modifications under the Obama administration's Home Affordable Loan Modification Program (HAMP) will default in 12 months. This is because the median ratio of total debt payments to pretax income is about 64% according to a Treasury Department estimate. Many of these homeowners have large credit card and other debt, and little is left for food, clothing and other expenses. By April 2010, 295,000 homeowners had taken loan modifications under HAMP, which provides interest rates of as low as 2%. And another 637,000 homeowners are in trial modifications, which require that homeowners show they can make the lower payments consistently and provide documets to show eligibility. The Obama administration has provided $50 billion for the HAMP program, with financial incentives to loan servicers and mortgage investors to modify loans. Critics say the program would have worked better if the government and HAMP dealt directly with homeowners- as homeowners complain about the long time, upto a year, it takes for loan servicers and mortgage companies to get the loan modified on a long-term basis....

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Critics of the balanced budget amendment say it prevents the use of counter cyclical policies in an economic downturn.

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A new report on American driving habits by Samantha Gross and Aaron Brady of Cambridge Energy Associates shows that finally the gasoline price increases are beginning to bite the consumer and American drivers are changing their habits. After increasing from about2.5 trillion miles of total vehicle miles travelled by Americans in 1998 to about 3.0 trillion miles in 2007 the last 6 months are showing a downward trend for the first time. In the late 1970's and early 1980's something similar happened with a deep recession, rising gasoline prices and improved fuel efficiency standards, during this period gasoline consumption declined by 12 % accordingt o CEA. What is different now? For one thing the environmental issues are a big factor now and they take a new meaning as developing countries like India China Brazil and Rusia as well as other countries with much larger numbers of people than the US and Europe are now part of the car buying and electricity using peoples of the world. Its impossible both for the environment and for resource supplies to meet the needs of billions of new people joining the global economy and western ways of living without doing something radically different. And he problem is immediate as China becomes the second largest car buying country and India is not far behind with an explosion in Nano sales expected in the next few years, and the huge demands on electricity in these countries meaning burning huge amounts of coal to generate this electricity and create global environmental problems. All this makes the 70's and early eighties period remotely relevant. We are looking at something hugely different and 21st century defining now as its clear fuel has to be conserved and resources shared between the western world and the developing world, and technology moved forward quickly to meet the needs of a new world of Asia, Africa, Europe and the Americas all bundled into one both by the global ecoomy and the way business operates and by the needs of people everywhere. And the media and public perceptions may be just catching up to these changes which are already taking place on the lands and under the feet of millions of people around the world. Some clues to what might have happened. Americans spent 4.5% of their after tax income on transportation fuels in 1981 according to Global Insight, a forecasting firm, and this went down to 1.9% in 1998, and is back up to 4% now in 2008. In California and more affluent areas of the country where the incomes are higher and gasoline prices are higher over 4% is spent on transportation fuels, whereas in areas of Alabama and Mississippi in the poorest areas where gasoline is less expensive this is over 16% according to the New York Times interactive graphic. During this period 1998 to 2008 demand increased for gasoline, in terms of the number of miles driven went up by 25% from 2.5 trillion miles driven to 3.0 trillion miles driven, and the sales of large pickup trucks and SUV's soared to make them the largest number of vehicles sold each year. At 1.9% of after tax income nationally, transportation fuels were cheap and consumers reacted rationally by splurging on gasoline in the USA. As a sobering note to all this sign of improvement in conservation of fuel the miles driven are still at about 3.0 trillion miles the high reached last year 2007. It will take a lag of a couple of years before a changing fleet to smaller vehicles and more fuel efficient vehicles and better driving habits and conserving fuel habits to make itself felt in transportation fuel usage across the USA and this requires prices at least at these levels to make the change seen as necessary to meet global needs and global environment....