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Mario Draghi, President of the ECB, turned down proposals to let European central banks send money to troubled European governments through the IMF. Draghi said- "we should't try to circumvent the spirit of the treaty, no matter what the legal trick is." The ECB also opposes large government bond buying to bring down yields on Italian and Spanish government bonds. The ECB by majority vote reduced interest rates in the eurozone by 0.25%, bringing interest rates down to 1%, and reversing rate increases under the previous president Trichet. It also made medium term funding available to European banks on better terms. According to a person in the room, German Chancellor Merkel opened the summit saying Germany opposes a plan to let the European Stability Mechanism (ESM) borrow from the ECB. The ESM is the bailout mechanism for future bailouts.

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Mitt Romney on the weaknesses of America's position in the Middle East in policies for Syria, Libya, Egypt and the rest of the Arab world. The problems with Iran and the lack of results in bringing an end to Iran's nuclear program.

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Tougher sanctions on Russia in July 2014 with the addition of Moscow Bank, VTB Bank. Sberbank was not added but other steps limit its access to financing in European financial markets. The limited access to international capital means banks and other companies will have to turn to the government for financing. Growth was estimated at 3.8% and lowered by the IMF to 0.2% in its latest forecast for 2014. It could turn negative, showing the impact both of the emerging markets crisis in early 2014, compounded by the crisis in Ukraine in the second quarter on the Russian economy.

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The Indonesian currency, the Rupiah, has declined by 13% in 2013- by Sept. 3. It reached a level of 11,050 rupiah for one dollar on Sept 3. Economic growth has declined to 6% for the second quarter of 2013. The depreciation of the rupiah is likely to increase inflation significantly and affect the consumer spending boom in Indonesia. Indonesia had a $2.3 billion trade deficit in July 2013 after a continuing surge in imports. This will affect car prices and prices of international brands popular in the country. Toyota set the rate at 9500 rupiah to the dollar and plans to increase prices now that the rate has passed 11,000 rupiah.

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This article in NYT by a China expert based in Hong Kong points out that a key driver in the current developmetns in Korea are not understood. With the growth of China's influence in East Asia and a decline in American influence many of the countries in the region are rebalancing. Vietnam and Singapore are pushing back. In the same way North Korea under Kim Jong Un is concerned about its dependence on China with 90% of its trade conducted with China. The Chinese participation in the strong sanctions introduced by president Trump has increased this awareness of its dependence on China. President Xi Jinping has also ignored North Korea as China focuses on larger issues in international relations, including its relationships with the U.S., EU and India. This strategic development is what drives the current meetings between president Moon of South Korea and president Kim of North Korea, and the planned meeting of Kim with president Trump.  This China expert says the shift in better relations could be part of North Korea's effort to open up to the U.S, South Korea and Japan, in an effort to diversify its relationships to reduce dependence on China. This does not mean the unification of North and South Korea, he says, because it would mean loss of power for the Kim regime and would be too costly for the South. The nuclear missile development was part of an effort to preserve the Kim regime. The Kim regime is also focusing efforts on economic development which would be better achieved by opening up to the U.S., South Korea and Japan. ...

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Aizenman in this must-read describes the National Soda Summit and the presentation of one man Todd Putnam, a former executive from Coca-Cola that throws light on one of the truly important things that happened in the lives of Americans in the postwar period of development and growing prosperity. This is the development of marketing and advertising and its singular application in the case of Coca Cola to promoting sugary drinks. It is also related to what even business people describe as the single biggest problem in America. And it is happening at a time when the story is being repeated in developing countries such as China and India. Putnam describes the exhilaration, he and other Coca-Cola managers felt when the graphs at internal presentations showed Coke passing milk in consumption per capita in America. Several other facts stand out in Putnam's description of his experience- the ignorance on health issues among his marketing peers, the huge marketing prowess and dollars brought to bear once a goal such as increasing per capita consumption of sugary drinks was set- he was hired out of Purdue by P&G and worked at Disney before joining Coca-Cola- and the focus on the 12-24 demographic with 90% of all soft drink marketing targeted at this segment. What he regrets most is the focus on minorities who suffer some of the highest levels of obesity in America. No mention is made of the efforts underway in developing coutnries such as China and India which are seeing a surge in obesity rates and diseases such as diabetes. Coca-Cola says 41% of its sugary drinks are low calorie, but compared to milk, fruit juice and other healthier alternatives where does this rank? The cost to the nation's health care system alone would show that the performance of Coca-Cola's stock price over the postwar period came with a price tag that was never even thought about, when healthier alternatives as health drinks companies have found sell well when well marketed and formulated for different groups....

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A study group at the Washington Institute for Near East Policy sends a public letter to U.S. president Obama on the Iran negotiations. It says the nuclear agreement negotiated with Iran "may fall short of the administration's own standard of a 'good' agreement." It is signed by some of Mr. Obama's main advisors during the first term. Some of these officials told the NYT that the letter was the result of serious concern that Mr. Kerry and other negotiators were moving towards major concessions that would weaken the international inspections of Iran's facilities, back away from making Iran reveal suspected past work on weapons, and allow Iranian R&D to move ahead with making nuclear fuel once the accord expires. The five Obama advisors from the first term who signed the letter are: Dennis Ross, Middle East negotiator, David Petraeus, CIA director, Robert Einhorn, State Department proliferation expert, Gary Samore, chief advisor on nuclear policy, Gen. James Cartwright, vice chairman Jt. Chiefs of Staff. Gary Samore is president of the advocacy group United Against Nuclear Iran. The letter was also signed by President Bush's national security advisor during his second term, Stephen Hadley. Such a large group of advisors to presidents Bush and Obama familiar with the details of Iran's development of nuclear technology and weapons capabilities could give Republicans support to kill any agreement that falls short on inspections during Congressional Review. On this key factor where only vague assurances are made by the Iranian side- such as signing an International Atomic Agency convention giving inspectors broad rights to visit suspicious sites, followed by Ayatollah Khamanei ruling out military sites- the letter is specific. Inspections it says " must include military (including Islamic Revolutionary Guards Corps), and other sensitive facilities. Iran must not be able to deny or delay timely access to any site anywhere in the country." Inspections work rigorously done is set as a precondition before any significant relief from economic sanctions on Iran....

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Krugman puts it best when he says in the NYT that he's got a sick feeling in the pit of his stomach. Its just that the Republican challenge of not a single vote in the House for the $789 billion Stimulus bill just makes it harder to go back for more money which most definitely will be needed. The Congressional Budget Office predicts that over the next 3 years there will be a $2.9 trillion gap between what the economy could produce and will actually produce. $789 billion won't be enough, and more so because the weightage shifted in the direction of tax cuts from the original version. And considering the accelerating nature of the crisis on the housing front and in layoffs and consumption, the absence of a clear action plan with specifics to deal with the bad debt in the banking system, is what gives this sick feeling in the stomach. Because as is stated on these same pages by experts from Japan on February 12, NYT, see the link, Japan went through this same soul searching, public anger, controversy, and political leaders were afraid to take strong action for years from the mid 1990's till 2003 after Koizumi's election. Each action or set of actions each year during that period before 2003 was behind the curve, and did not match what was needed. For the USA this has happened already for 2007, 2008 and is heading in that direction for 2009, with a lack of consensus for the strong action needed. Would 4 million new jobs be generated by the current stimulus if that is a measure of success, as Obama indicated at his first press conference? With less going into spending for education, infrastructure, energy and other green projects, in favor of tax cuts and the AMT, and the feeling that going to Congress for more money will be harder and a partisan affair, will this become difficult to achieve? ...

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Having 12 million human beings caught in a net of fear and apprehension, living life in the shadows, even in abad economy, no, especially in a bad economy, makes no sense, says the NYT editorial. These immigrants can become productive citizens, some of the most hard working who did the backbreaking work in factories and construction, who send money to keep families in Mexico and other parts of Latin Ameica from falling into poverty. In doing so and working on the books instead of off the books, they earn more, spend more, pay more taxes. and have the ability to ensure that there are fewer abuses in the workplace. This way they also get better education for themseves to improve job prospects, and better education for their children who can become part of the next generation of productive citizens. It also clears the path for focus on how to handle better border enforcement focussing resources on fighting crime, drugs, violence, and have a future flow of workers that is in line with the economy's needs. It createss decent workplaces, where people's workplace rights are not violated by unscruplous employers. In this case the fair thing to do, is also the most beneficial thing to do in the larger sense for the economy. In this context the agreement of labor unions, the AFL-CIO and the Change to Win (a rival federation that includes auto service employees, Teamsters and carpenters), to agree that an independent national commission would figure out the size of temporary workers depending on the needs of the economy, higher if it was growing, lower if it wasn't, basing it on conditions in the labor markets, is a good things says NYT. It takes necessary courage for unions, Obama to do the needed fight to protect these future citizens and build a better America with their help, rather than wish the impossible of putting them all on the boat back. ...

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Who is Medvedev. Acccounts about his background from his days at St Petersburg State University. He was 25 when he was selected by his law profesor Sobchak as an aide. Sobchak had just been elected chairman of the city council of St Petersburg. Sobchak had another student as an aide this was Vladimir Putin. Its here that Putin became Medvedev's mentor and friend. They both felt strongly about what had happened to Russia as it collapsed economically after the collapse of the political structures of the communist state. Its this deeply felt humiliation and the need to restore Russia to its proper position and bring dignity and respect to the ordinary Russian and the Russia people without all the unrest, disorder and suffering of the upheavals of the 20th century that seems to motivate both. Because things were simpler then in the late 1990's till today because anything that brought Russia back economically was clearly to be desired, there seems to be a marching together of soldiers in a shared feeling of loktya the expression Putin used for the mutual trust and closeness he felt for his much younger friend, younger by 13 years. From the age of 25 to today when he is 42 Medvedev worked 17 years in close association with his mentor Vladimir Putin. First as Deputy Chief of Staff to the new President at age 34, then as Chairman of the Board of Gazprom, Mevedev would spend hours in the Kremlin with Putin working on the details of Gazprom's plans as they sought to make Gazprom Russia's biggest and and most influential company. Their shared feeling was that the consolidation under Gazprom of oil asets across Russia was "good for Russia." Since 2005 he was groomed as Putin's successor. See the link to Medvedev's answers to questions put to him that reveal his inner thinking and views and tendencies....

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The graph showing the monthly volume of issued bonds shows that the bonds issued came to a complete halt in October 2008, leading to a collapse in this market, making consumer finance almost impossible to get. The action by the Fed to lend $600 billion to investors to buy these bonds is an effort to unclog these markets for consumer finance. It also comes as the market for cars collapsed in October, with auto loan financing difficulties a major factor in this collapse, especially for GM. The market for mortgage securities issued by Fannie and Freddie also seemed to be drying up as investors and foreign central banks shunned Fannie and Freddie, resulting in the spread over Treasury bonds for these securities issued by Fannie rising from 0.7 percentage points in September to 1.7 percentage points in October 2008. The Fed announced that it would buy $600 billion of these securities starting December 1, 2008, and hire asset managers to manage this portfolio for the Fed. Mortgage rates dropped half a point to to 5.5% on the announcement injecting some life in to housing markets. This does not help the 11.8 million homeowners under water, and those facing foreclosure, and it does not help those buyers who do not qualify for mortgages. It does help those who were responsible in their finances through the recent years and helps others refinance. So it helps those who were better off but started cracking under this economy. So it does not change the underlying fundamentals say some experts, but it does help keep some life in the housing markets say other experts. The Case-Shiller index of housing prices which declined 15.1 % in the second quarter, declined 16.6% in the third quarter, year over year. This helps keep up the prices from severe drops, but even the lower mortgage rates from this Fed action may not last as the rates dropped after the rescue of Fannie and the again started creeping upwards again. . . ...

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Home Secretary Yvette Cooper predicts "swift justice" for rioters on British streets. She tells Sky News: “So we should be clear, there will be people who were thinking they were going on their summer holidays this week, and instead they will face a knock on the door from the police.”

On BBC Radio 4’s Today Cooper said: “We have seen truly appalling criminal violence and thuggery in some of our cities and towns – it is a total disgrace. These people do not speak for Britain.”

Police she said would follow the “full range of prosecutions and penalties” including prison sentences, long-term tagging and travel bans, she said, adding: “Keir Starmer has made clear he is prepared to take whatever action is needed to keep streets safe.”

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Republican presidential candidate Rick Perry tells an audience in Cedar Rapids, Iowa: Printing more money to play politics at this particular time in American history is almost treacherous- or treasonous, in my opinion." He was referring to Federal Reserve chairman Bernanke when he said: "I know there's a lot of talk and what have you about if this guy prints more money between now and the election... I don't know what y'all would do to him in Iowa, but we would treat him pretty ugly down in Texas." Perry's spokesman said Perry feels strongly about printing money, and "got passionate" in his comments.

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Jeremy Corbyn is reelected leader of the Labor Party with the support of young people. He is seen here from the European viewpoint as a disaster for Britain. The parliamentary group of the Labor Party opposes Corbyn, and is critical of him for not supporting the Brexit no vote the way he should have. Corbyn did not come out strongly in favor of staying in the EU, giving it a 7.5 out of 10 score when asked how he would rate the EU. Only a fifth of British voters support the idea of Corbyn as prime minister. He is good at bringing people's concerns for attention at prime minister's questions, rides a bicycle to work, and is honest about his convictions. Yet this is not enough to be effective as a leader of the opposition who lacks the support of his party's members in parliament. Corbyn has also dropped people with different opinions from the leadership in the Labor party in a nasty fight with people who disagree with him, which is bad for the Labor Party. This has weakened Labor to the point where it cannot function as an effective Opposition Party, especially now that Britain enters Brexit negotiations and needs an opposition to act as a check on the government's policies. The Economist magazine in London shares these concerns in an editorial. ...

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Reports from the Sixth China North-South Lung Cancer Summit meeting of 300 experts focusses on controlling tobacco use and promoting early detection and treatment of lung cancer. Lung cancer is now the leading form of cancer in China, with 22.7% of cancer deaths each year. Currently about 1 million die in China from smoking related illness each year. CCTV reports this is increasing by 26.9% a year. Causes cited are aging population, air pollution, and widespread smoking. About one in three of China's people smoke, or about 350 million. Awareness of the dangers of tobacco use is not high outside two or three major cities. China manufactures about 1.7 trillion cigarettes a year, according to CCTV, and tobacco contributes 7-10 percent of state revenues.