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A delicate balancing act for the Federal Reserve, in not withdrawing support to the debt securitization markets in a manner that throws the economy off balance, and leads to the collapse of credit markets still again. Lee Sachs, an advisor to Timothy Geithner, Treasury secretary, says that its important to do it incrementally, where and when you think you can, and not sooner. The debt securitization markets act as a shadow banking system, they finance mortgages for homes, corporate loans, student loans, credit card debt. Before the debt crisis in 2008, banks made loans for mortgages, and then sold these loans packaged into securities in the debt securtization markets. 60% of American credit has in recent years come from this process of debt securitization. This is how the markets look at this time in September 2009. 1. A thriving private market in securities packaged out of home mortgages, collapsed from $744 billion in 2005 at the peak, to $8 billion during first half 2009. THe Fed is almost the only buyer of mortgage backed securities, with $905 billion of these government guaranteed securities purchased through mid September, 80-85% of the market. 2. The market for bonds backed by consumer debt - credit card debt, auto loans and student loans - has recovered to before the crisis. But this is only because of the government's Term Asset Backed Securities Loan Facility or TALF, which provides attractive government financing to buyers. Hyun Song Shin, a Princeton University economist, who is an expert in this area, says the big question is what happens without TALF, can the market stand on its own two feet or is it permanently hobbled. 3. The market for securities in commercial real estate loans has not seen any securties issued in two years. Overall says Robert Shiller, a Yale University economist, the security markets are dead, we are stuck in a situation where no one knows what will happen when the government gets out of these markets. The Fed will continue to support the mortgage markets till it goes from the $905 billion now to $1.25 trillion. At that point it will have to make some tough decisions, and banks are not lending, making it tougher for business. On top of this banks liquidity requirements are being increased after the G20 agreement, and Britain's FSA has already taken the initiative on this. And a further $50 billion in corporate real estate securities are to be refinanced in 2010, says CALPERS, Arnold Phillips. If there is no mechanism to address support here, these properties will default, leading to bank losses and even tighter credit. ...

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Germany's SPD Deputy Chancellor says in Kiev on August 25, 2025 after the abortive effort by DJT in Alaska for peace talks that improved Russia -US relations as two leading world nuclear powers but did not have the basics in place for Ukraine- Russia direct talks, with Putin asking for territory in the east. "In the three and a half years that this war has been going on, we have always shown that we are not ducking away, but stand by the side of the Ukrainians. And that will also apply to security guarantees."  The big change is that the SPD under Klingbeil in Germany is now working with CDU's Merz to build up Germany's defense forces to act as a deterrent for Europe. There is a change in the mood in Germany and in Europe, from Sweden and UK , France, Italy, for concerted action in Europe that was not seen before. By taking on responsibilities for Europe with 2-5% defense expenditures this has removed the differences between the US and Europe. It means a prolongation of the war but also means this may lead to a stronger Europe, better Russia- US relations, and a Russian and Ukraine more willing to come to a peace agreement based on terms where no side appears to be the loser. Klingbeil added- It is important to have a "really strong Ukrainian army that is also capable of defense. And the second thing is that armaments production is also being ramped up here in Ukraine as well, thereby putting Ukraine in a position to defend itself and deter attacks." If European history since 1400 is any guide when the powers on either side were eventually counterbalanced the power that took a an aggressive position early had to settle for a peace settlement with both sides not appearing the loser. ...

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Bias on NBC News with opinion of Chris Matthews more commentator than unbiased anchor in Brokaw's view and the reluctance of the McCain campaign to trust NBC News,. Brokaw's efforts to sooth feelings at the McCain campaign. Brokaw's hosting of Meet the Press and the effects of age, he is 68, in the rigors of hosting and commenting in a hectic campaign season. "My daughters will say that I look a bit tired," said Brokaw recently. He is filling in for Tim Russert at this time.

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Jaffe and Eilperin provide this exceptional account describing the huge struggle of Agriculture Secretary Tom Vilsack to come to grips with the opioid crisis in rural America. Vilsack is from rural Iowa, where he was a small town Mayor. The opioid epidemic has personal overtones for Vilsack because of his parents addiction and growing up seeing the lack of helping hands. Vilsack. a two term governor of Iowa has witnesses these struggles in Iowa, as the state rural areas faced high poverty rates, more likelihood of being obese, less likely to go to college, and more likely to be pregnant in the teen years, than the rest of America. Vilsack is frustrated not just with the Obama administration but also with Congress, the media, the private sector with high pharmaceutical prices, for not giving enough attention to rural America. He sees rural America as providing the food grown and a disproportionate share of the military. The opioid epidemic comes at a bad time for rural America. This report provides a story that is typical where a dose of painkillers for a Navy employee leads to addiction and use of opioids. The whole experience has made Vilsack sound cranky to people in the White House. ...

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Car sales in Germany are up 40% from ayear ago. This is not about to happen in the USA. The cash for clunkers program in Germany is broad and less complicated.In Germany eligible cars have to 9 years old and the subsidy covered the purchase of any new car, regardless of size and fuel efficiency. In the US the program just signed by President Obama covers a narrow profile of customers. In the US customers who benefitare economically challenged and in the midst of adeep recession. Cars can't be over 25 years old, and can't have a combined highway and city fuel economy rating of more than 18 miles per gallon as calculated by EPA. To get the full $4500 credit customers must buy either a new truck or sport utility rated 5mpg higher than the clunker or scrapped vehicle, or a passenger car rated at least 10 mpg higher.And the credit is given instead of the trade in value, so if the trade in value is higher it doesn't help. The German government is giving away upto $4500 but it started out with 1.5 billion euros to get 600,000 clunkers off the road, but because of the popularity of the program has expanded it to 5 billion euros for 2 million cars and extended it to end of 2009. The US program only has $1 billion for 250,000 cars or one eight of what the Germans are doing for amuch larger car market. Because of the dire shape Detroit and much of the midwest is in, because of the slump in the auto industry, this may be a mistake and a missed opportunity to do what the Europeans are doing, and get an even bigger impact. The American car market and industry is taking a severe blow from the deep recession. Because of the depressed region the impact of a real clunkers for cash program that targets a broader profile, with bigger financing and designed to give a boost to the market, could make a real difference. At this point it is more of a program designed to help people turn in their gas guzzling trucks for passenger cars, and those driving a $200 car are not likely to be the kind of customer who goes out and buys a new car say dealers. See the link to Alan Blinder's stimulus proposal in July 29, 2008, that suggested a $20 billion program even before the current crisis. The present program has only $1 billion....

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This WSJ editorial says China's nationalist sentiment should not be underestimated and there are risks of a skirmish between Japan and China over disputed islands. The Japanese government's decision to buy the islands was meant to counter the effort of nationalist Tokyo governor Ishihara's attempt to buy the islands, and should not have been seen as a provocation by China. It says the U.S. should stand by Japan. WSJ reported on Sept. 25, 2012, joint exercizes with Japan's Self Defense Force on the island of Guam, providing American training on island defense.

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U.S. housing firm Fannie Mae reported a loss of $6.5 billon for 1st quarter 2011. Home price declines pose an added risk for Fannie Mae and Freddie Mac as the firms have a large number of foreclosed homes. Fannie and Freddie had 218,000 homes at the end of March that have to be resold, a 33% increase from 2010. Fannie Mae has about $206 billion of delinquent loans on its books. Both firms are on government life support. Fannie said it would ask for $6.2 billion in new funds from the U.S. government.

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Kohls online retail sales show margins of 4% compared to 10% for in-store sales. Wal-Mart is losing money on online sales as it invests in technology and infrastructure for Web operations. Best Buy's margins are thin on online sales. Shipping and handling, higher returns, and lower prices lead to lower margins on online retail sales. The lower costs from not having to maintain an actual store network with real estate and labor costs is offset by these costs which can run as high as 25%, according to industry analysts.

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Efforts to increase wages by the Abe administration in Japan. Combined 10 of 12 major auto worker unions in Japan said companies had met their full demands in 2013. Toyota offered workers a bonus equal to 6 months of base pay- a 15% increase over 2012 bonus. This reverses a negative trend of declining wages in Japan- average annual compensation declined for part and full time employees, including bonuses, for 8 of 10 years 2002-2011, reaching 4.09 million yen or $42,800 per worker in 2011, according to the National Tax Agency.

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Faced with the prospects of severe hardship in poorer countries, the World Bank gives a realistic forecast for 2009 that shows the world economy shrinking in 2009. It says the neeeds of poorer countries are likely to overwhelm what the IMF and the World Bank can do. And called for seting up a"vulnerability fund". Even if the World Bank tripled its lending in 2009, it would only reach $35 billion. The combined gap the emerging market countries face it says, is at least $270 billion and upto $700 billion in the next 2 years.

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This chart shows sharply divergent earnings trends. Looking at percent changes from a year ago the Bureau of Economic Anlaysis numbers show that fourth quarter earnings domestic profits were down 6.5% while earnings from the rest of the world jumped 42.8% the largest increase in 27 years. How strongly will these export markets hold up as we get to 2009 and there is a global impact of the recession that starts in the USA. And lower earnings in US markets will mean lower capital spending in the US.

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Here are some ways to make for a better day at work.  1. Have what is called a "monk-mode" morning when you just keep out all phone calls and focus on "deep work," without distractions. Every little distraction in the form of a call or some other interruption has its costs in terms of having to refocus and not being able to concentrate on the task at hand as it deserves. 2. Have "meeting-free" days. These are days that you can focus, concentrate on tasks without distraction of meetings. Have walking meetings and meetings where you can walk out in the open for fresh air and some exercize. And no phones at meetings. 3. Replace reading with presenting powerpoint presentations. Have people write out their ideas for others to read so that discussion can be engaged and effective. Amazon CEO Bezos never believed in powerpoint presentations and required staff to write so that they could in the process improve on the clarity of their thinking. 4.  Have weekends free of email. This reduces the stress of workers under a manager who spend time writing and answering emails over weekends when they could replenish their energies and come back charged up on Monday morning for a fresh start on a new week. 55. Grab a coffee with a colleague and do some one on ones talking as one walks around the offices. This was done by Intel's Andy Grove as an effective way to get things done eliminating some of the need for formal meetings. This also provides an opportunity for casual conversation Also laugh and socialize in different ways.       ...

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The Economist magazine points out that even without the one-child policy birth rates would have declined in China because of rising participation of women in the work force, education, delayed marraige, and the high cost of education and housing for more children. As China pursues a two child policy starting in 2015, many of the same factors are at work and many women are seen as unlikely to have two children. The Economist says the right policy would have been to scrap this policy altogether. This may actually happen as China sees the social and economic factors behind the falling birthrate continuing to operate limiting the size of families, and creating problems of rapidly aging society as in Japan. Latin America provides strong evidence to support the Economist magazine's point because of the falling birthrates in Brazil and Mexico for social and economic reasons.

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Alicia Munnell, is the director of the Center for Retirement Research at Boston College. Munnell says the Domenici-Rivlin deficit reduction proposals should serve as the basis for putting Social Security on a sound financial basis. Tackling the budget deficit should not be focussed simply on the 12% of the budget that makes up nondefense discretionary spending in his view. Tackling Social Security would build confidence and reduce the long term deficit. The Domenici-Rivlin plan has the following proposals for Social Security- indexing the full retirement age after it reaches 67 to improvements in life span, a smaller cost of living adjustment, increasing the earnings subject to the payroll tax to about 180,000 from 106,800 in a gradual way, and gradually taxing employer and employee premiums for health insurance.

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Florida's House of Representatives passed a bill in March that reduces the number of weeks of unemployment benefits from the standard 26 weeks to 20 weeks. A similar law was passed in Michigan recently. Both states have unemployment rates exceeding 10%.

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Ariel Mckenzie is the daughter of  Boeing machinist who told his daughter to join Boeing as generations of Boeing workers in the Seattle area have done. Not anymore. Airel says she can't tell her 15 year old daughter that it can provide a good life today with wages falling behind soaring costs in the Seattle area. Note that the new contract states the 437 billion dollars of planes backlog Boeing has will not be made in non union plants in the South, most will be made in the Seattle area home to Boeing since it's founding. How does Boeing see this happening without a wage deal that workers are not happy with, when since 1997 the workers were being treated as a transaction and losing out. Boeing workers say the new contract has no bonus program and does not restore fixed benefit pensions which were replaced by 401 K's . The housing prices index in the Seattle area for last decade rose 128% and average price of a home in Seattle is $835,000. Average worker pay in 2024 is $75,000 and fallen far behind costs of living. It's all been downhill say veteran Boeing workers after the 1997 merger with McDonnell Douglas and the shift of corporate offices to Chicago. ...

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Scott Shane of the NYT provides this exceptional account of how the ideology of Wahhabism on which the Saudi monarchy is based has influenced the evolution of Islam, but not in the way other religions have evolved into more moderate and open religions. Christianity evolved from the period of religious conflict, and evolved to the point that the basis of progress was based on education and technology in most of northern and southern Europe. Where the evolution did not take place because of more intolerant behaviours such as in Spain with the Spanish Inquisition and ideas from the medieval period, this development based on education and technology lagged severely behind.  Wahhabism developed as a result of a sect started by a religious cleric Wahhab in a poor desert region around Mecca and Medina, now the Saudi Kingdom, who sought the help of a tribal chief Ibn Saud. They used the religious-political alliance to gain tribal dominance in the region. Wahhabism sought to change Islam by banning worship and religious rites at tombs common in that period. It also as Brookings scholar William McCants cited here says, drew "sharp lines" and intolerance between believers and non-believers- all non-believers including other sects of Islam, Shiites, Christians. The movement spread throughout the region, but was crushed by the Ottoman Empire based in Istanbul, Turkey, by the 1850's, only to be revived in the 1920's following the collapse of the Ottoman Empire. A Norwegian expert Heggenhammer cited here says clearly Islam did not benefit from the evolution that other religions had, and Wahhabism has slowed this evolution into and open, tolerant religion because of its "sharp lines" and intolerance of other faiths and ideas with the Wahhabism from a medieval perod. In India the British rule brought enlightenment thinkers (John Stuart Mill for example was a clerk for the British East India company). But no such change happened under Ottoman rule to inspire leaders like Gandhi and Nehru to setup a new constitution that made changes from medieval Hindu beliefs such as caste and religious practices based on superstition.  The development of an oil rich state in Saudi Arabia with the discovery of oil, and the dependence from 1950-2010 of the global economy, has led say experts to the export of the Wahhabist kind of Islam to other countries in Middle East and South Asia. This they say made the evolution to democracy and peaceful coexistence difficult or impossible in the region. ...

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The plant in Tychy, Poland where Fiat turns out 500,000 small cars a year, one every 55 seconds. Chrysler engineers are now visiting this plant to see what can be done with small car production. The Fiat 500 is turned out here. Its Fiat's best effort in terms of quality. Zdzislaw Arlet, is director of the Tychy (pronounced TICK-ee) plant. He says the right combination of robots to individual workers was critical to achieve efficiencies and to have the flexibility to switch to different Fiat small car models depending on which is selling more. This enables the Tichy plant to operate round the clock six days a week. About three years ago workers were assigned an individual ID that is stamped on the sections of the car that they assemble so any problems at the end of the line can be traced to the source. As a result of these efforts defects have fallen from 20% in 1996 to just 4% now, and the time to have a car roll out of the assembly line has been halved.

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Greece's new Syriza government plans to put a bill through parliament on the minimum wage as one of its first steps. It will reverse plans to sell the government's 67% stake in the port of Piraeus, and a planned sale of the state controlled utility will be held back. Sigmar Gabriel, the Social Democratic leader in the coalition government in Germany says Germany is ready to show solidarity with the Greek people, and says the new government has the opportunity to take better action against corruption and tax evasion in Greece than previous governments. Previous governments including governments of the Pasok and New Democracy parties which make up the ruling political elite in Greece failed to make the serious changes in tax collection needed in Greece whereby the upper class in Greece pay the fair amount of taxes due. The IMF's Lagarde also emphasized the tax collection, and separated it from austerity issues where most of European and American opinion believes growth oriented policies are the right path....

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The effort to shift China's economc growth away from the rampant overbuilding in housing and industrial capacity of the past to domestic consumption, and focus on meeting the demand for better medical care, quality of food, education and other quality of life products. China's leaders met at the Central Economic Work Conference in Beijing in Dec. 2015 to work out ways to make this shift so that growth rate of 6.5% and other goals can be met. Plans include reducing industrial overcapacity, dealing with overinvestment and unused inventory in housing, reducing financial risks from high corporate debt to GDP ratio approaching 160% estimated by Standard and Poors Ratings Services. By comparison the U.S. debt to GDP ratio is 70%. A steep rise resulted from the huge China stimulus program of 2008-2009, when the ratio was 98% for China. Experts such as Derek Scissors of the American Enterprise Institute are pessimistic about the prospects of successfully implementing reforms, saying reducing industrial overcapacity was a goal of the new Jinping Li-Keqiang leadership in 2013, but not much progress has been made in 2 years....

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An assessment of Brazil compared to the other leading emergig market countries Russia, China and India, shows that Brazil has a lot going for it. Compared to Russia and China, Brazil has a stable multiparty democracy. And the differences between the countryside and the urban areas is not quite as large as it is in China and India. Surprising as it may appear about 83% of Brazilians now live in cities. And the process of urbanization that is taking place in China and India took place much earlier in Brazil. Between 1940 to 1980 industrialization and a growth rate that averaged 7% for most of that period brough large numbers of people from rural to urban areas. And the problem of inflation which wracked the economy from 1986 to 1994 before being brought under control is now well under control at about 4.7%. Debt problems from the Asian crisis contagion effects are now behind it as Brazil is a big exporter of commodities from coffee, soyabeans, orange juice to iron ore, with the real strengthening from 68 as measured in the currencies of its trading partners in 2001 to 100 today. Brazil's growth rate has reached 5.4%. and has been at an average of 4.5% since 2004. Between 1980 and 2000 Brazil's growth was in a slump so this has been a period of great changes in Brazil. Brazil is importing more plant and equipment with a stronger currency and booming exports. Brazil invests 19% of GDP according to Vale of MB Associados and that number should reach 25% of GDP at which point it would be easier to maintain a growth rate of 5% a year. With consumer credit growing at 25% each year for the last 2 years consumption is growing. And Brazilian companies were the second largest source of foreign direct investment in developing countries after China, according to the Fundacao Dom Cabral, a business school, and Columbia University, with the stronger real helping the balance sheets of Brazilian companies. The big change is that under the Lula government Brazil has done much better for the working classes and the rural poor. The Bolsa Familias is a program of cash transfers to poor people under the poverty line but which has strings attached so that they are required to send their children to school and have them vaccinated. It reaches 11 million families and is considered a major success in reducing poverty and in helping to see that poverty is not passed on from generation to generation. A program that may be copied in India. Acccording to the Observador Brasil/ Ipsos survey 23 million Brazilians have left social classes D and E and joined class C which means that they can have a rented apartment, a car and some gadgets. This give more confidence in Brazilian democracy and capitalism as more of society's diverse groups have a stake in the future....

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President Macron moved to invoke an article in the French constitution that allows the government to pass a law bypassing the legislature. He used this to pass his pension overhaul. The law allows the president to bypass the National Assembly. A motion can then be introduced in the National Assembly to censure the president. This cannot pass because Macron's party has a majority in the National Assembly. Opposition lawmakers had hoped to introduce thousands of amendments to stall legislation on pensions.  Under the overhaul the entire salary history of employees are taken into account in calculating a pension amount. Previously the highest earning 25 years were used. For civil servants the last 6 months of service were used. The pension system was also fragmented providing different terms to different groups with some more favored than others. To maintain the old system a 40 day transport strike was organized in December 2019, but failed to change public opinion on the issue which favors a single pension system instead of the many different and disparate pension schemes with different rules. ...