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Walter Mead describes the roots of the refugee crisis in 2015, as millions of refugees flee Syria, Iraq, and other countries in the Middle East, lying in the failure of governments throughout the Middle East to accomodate modernity, women's rights and technological progress into the old Islamic thinking. He says he sees this in Egypt, Saudi Arabia, Turkey, Pakistan, Iraq, Syria, Libya, Tunisia, and other countries in the Middle East. The Arab Spring which aroused so much hope for the people of the region has floudered in the failure of both the Islamic leaders, the military elite, and civil society to come up with a consensus rooted in what a modern Islamic society that accomodates modernity, women's rights, the participation of people in their government, technological progress should look like. The Western nations of Europe and the U.S. also underwent soul searching to come up with a modern Christian society through its own struggles, which the Islamic societies have failed to do; and as a result floundered and broken up by sectarian, religious and military conflicts. Mead takes the long view, yet falls short when it comes to how European leaders and societies face individual challenges to bring their own Christian faith and ideals into the real world, in the way chancellor Merkel has responded in Germany. Europeans have had their own period of conflicts and civil wars, the refugee crisis and refugees in chancellor Merkel's words who "have gone through the hell of a civil war" are very real, and how each European responds defines who he is and how far Europe has come from its own dark days....

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This op-ed essay by the President of Toyota Motor Company, Akio Toyoda, talks frankly about the situation that led to the quality failures at Toyota and promises that Toyota will try to live up to the ideals that shaped its beginnings some 70 years ago. Toyota had humble beginnings in the thirties when the original founder of Toyoda was in the textile loom manufacturing business. Following a new venture in automobiles in the 1930's, for three decades Toyota was only trying to catchup with the U.S. in auto manufacturing. It started with the current chairman Shoichiro Toyoda's father -and Akio Toyoda's grandfather Kiichiro- visiting a Professor of Metallurgical Engineerig at a university in Tokyo to collect ideas and information for entering the automobile manufacturing business. Akio Toyoda seems quite cognizant of these beginnings in this essay. Action steps he mentions are a top down review of global operations, establishing an Automotive Center of Quality Excellence in the United States, and asking a blue-ribbon safety advisory group of outside experts in quality management to independently review Toyota's operations, with the findings made public. Akio Toyoda points to the lack of effective communication in quality matters in its global operations that led to the problem festering for so long. He says that in regard to sticking accelerator pedals, Toyota "failed to connect the dots between problems in Europe and problems in the United States because the European situation related primarily to right-hand-drive vehicles." Toyota also moved to address problems in its Prius and Lexus HS250h models for anti-lock braking systems....

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The Federal Trade Commission says food companies in the U.S. spent $2.3 billion in 2006 for advertising to children. With the epidemic in childhood obesity in the U.S., this raises serious questions about how product packaging, images and themes affect the eating behaviour of children. New guidelines have now been written at the request of Congress. They were written by the F.T.C., the Food and Drug Administration, the Agriculture Department, and the Centers for Disease Control. The regulatory agencies say they will take comments and consider changes before submitting a report to Congress. The guidelines call for foods advertised to children to include healthy ingredients such as whole grains, fresh fruits and vegetables, or low fat milk. The foods cannot contain unhealthy amounts of sugar, saturated fat, trans fat and salt. The sugar requirement would have cereals contain no more than 8 grams of added sugar per serving. Fruit Loops for example contains 12 grams of sugar per serving. The guidelines apply to both children and teenagers. However these guidelines are voluntary. At this time an industry led effort has not produced results. The Children's Food and Beverage Advertising Initiative, which is operated by the industry, lets each company set its own nutritional criteria. The regulatory agencies see the need for the food industry to follow a uniform set of standards. Without serious action on this issue the U.S. healthcare system will continue to be burdened with high rates of obesity related illnesses in the general population, and out of control costs. And the U.S. will continue to face the urgent problem of a lack of healthy eating habits of children teenagers, and adults....

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Bill Spindle of the WSJ describes the Iranian Quds military organization led by Suleimani that operates alongside the Hezbollah organization in Lebanon as Iran intervenes in regional conflicts across borders. Using the militia and Quds Iran is supporting the Assad regime in Syria, and fighting Islamic State in Iraq. Quds has also supported Shiites in Yemen. The problem with the interventions may be that they may have created new problems from which Iran has gained little. The intervention on the side of the Assad regime created an opening for Sunnis supporting Islami State insurgency in both Syria and Iraq, creating another problem for Iran, and weakening the Shiite led government in Baghdad with the loss of Mosul Iraq's second largest city. The cost is in tens of billions of dollars for the intervention at a time when the Iranian economy is suffering from tighter sanctions because of an expanding nuclear development effort. Suleimani is head of the Quds military force, and Alaeddin Bouroujerdi is head of the foreign policy and national security committee in Iran's parliament, who says Iran is now a powerful force in the region. But at a heavy price and complicating the effort of Sunnis and Shiites to live side by side for centuries in the Middle East. There are no serious benefits for the Iranian people suffering from severe shortages at home, a devaluing currency, cost to subsidize other countries, getting into and exacerbating military conflicts. Prime minister Rouhani says- "Until when should our economy subsidize our policies? Lets have our foreign policy subsidize our economy, and see what happens." ...

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This piece by Kanter in the NYT gives an account of Jean Claude Juncker's background as a political leader in Luxembourg. His father worked in the steel industry and was active in the trade union movement at a time when farming and steel making supported the economy of Luxembourg. In two decades under Juncker Luxembourg was transformed into a banking and insurance center with one of the largest per capita incomes in Europe. As a Brussels insider Juncker, according to British public opinion, is an odd choice to head the EU when it is trying to make its administration more democratic and less distant from the average person in the EU. Britain's prime minister Cameron says Juncker "was never on any ballot." The reason for Juncker's candidacy is that he is supported by the centre right parties in Europe, which also lost support in the recent elections. The Socialist and left parties fared worse in the election, but both centre right and left parties lost votes to third parties and nationalist parties such as the Marie Le Pen's nationalist party in France and the Independent party in Britain. Even chancellor Merkel of Germany initially hesitated to support Juncker, but confirmed him as her choice when German public opinion showed it favored the selection based on the largest party in the European parliament making the choice. This puts Britain and Cameron at odds with Germany, with the Swedes and the Dutch calming their doubts about Juncker and going with Germany. Little is mentioned in the media about the other candidate, an SPD leader from Germany representing the socialist and Left parties. ...

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The MIT Economics Department helped shape the thinking of influential central bank governors, Mervyn King of the Bank of England, Ben Bernanke of the U.S. Federal Reserve, and Mario Draghi of the European Central Bank. Bernanke (1979) and Draghi (1977) received their Ph.D.s in economics from MIT in the late 1970's, with Prof. Stanley Fischer (1973-94) as their advisor. Charles Bean, deputy governor of the Bank of England followed them a few years later. Mervyn King was a visiting professor at MIT (1983-84). King and Bernanke shared an office as professors at MIT. The MIT school came up with a pragmatic and activist approach which argued there was a role for government when markets and the economy stumbled. This followed a period when economists from the universities at Chicago, Minnesota and Rochester were influential, making the case for efficient markets and businesses holding rational future expectations which were ahead of government planners; saying government should play a minimal role. The MIT trained central bankers have made shaping public and market expectations an important part of policy actions. Draghi's July 23, 2012 remark- "Believe me this will be enough," was an effort to shape expectations after the European Central Bank's July 2012 bond buying actions in the eurozone. Germany has a competing version based in Bonn. Germany's former Bundesbank president, Axel Weber, was the tutor at Bonn University for current Bundesbank president, Jens Weidmann. Both Weber and Weidmann supported austerity measures, inflation fighting efforts of former ECB head Claude Trichet, and opposed Draghi's monetary easing and bond buying efforts to reduce excessive yields of Italy and Spain....

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June unemployment numbers will jump say experts at IHS Insight as GM and Chrysler downsize even more to become smaller companies with even less market share. This will reflect closing Pontiac and sale or closing of the other GM brands Saturn, Saab, and Hummer. It will reflect closing of more dealerships of GM and Chrysler. THis might be offset by a pickup in sales if something like the European trading clunkers for new cars program takes off in the USA. But with the US customers more in debt and with rising job losses, the pattern may be different in the US. It may only offer a small boost in sales. Manufacturing still matters in a recovery. In 1980 manufacturing was 20% of America's output, now it is 11.5% says Mark Zandl of Moody's Economy.com. Manufacturing, he says, has a bigger impact than its size suggests, because it responds quickly. As sales resume workers are called back to their jobs. The sharp V shaped recoveries in the early 80's reflected the rapid response of manufacturing. After the 1980's both the declines and the recoveries were shallow in 1990-1991 and 2001. Now with GM and Chrysler shrinking further under the government plan to fix these companies, and taking the supplier impact, the rebound leg of the V is missing. The kick from the Big Three and their suppliers is missing, says Nigel Gault of IHS Insight. Of the 5.7 million jobs lost from Jan 2008 to June 2009, 1.6 million were in manufacturing and 289,000 were in motor vehicles, split almost evenly between assemblers and supplier networks....

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GM and Chrysler will face a tough market in the years ahead. The last year as seen GM's image with the American customer erode even further. Reputation Institute surveyed 70,000 people worldwide, and found only Mitsubishi and AvtoVAZ have a worse image. This inspite of improvements in quality at GM, which shows that management errors and its image matters a lot in buyer behaviour. Worse still GM and Chrysler, both are not favored by the younger generation of customers. The new demographics show that 73 million 21-33 year olds will be customers in the next few years, and they have shown little interest in Detroit brands. These people says one expert on atitudes towards automotive brands at AutoStrategem, can't see heir friends in these brands, and so can't see themselves in them. Perception matters a lot to these young people who are better educated. Studies have shown that college graduates and better educated Americans favor overseas brands by a wide margin. Chrysler is pervceived as having poor quality according to JD Powers and Consumer Reports. With $21 billion in debt Chrysler is more burdened with costs, needed improvements are less likely without investment. Chrysler may shrink to 6% of the market says BW, and GM will probably go down from 19% in 2008 to 14% in the next 3-4 years, as competing with Honda, Toyota, Hyundai, VW and new competitors from China and India makes for a very tough environment. Worse still there is about 90 million car production capacity worldwide, and the worldwide market has shrunk to 55 million cars and is still shrinking. ...

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Economist's analysis of the American stock market as it stands in January 2007. World awash in liquidity. Could this change? Corporate profits at an high, could this change? What will the housing market weakness do in 2007 and 2008? Are there any complex financial instruments that might falter in 2007? Will risky assets always outperform and volatility remain low or will things change? Questions posed here. Note from 2007 November 27. The housing market took a downturn by mid year. The credit markets felt a severe jolt in the third quarter of 2007 and a credit crunch ensued. And the new financial instrument or delivery vehicle subprime mortgages packaged into securities and sold by premier institutions like Citigroup as AAA safe investments around the world, including it so happens to 3 Arctic towns in Norway by brokerage firm there. Using a network of financial affiliates to do this in a off balancesheet fashion, all blew up by November 2007. The adjustable rate mortgages were set to adjust by mid year 2008 and lead to an acceleration of foreclosures in 2008 which had already climbed up in 2007. Things can get sour quickly and financial markets felt this especially because no oone knew how much of these risky securities other parties in the markets were holding resulting in a general level of mistrust. Leading to a choking up of the financial institutions in USA and Europe and central bank intervention in both places, successful for the time being in stemming the problem. Another part of this crisis is the global effect of the subprime mortgage losses so that financial institutions around the world were affected. ...

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David Brooks of the NYT describes the approach taken by British prime minister David Cameron and his Conservative Party government to help the working class poor in Britain, and tackle the social roots of poverty. He says an American adaptation similar to this is badly needed in the Republican Party, with the candidates in the election providing solutions from an old rulebook. Only after Trump's popularity with appeals to less educated older Americans has the Republican leadership responded, with Speaker Ryan helping organize a forum on poverty under the Jack Kemp Foundation- emphasis was placed on education, work, opportunity and accountability for anti-poverty programs in the discussion moderated by Ryan and Senator Tim Scott. Less attention was paid to the other social aspects mentioned here by Brooks, and cited by Cameron when he described the inadequacy of traditional solutions from the right and left of the political spectrum. Cameron outlined the principles of his anti-poverty plans called "Life Chances Strategy," in a speech on Jan. 11, 2016, in north London, with the entrie transcript on the gov.uk website. Cameron acknowledged in the speech that social issues including single parent families, and other social problems such as long term unemployment, can make it harder for some people to use self-reliance and personal responsibility in a growing economy as a way to grasp opportunities. Cameron proposes a combination of economic, social and job growth strategies. His second term plans include 30 hours a week of free childcare for 3 and 4 year olds so both parents can work, parental maternity leave, expansion of Troubled Families Program, in addition to the introduction of National Living Wage, tax cuts, universal credit. In tackling social aspects of the problem Cameron cited the need for development in the early years of childhood, the huge importance of family, social connections and experiences, informal mentors, cultural experiences, broadenend horizons, that enable young people to acquire language skills, character and resilience. Second term projects include expanding reach of high performing schools to deprived areas, emphasis on core English, math, science, history, geography Ebacc skills, a 1 billion pound investment in the National Citizens Service by 2021, a plan to transform housing estates including rebuilding from scratch, additional 1 billion pounds to provide mental health treatment including treatment within 2 weeks in homes and communities. Throughout Cameron's "Life Chances strategy" is aimed at tackling not just the material dimensions of poverty, but also what he describes is broken in Britain- "the paucity of opportunity."...

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In addition to a new $1 billion credit line after the earlier $1 billion credit line, India is facilitating Sri Lanka's negotiations with the International Monetary Fund. Indian focus is for stronger Neighborhood and economic development in the region at an accelerated pace after earlier setbacks in the region. This can be seen in Uttar Pradesh a region as large in population as the US, which faltered for 60 years after independence, but is moving forward with both state and federal government guided efforts. This also holds true for the entire Indian Ocean region countries where Indian experience in achieving development goals can be shared. 

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The change means sensitive technologies could no longer be accessed through Hong Kong says the WSJ. From China's perspective the $1.14 trillion held in Chinese banks in Hong Kong dollars is only about 3% of China's total $40 trillion in bank assets, and the effect on Chinese banks would take some time.

In fact the unequal trading relationship which left the American manufacturing base so widely exposed and sent outside the country has taken place for decades till this pandemic  showed its basic weakness, so much so that both sides may have a sense that this was about to end at some time anyway.

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The differences between prime minister Netanyahu of Israel and U.S. president Obama during the conflict with Hamas in 2014. U.S. relations with Israel reach another low point.

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The Economist continues to advocate nationalization of American banks as the only meaningful and effective solution.

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Here are 11 big infrastructure projects that are planned across the country. They are part of the $2.2 trillion of projects to build or repair infrastructure, that is estimated by the American Society of Civil Engineers as needed by America today. But there is only $100 billion for infrastructure spending in the Stimulus Plan, and much of this will go to keeping existing infrastructure, a dilapidated bridge here or road there in repair. Only $50 billion is available for transportation projects. The rapid transit planned for California with trains twice as fast as Acela for a 800 mile track is estimated at $45 billion, but there is only $11 billion in the Stimulus for mass transit aand cities like Washington DC for Dulles airport with its need for a airport train, and other mass transit projects around the country wil compete for the same money. As a result most will go unfunded. The Second Avenue Subway in New York at $4.35 billion, Miami Port Tunnel at $1 billion, Bridge to Canada from Detroit for $1.8 billion, Hudson Rail Tunnel for New York at $8.75 billion, Seattle Highway Tunnel at $4.24 billion, Gulf ports at New Orleans and Gulfport, Mississippi at $2.04 billion, tens of billions for new California aqueduct bypassing the delta around Sacramento to bring water from north to arid Southern part of California, NestGen Air Traffic Control for $15 billion to $22 billion, are the other projects on this list. Many of these are badly needed and have been waiting for years to get the necessary investment. This is only a partial list, and suggests that there are a lot of projects that can productively use government investment, so that wasteful spending does not occur. It appears that the projects are there because these areas were neglected for a long period, more like the situation faced during the post Thatcher period in the UK, where infrastructure and services had been neglected for so long that Labor governments could productively channel new investment in these areas to avoid wasteful spending. And it appears that the situation is very different from Japan where the Liberal Democratic Party had a vested interest in keeping its farm and rural base happy with new projects, like a bridge to nowhere, that led to wasteful spending for a decade or more, leading to rising deficits and investments that did not create productive returns in terms of economic growth. By contrast these projects have potential to generate productive returns for years into the future and also are large enough to create jobs and be spread out over a number of years. This could end up being a real bright spot in the current situation. Felix Rohatyn, who helped New York rebuild its finances afte a crisis, has a new book "Bold Endeavors: How our Government Built America, and Why It Must Rebuild Now", using examples like the rebuilding of the Erie Canal, the transcontinental railroad, and the Interstate Highway System, and says the US needs to build for the future with more ambitious, better planned projects today. He says, that infrastructure is not an expense, it has to be seen as a vitally needed and productive investment. People like Rohatyn and others see the Stimlulus plan as a missed opportunity because a lot of these projects mentioned here and the numerous others not shown here will simply not see much money from the government to support them and get them off the ground. The idea that this is wasteful government spending that is spreading, may be a danger to this vision and opportunity. At the same time the reality is that if all this was happening during the time of the Erie Canal or the postwar period of the Interstate Highway System it would have been much easier to support. The banking crisis fix is taking away so many of the dollars that could have gone here, that this may be the missed opportunity, the lack of room for visionary investments because of the danger of pushing the government deficit to 60% of GDP with the current spending plans. ...

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Daniel Bell at Tsinghua University in Beijing, Andy Xie, economist in Shanghai, Zhang Habin, professor at Peking University, and Michael Meyer, author and hutong expert, talk about what issues are important. Bell says Obama mania is absent among the young in China, though they respect his intellectual abilities, and Chinese are not looking to the USA for ideals. They are looking to Chinese culture and characteristics, and democracy is seen in this light with emphasis on Chinese characteristics. This means the US has to engage at a deeper level with China. Treat China as an equal with something positive to offer, says Bell. Andy Xie is concerned about the US-China relationship, based as it is today on tenuous grounds, where what happens in Florida and California can have a significant and immediate effect on what happens in Guangdong. With 70% of the furniture sold in the US made in China, the effects are immediate when housing slumps. So he says the US lost 3 million jobs since the subprime crisis, and China lost 20 million jobs. And for the 5 million college graduates coming out in 2009, they will be adding to the 5 million college graduates from previous years who are seeking jobs. Ten million unemployed college graduates mean China is seeing whole new conditions as the backdrop of US-China relations. Habin says its important for the US to set an example in climate change and emissions of greenhouse gases. The US should sign an agreement with China with binding targets, make its technology available to China, and provide development aid to make this technology and other assistance accessible to China. Cooperation on this issue is vital to future relations says Habin. Meyer says the hutong, small enclaves of old Beijing with lanes and small homes, that the city officials call neighborhood slums, but actually have a sense of community and a vibrant life, are worth preserving. He questions the Walmart and Pepsi commercial culture, and questions building of the American car culture urban plan that generates pollution, lacks community feeling, and is not energy efficient. In fact he has a point here, because the US is shifting away from its own older urban planning design that encourages urban sprawl, as in California. The new Sacramento urban plan that is being adopted for the future in America has energy efficiency, more community and easy interaction, less urban sprawl in mind. See the link to this. But Meyer says Chinese planners insist on their right to make the same mistakes American urban planners made. And Meyer quotes the head of the first Chinese environmental NGO, who says, "if the Chinese want to live the American way of life we need 7 earths to support them". Which raises a disturbing question of the US postwar way of life with its large SUV's, urban sprawl, and less sense of community. Wouldn't the US have to join India and China in the worldwide scramble for resources to preserve this way of life? Just this week China signed $51 billion of deals for natural resources, see the link. And is the rapid decline of the SUV, just the first sign of changes that are taking place, with the economic changes in coming years leading to grappling with issues of better quality of life, smaller quantity of things, health and obesity and lifestyles, community, all coming to the fore. ...

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GE's share price falls below $10. It has dropped 77% in 1 year from the 52 week high of $38.52 a share. Last time it hit this level was April 17, 1995. And its GE Capital unit faces problems. For years it generated half of GE's profits, now it had to sell its commercial paper to the government when markets dried up last fall. It has had to use a government bond guarantee program for bond issuance in recent months, even though it was at one time one of the largest corporate bond issuers. It has been unable to sell its $30 billion private label credit card operations and it appliances and light bulb units, as there are no buyers. As the stock drops GE has to consider cutting the dividend of $1.24 per share, to keep more cash to navigate this crisis. GE's Immelt continues to have his managers focus on the operations, and its business reviews that were conducted weekly are now conducted daily, and the monthly reviews are conducted weekly. But being proactive hasn't helped in this environment. ....

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Japnese exports dropped 45.7% in January from ayear earlier, resulting in 1$9.9 billion trade deficit. Exports to the USA dropped 52.9% in january from ayear earlier, exports to China dropped 45.1% and exports to Asia dropped 46.7% in January, over ayear earlier.

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The first budget of the Obama government makes a sharp swing away from decades of earlier policy, and puts America on a new direction focussed on priorities in education, health care for all, and energy. The 134 page doocument on the budget defines the governing principles and priorities of the new government. "This is the legacy that we inherit- a legacy of mismanagement and misplaced priorities, of missed opportunities and of deep, strutural problems ignored for too long," the document says. It declares that "government must lead" in contrast to Reagan's "government is not the solution, government is the problem." In contrast to "trickle down" policies of Reagan it proposes "trickle up" policies- shifting income from rich to the poor. It creates a $630 billion fund towards a national health insurance program built with the help of savings and cuts elsewhere. Government takes over most student lending, and dramatically expands Pell grants for poor college bound strudents, transforming it into something like Medicare that is automatic rather than approved each year by Congress. Businesses that emit carbon and heat trapping gases will have to purchase permits to do so starting in 2012. Hundreds of billions of dollars from these permits will pay for clean-energy technology and for tax credits for working couples. Income tax rates will rise for couples earning more than $250,000 beginning in 2011 and will have lower personal exemptions, lower itemized deductions, and higher capital gains tax rates. The estate tax will be preserved. Hedge fund and private equity managers wil have to pay income tax rates for that compensation as high as 39.6% after 2010, not the low 15% capital gains rate they pay now. The Defense Department would see a $20.4 billion boost or a 4% increase in 2010 over 2009, it will request an additional $75.5 billion in 2009 for the wars in Iraq and Afghanistan, and an additional $130 billion for 2010. The budget is for $3.6 trillion for 2009, and projects a deficit of $1.75 trillion for 2009, or 12.3% of GDP- a level see in 1942 when the US entered World War II. Under optimistic White House assumptions for a strong economic rebound, the deficit would drop to $533 billion by 2013....

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Willingness to change opinions as the wind shifts, or as conditions change and new information or insights are gained, is a necessary quality in good leadership. You may not get it right the first time, and that is OK if you are honest with yourself and do the right thing, which is to take stock of the new information and understanding and act upon it, even if that is different from what you said or did before. These skills may be needed by the President in difficult places like Afghanistan and Pakistan, as well as at home in tackling the economy where some actions work and make sense and some others don not work or make sense under the conditions. Or its some new understanding of the conditions that is gained. FDR tried a number of things in his first 100 days in office and he got conflicting advice from some advisors, over time he obtained a better grasp of conditions and an understanding of what actions would be most effective in ending the crisis in the country. He had to be a good learner, be a good observer first hand of conditions, stay in touch with the people, honestly ask himself what would be the best thing to do in each situation. Sometimes he had to chart a new course and he had to know which advisers best represented the interests of the people and the country, and where to look for help. This is described by Adam Cohen of the NYT in his new book "Nothing to Fear". ...

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The administration hopes to seize the initiative on the regulatory framework agenda before the G20 meeting on April 2, 2009. Broad outlines of the approach will be laid out. One of them is to give the Fed the authority to oversee the regulatory framework and oversee systemic risk. It includes stronger capital requirements for banks especially in good times, give regulators power to take over financial firms that are failing. Also included will be consumer protections, and strict enforecement of consumer protection laws opn credit cards and mortgages, and giving the government comprehensive authority over all financial products marketed to consumers.

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The authors of this article say 2.4 million excess houses over and above nomal working inventories remain to be sold, and it is this surplus that is a mortal enemy of housing prices. US buyers are too debt ridden and have seen their 401 K's and pensions decline. So they suggest giving permanent resident status to immigrants who will invest in US housing, buy one or more than one house. They did not have to live in them, they also could not rent them, and would have to be above a certain price, so they would be taken off the housing market. They are aware of the effect on Vancouver of letting people from Hong Kong buy into that market, just before the handover to China. About a quarter of Vancouver's population became Chinese, and billions were invested in the housing market. They quote Merrill Lynch that there are 7.1 million households in the world with $1 million in financial assets, with a total of $29 trillion. They figure that 2.4 million excess houses could be sold at a median price of $184,000, and bring in billion sof dollars. If jobs are not impacted, and wealthy people in Asia and the rest of the developing world were to put money into buying houses of above $184,000 as an asset, with a temorary residency attached to it which could be permanent in 5 years, this could be part of the overall solution to the housing excess supply. The fact that values are attractive could make this an investment for affluent foreigners who may not stay in the houses at this time and keep it as a safe haven house, an additional property to use in the USA. It would ease the hosuing price situation in certain cities by bringing in a new buyer with resources into the market. ...

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Simon Johnson, a former chief economist at the IMF, rejects the argument that only the traders at AIG in the Financial Products Group who got the company in the mess are the ones who can unwind the complex transactions. He says the same arguments were used in S. Korea, and Thailand and were rejected by their governments as the banks in these countries collapsed and were takenover by the government. At the most keep afew traders and let the rest go is what Johnson suggests.

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THe Fed is pumping new money into the financial system. $800 billion of new money over the past seven months, since September 2008. Last week it said another trillion dollars or more could be added int he months ahead. The way this works is the Fed purchases securities or other assets from securities dealers in exchangefor electronic credits that amount to cash and are deposited in banks. These cash credits known as bank reserves have jumped from $3 billion in August to $776 billion by mid March 2009. This week it said it would buy $1.25 trillion of mortgage backed securtities backed by Faniie and Freddie, and $200 billion in debt issued by these firms. And also buy upto $300 billion of longterm debt issued by the US Treasury. THe idea is to drive down longterm interest rates. All the while the Fed is not printing money in the old fashioned way- Federal Reserve notes also called dollars only increased to $862 billion from $793 billion. Still it is increasing the banks reserves in this way. And these mountains of cash in reserves are sitting in the banks as there is not much lending, and consumers are reluctant to borrow and to spend, and with all that unused production capacity there is little chance of inflation. When the economy recovers the Fed hopes, if all works out as planned, to pull that extra money out of the system and pushing interest rates higher before inflation settles into the system....