LyrArc Article Gist
An investment of $1000 in Deutsche Bank shares in 2015 would have led to loss of most of the capital - loss of 75% of it, says this report in DW.com. For years Deutsche Bank chased profitability but the results are dismal. Recently 18,000 jobs were slashed and the bank is now accepting the inevitable shrinking. It all started with with chasing profitability in the U.S. as an investment bank leading to deep losses during the 2009 financial crisis. While German and Swedish teachers as shown in this weeks stories from Europe show struggle to make ends meet on low salaries, jobs in banking have continued to pay even when their are steep losses as at Deutsche Bank. This report argues about who is responsible for high severance pay at banks investors, shareholders, supervisory boards or regulators. Ultimately it is about what choices a society makes, and about the importance it gives to education compared to other occupations, and to good governance across the board without exceptions. Developed countries sometimes fail to learn the lessons of the past in the chaos of the times. ...

LyrArc Article Gist
Christopher Wood points to deflationary trends in Europe and the USA. Bank for International Settlements (BIS) data shows European bank exposure to government debt in Portugal, Italy, Ireland, Greece and Spain at $2.8 trillion at the end of 2009, and a rise in the London interbank offered rate (LIBOR), as further signs of negative trends. The property bubble in China and strong action to tighten and use antispeculation measures have already led to transaction volumes in residential real estate falling rapidly. If Beijing reconsiders further appreciation of the yuan, a trade debate with the U.S. may intensify. All this points to increasing risk of a double dip recession.

LyrArc Article Gist
The move is one DJT made on his trip to Saudi Arabia in May 2025. DJT signed agreements that let the Saudis (and UAE, Qatar) have access to US made AI chips in exchange for $1 trillion in investments in US AI infrastructure. This is the only way the Saudis can access AI technologies in the US. For the US and for Saudi this is a way to efficiently utilize funds that go from the rest of the world to the Saudis for oil, much of it being wasted on foreign wars not development and science in other oil producing regions. To do this DJT rescinded the Diffusion prevention rule made by the Biden administration to not let even allies have a way to invest in American AI and have AI chips exported to allies.

One result can be seen in the 73% growth in Nvidia's data center sales in 2025, which makes AI chips, even after a $4.5 billion charge for DJT administration rules blocking sales of AI chips to a competitor China.

LyrArc Article Gist
According to Census Bureau data analyzed by the Pew Research Center, 6.1 million Hispanic children lived in poverty in 2010. The poverty line is defined as a family of four living on $22,314. Of the total poor children in 2010, 37.3% were Hispanic, 30.5% white, and 26.6% black. Hispanics were hit hard by the 2008-2009 recession because many are employed in construction and the hospitality industries or blue collar jobs. A majority of the Hispanic children were born in the U.S. 4.1 million have immigrant parents and 2.0 million have U.S. born parents. Of the total U.S. population Latinos are 16%, yet they comprise 23% of all the children in the country. With a quarter of America's children being Latino -and with these numbers expected to grow in coming years because of higher birth rates- the fact that many of these children are less likely to get a college education or acquire technical skills because of poverty levels, has serious implications for America's future competitiveness.

LyrArc Article Gist
Speaker Paul Ryan's effort to fix what he calls "a House that is broken," as he becomes the new Speaker of the U.S. House of Representatives in Oct. 2015.

LyrArc Article Gist
In a forceful speech at George Washington University, on April 14, 2011, President Obama outlined his proposal for addressing the U.S. budget deficit. His plan includes a mix of tax increases and spending cuts. His plan is for a $4 trillion deficit reduction over 12 years, with $1 trillion coming from revenue increases, $2 trillion from spending cuts, and $1 trillion from savings in interest because the U.S. would borrow less. Obama's plan would end the Bush-era tax cuts for people earning more than $250,000 a year and eliminate a number of tax breaks. Spending cuts would include cuts in Medicare costs, discretionary spending, and defense. Obama's plan would commit to automatic, across the board spending cuts and tax increases if an initial target is not reached by 2014. Obama said the Republican plan proposed by Paul Ryan presented " a vision that was less about reducing the deficit than it is about changing the basic social compact in America....The's nothing courageous about asking for sacrifice from those who can least afford it and don't have any clout on Capitol Hill."...

LyrArc Article Gist
Charts of foot traffic in retail stores show traffic is back up in home improvement stores but lags in electronics and apparel. Apparel is well below levels below the pandemic with stores closing. E commerce sales in September were up by 45% compared to same period 2019, with this making up 16% of all U.S. retail sales.Weekly foot traffic in the U.S. is down 14% in September compared to one year ago.

Clothing stores have the lowest employment rate with a decline of 29% as of July, and this is where stores have closed the most with job losses permanent.

 

LyrArc Article Gist
The OECD sharply cut its eurozone growth forecast to 0.3% in 2012, well below the 2% growth forecast it put out in May 2011. The U.S. growth forecast was cut to 1.8% from the 3.1% predicted earlier. This has serious implications for the eurozone because it means the worsening of budget deficits in the eurozone, leading to more austerity measures and spending cuts, leading to a downward spiral as this affects growth. It also has implications for growth in the U.S., if the super-committee appointed by Congress mandates additional cuts in spending.

LyrArc Article Gist
India enters a complete and total lockdown as no one is allowed outside in a country of 1.3 billion people lacking the public health systems found in Europe, China and the U.S. Experts say this was a needed step.

LyrArc Article Gist
Nawaf Obaid, a fellow of the Belfer Center for Science and International Affairs at Harvard University's Kennedy School of Government, is also senior fellow at the King Faisal Center for Research and Islamic Studies. Here he describes the events leading to the Saudi turndown of a seat on the UN Security Council. The Saudi foreign policy establishment made this decision after several weeks of debate in Jeddah considering the U.S. and Russia's effort to make only a muted criticism of the use of chemical weapons in Syria in the Security Council; and the U.S. effort to have the British, French and Saudis give up on demands for firm language in a Security Council resolution on action to be taken against the use of chemical weapons. For the Saudis, says Obaid, better not taking a temporary seat on the UN Security Council, than to be left a docile member without its own voice and the voice of others in the international community being heard. Obaid also points out that this is the beginning of Saudi effort to exercize its own influence in the Middle East, as it faces three separate developments in 2013- the Iranian rapprochement with the West under new president Rouhani, the Arab Awakening and the new consciousness in the Middle East, the U.S. policy under president Obama of not taking leadership in the Middle East. This also comes as the Saudis parted ways with the Obama administration on the role of the military in Egypt, and has differences with Turkey and Quatar on support for Islamic groups in Egypt and Syria....

LyrArc Article Gist
Increasing supplies of natural gas in the U.S. will play out over 3 decades and reshape industry and manufacturing in the U.S. A new study by the University of Texas and funded by the Sloan Foundation of the Barnett shale rock formation shows that large quantities of natural gas are available that can be drilled at a cost of $4 per million BTU. This is only slightly higher than the current price of $3.43. This makes the increasing supply of lowcost natural gas a multi decade development, according to the Bureau of Economic Geology at the University of Texas.

LyrArc Article Gist
US president Biden's $2 trillion infrastructure spending plan is being compared to the New Deal infrastructure plans of Franklin Delano Roosevelt in the 1930's. FDR was preceded by Republican administrations under Hoover and other presidents who followed policies that can be compared to the Reagan administration policies when public sector spending was not seen to be as efficient as private sector spending. By the time of the economic collapse in the 1930's it had become clear that only the federal government could save the country in the depression. During the pandemic and collapse of the health systems it was clear that only the federal government could save the country. It is now also evident that infrastructure building led by the government can rebuild America. In the 1930's and during other periods in American history such as the building of the Erie Canal and other public sector infrastructure projects in the 19th century it was the federal government that led the way to building America. ...

LyrArc Article Gist
Ian Thompson takes over as the new Chief Credit Officer at S&P. He replaces Mark Adelson, who will remain as a senior fellow at S&P. He was hired by the previous CEO, Deven Sharma. Deven Sarma was replaced by former Citigroup excutive, Doug Peterson, in September 2011, weeks after the downgrading of the U.S. sovereign credit rating. Ian Thompson reported to Mr. Adelson, as the head of the Asia-Pacific region. Adelson joined in 2008 with the task of making it difficult to earn the highest credit rating for issuers following the subprime mortgage crisis, in which credit rating firms gave top ratings to lower quality mortgage securities. Mr. Jacob, the structured finance chief, will also be leaving S&P. The frequent management changes are viewed as making it harder for S&P to win back credibility in its ratings.

LyrArc Article Gist
Since mid-2014 the dollar has strengthened by 19% against the euro and 17% against the Japanese yen. This is putting new pressure on American manufacturers to come up with efficiency improvements to cut costs and move into markets with better pricing power. This will increase in importance in 2015-2016 as the euro moves towards parity with the U.S. dollar increasing the competitiveness of German and other European manufacturers. The Japanese yen at 116 to the dollar in Jan 2015 gives Japanese manufacturers an edge in pricing competitiveness.

LyrArc Article Gist
Felipe Calderon is President of Mexico till Dec. 1, 2012, when Enrique Pena Nieto takes office. He describes the priorities for the next administration at the Mexican cultural center in Washington D.C. The first is to allow foreign investment in Mexico's oil industry. His efforts to do this were watered down in Mexico's Congress. The renewal of the ban on assault weapons in the U.S. is another priority, as 80% of the 150,000 weapons confiscated by Mexican law enforcement were bought in U.S. gun shops. Calderon's says he worked hard in his term of office to make Mexico "a rule-of-law state."

LyrArc Article Gist
U.S. President Obama's speech at the General Assembly of the United Nations, Sept. 25, 2012, in which he praised the work of Ambassador Stevens in Libya. He defended First Amendment rights in the U.S. of free speech to an audience that was not fully convinced that the "anti-Muslim video" designed from the start as a provocation, produced as a violation of probation rulings by the individual, and being given the distribution channel of a vast internet audience by Google owned YouTube, falls neatly into free speech. The German government is reported to be looking into banning the video from distribution in Germany, and Germany also protects free speech under its constitution. He cited the "voices that rally against bigotry and blasphemy," as the way a First Amendment democracy protects against this type of abuse; which would suggest that Google as one of these voices has the responsibility to treat such content similiar to other extreme content of a pornographic nature or other such provocative material inducing violence, which it routinely excludes from distribution. The ultimate protection of First Amendment rights comes not from the U.S. constitution itself, but from the responsible exericize of wisdom, vigilance and common sense. During the long years of drafting of the Constitution when Madison, Jefferson and others who drafted the document took pains to include every protection so that basic rights would be preserved, George Washington pointed out that one could do this only upto a point, because it was upto the wisdom of future generations to preserve these rights, and this could never be done completely....

LyrArc Article Gist
As OPEC members met again in June 2015 for the first time since the meeting in November 2014, there is a sense that OPEC no longer exerts the same influence on oil prices. There are 4000 oil companies in the U.S., says one U.S. State Department official, even if OPEC were to cut production the cuts could be matched by shale oil producers in the U.S. quickly increasing output. This is the new reality, say experts. OPEC expects to keep production at the same level of the current production ceiling of 30 million barrels a day in place for the 7th meeting in over 3 years. Algeria and Nigeria, both hurt badly by the drop in oil price, have called for cuts but failed to persuade the Saudis. With Russia unwilling to join a coordinated production cut, there is not much talk about doing this. The Saudis and Iraq have continued to pump more oil, with April 2015 production of 30.84 million barrels a day the highest monthly average since 2012. Other factors also remain in the minds of the Saudis and other producers such as the United Arab Emirates, Kuwait, Qatar- policies on climate change, use of less energy and more from friendlier sources for the same amount of economic output demonstrated by countries such as Germany, advances in technology, energy saving transitions in emerging markets such as China and India....

LyrArc Article Gist
USAID Administrator Samantha Powers talk at the IIT- Delhi is covered in detail in the Indian Express. Powers says India's aid to Sri Lanka with $3.5 billion in credit lines during the pandemic is an example of the kind of help the US and India have made to assist poor countries. She sees ever broader and deeper cooperation between the US and India to help African, Asian and Latin American nations build a better future.

LyrArc Article Gist
Shiller says that his CAPE ratio for the U.S. stands at above 25 in 2014, from 23 in 2013, above the 20th century average of 15.21. He looks at possible reasons for the CAPE remaining above 20 for long period of about 20 years, except when it dropped to 13 following the 2008 financial crisis. CAPE is similiar to the price earnings ratio except it uses the average of the last 10 years earnings. Reasons he gives are low interest rates, high bond prices, Fed policy, and the lack of alternative investments in a low interest rate environment that puts more money into the stock market in the U.S.

LyrArc Article Gist
John Taylor, a professor of economics at Stanford, points out that the numbers being thrown back and forth in the budget debate can be confusing. He suggests a better way to look at this. The U.S. budget was 20% of GDP in 2007, and has been at or below that level in recent years, before the higher spending to counteract the effects of the 2008 financial crisis. As the economy recovers and private investment increases it makes sense to bring the spending back to levels where it has been- spending levels that do not endanger the country's credit rating and are a prudent way to manage the nation's finances. Taylor asks the question- if the U.S. got by by spending 20% of GDP in 2007, then why is it not possible to do this in future years when the GDP will be higher. In 2000 spending was actually 18.2% of GDP. Taylor says that with higher incomes people will be moving into higher tax brackets which should increase revenues in future years. In three years since 2009 the spending levels are up to 24.4%. Under this scenario private investment would make up for lower government spending and debt, leading to higher employment and GDP as business confidence rises. ...

LyrArc Article Gist
Two key appointments in international affairs are made by the Obama administration in Jan 2014. Nathan Sheets is appointed the new Treasury undersecretary for international affairs, and Mark Sobel is made the new U.S. representative to the IMF Board. Sheets served at the U.S. Fed since 1993 for about 2 decades, advising the Fed Open Market Committee on global financial developments, becoming the head of the Fed's international finance division in 2007. He received his doctorate in economics from MIT. Since 2011 he was Citigroup's head of global international economics. Sobel worked at the U.S. Treasury for 3 decades mostly in its international divisions, including 4 years as senior advisor to the U.S. representative at the IMF. The U.S. delegation to the Group of 20 meeting of ministers and central bankers in Sydney, Australia will include these 2 senior officials. The appointments come as the U.S. has not moved in the direction of greater power sharing with emerging nations at the IMF, and the emerging markets crisis in 2013-2014 with India, Brazil and other countries critical of U.S. Fed policy leading to capital outflows. Sheets works well with central bankers from other countries and is well received as a consensus builder. Sobel is seen as more direct in presenting U.S. positions. ...

LyrArc Article Gist
Eisinger says the Federal Reserve's staff plays an important role in regulatory reform. He quotes Cornell law professor, Robert Hockett, who says the general counsels tend to become more conservative over time and inclined to support the status quo. This makes required regulatory changes such as increasing the capital reserves at banks and reducing leverage more difficult. Eisinger describes the position of the U.S. Federal Reserve's general counsel, Scott Alvarez, on disclosure of lending by the Fed during the banking crisis, and on capital reserves, which veered more to the position of the banks which preferred less information be released and capital reserves be left at the 5% level than the 6% proposed by the FDIC and the Office of the Comptroller of the Currency. Comments by Alvarez in nonpublic hearings to Congressional staff members on May 18, 2012, about the JP Morgan London Whale trading losses, according to Eisinger, shows lack of awareness of the overall implications of the breakdown in financial controls and supervision inside the bank....

LyrArc Article Gist
The FTC is doing an investigation of Microsoft's deal with Inflection and AI co-founder. The deal did not go through the process set up for such deals to show that it does not adversely affect the US and its people.

LyrArc Article Gist
U.S. federal government efforts through changes in programs for loan repayment to reduce the burden of $1 trillion in student debt. A weakness of the programs is that no effort is made to put some form of cap on what colleges charge for tution, which is moving ever upwards. As a result students will continue to be burdened by high debt. The loan forgiveness after 20-25 years is not an adequate solution as the writer suggests, because extending loan payments of 15% of income for such an extended period of time leaves less for buying a house, for mortgage payments, education of children, and limits what a family can spend for two decades, a poor option for any family especially when both husband and wife are paying off student debt. As long as young people with student debt defer purchases for a new home and other purchases consumer spending will be weak.

LyrArc Article Gist
McKinnon argues that China should be very careful not to appreciate the yuan beyond the interest rate differential between the two countries, which is related to their inflation rates. If inflation comes down in the U.S. even a 3% appreciation could lead to deflation in China. See the related article by Feldstein in this group which looks at the need for U.S. to keep business investment strong and boost exports to compensate for a housing price collapse related slowdown in the US. How this will playout and how the two situations will be managed so as to create desirable outcomes and avoid risks of slowdown in both countries is uncertain.