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The Large Institution Supervision Coordination Committee (LISCC) was setup by Fed chairman Bernanke and Fed governor Tarullo, in 2010. The Fed's 200 PhD's, bank examiners and other experts at headquarters are now tapped for the the task of looking at adverse scenarios, checking on assumptions made by the banks in their analysis, requesting data from large banks on their loan and securities portfolios, and asking banks to consider adverse scenarios. Such adverse scenarios include a decline in the U.S. economic growth of 1.5% in 2011, and decline in housing. The Fed checks the banks estimate of its financial position aginst the Fed's own standard and prods the banks to consider new risks. Before the 2008 crisis the Fed's 12 Reserve Banks did the day to day supervision and reported back to Board of Governors, a system that led to a diffusion of responsibility and did not work. Former Fed vice chairman, Alan Blinder, says the bank boards did not exercize responsibility, and "blew it, big time," during the financial crisis. This approach has the effect of acting as a early warning for the banks for things that could go wrong. J.P. Morgan Chase CFO Braunstein made a Feb 15 presentation to show that Chase's stress scenario was more stringent than the Fed's. The current review says Tarullo includes asking banks to do a check before issuing dividends to shareholders, and consider what would happen if the economy is in trouble in the next 9 quarters. According to Fed guidelines issued in November if the bank's plan does not show enough capital to handle economic, regulatory and lending risks, the Fed can challenge the bank's decision....

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Krueger and Posner, eminent economists, say the reason wages have stagnated in the U.S. with wages not having budged much over a decade 2008-2018, is not only because of globalization and automation as long term trends. They attribute this stagnation in wages to "monopsony power," or power American corporations have over workers because of their stronger bargaining position and because workers have few alternatives.  For most of this period 2008-2018 high unemployment as reflected by the people out of work and taking part time jobs or having stopped looking for work, shifted bargaining power to companies. The Economist magazine pointed out that workers have not shared in the profit and gains corporations made during this period. Here Krueger and Posner show additional factors such as non compete clauses in worker agreements that have depressed wages. Half of franchise agreements prohibit competition for labor. Outsourcing work to other companies that hire workers means these outsourcing companies have more power over workers than the original companies using the labor. Unions represent only 7 percent of private sector workers by 2017, compared to 35 percent in the 1950's, so that there are no mechanisms to counteract the greater bargaining power gained by companies vs. workers. The way workers have roots in the communities they live and the consolidation of employers into a few companies in a particular area, mean fewer options exist for workers.  Senators Warren and Booker and the anti-trust division of the U.S. Justice Department are in agreement on this issue of widespread use of noncompete agreements that is considered unlawful, says this report in the NYT, offering hope for a solution to bring a better balance between the rights of workers to fair wages and companies seeking profit for stakeholders. Issues about workers, lack of gains for workers, prevalent outsourcing, and the frustrations of labor with parties that had lost touch with their worker base- such as Labor in Britain, SPD in Germany, Socialist Party in France and the Democratic Party in the U.S. - have led to political upsets with support shifting to other parties. This has not led to significant change to improve bargaining power of workers to correct the imbalance that now exists between labor and companies, leading to calls for change. Eric Posner is a law professor at the University of Chicago law school and co-author of a new book "Radical Markets: uprooting Capitalism and Democracy for a Just Society." This book turns the popular notion on its head that free markets have produced the imbalances that hurt social cohesion and democracy, by saying it is precisely the suppression of free competition such as for labor that have created this unhealthy situation. This is true in other areas where monopoly power has developed in other parts of the U.S and European economies in 2008-2018, as also for distortions in capital allocation that hurt infrastructure and other public investment. Krueger is a professor of public affairs at Princeton University and former head of the President's Council of Economic Advisors in 2011 under Obama, showing that Democrats themselves failed to correct this imbalance leading to a shift to other parties and Mr. Trump, who also appear to lack ideas or solutions to this problem that affects social cohesion and democracy. This is contrary to the vision of American or European society of better opportunity for all shared by all Americans and Europeans for most of the twentieth century. ...

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In a crucial demographic Donald Trump's provocative remarks cause a stir and a slide by 13 percentage points. In late July NYT/CBS polls show 72% support among Republican women. McCain won 89%, Romney 93%, George W. Bush 93%.  Divisive tactics hurt particularly with women, say experts. In states such as Pennsylvania this is evident, as Trump has 27% there for women overall and Clinton 58%, according to one poll. The Rutgers Center for Women and Politics has studies on how women diverge in their concerns and lives from men- from lower pay, longer life expectancy, and role of government in helping them,  to cite a few. Clinton has released television ads in 5 swing states directly appealing to mothers, showing children, and emphasizing kitchen table issues, job creation. College educated white women in particular carefully look at the issues, and make independent judgements based on character and temperament, and are less likely to ignore repeated provocative remarks or clearly sexist comments. ...

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The first presidential debate in Denver, Oct 3, 2012. For the first time Romney came out as a recent Republican governor of Massachusetts, the most liberal leaning state in the U.S. For a reason that remains a mystery, except that Romney had to shore up support with the conservative base of the Republican party, Romney did not aggressively adopt positions that would appeal to the vast majority of Americans- from people on foodstamps which he said in this debate had increased by millions under the Obama administration, working class Americans, ordinary Americans about to lose insurance with higher premium costs from the unending increase in the cost of healthcare, seniors on Social Security, workers insecure or losing jobs as the economy fails to recover, and young people who cannot find work. As governor of Massachusetts Romney had to be able to address the needs of different income groups, the middle class and working Americans, and his own father who is his role model was a governor of Michigan, a liberal leaning midwestern state with the largest number of autoworkers in the U.S. He asked Obama directly how he could have focussed on Obama care and passed it without a single Republican vote when 23 million Americans were out of work and the first priority should have been high unemployment. Obama responded by saying he would defend the middle class but did not say what he would do in the next 4 years that was different from the economic policies between 2004-2008. Romney made clear that he was not going to reduce taxes if it would increase the deficit even though Obama said Romney planned to increase taxes by $5 trillion and worsen the deficit. At one point Romney said looking at Obama that he could own a house, a plane, but could not own the facts....

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Deutsche Bank's auto analyst raises concern that the $24 billion that GM has now may not be enough to weather the coming downturn in the economy and spending. Some additional losses are expected in GMAC's mortgage unit Rescap. And the American Axle and Delphi situation need watching for som additional GM money needed there. A big factor in all this is the declining market. For a long time GM has considered 17 million vehicles a year as how the industry would do in N. America, but sales may be less than 15 million. And if much lower that GM may face more losses and its not clear for how long markets in emerging markets like Brazil and China will continue to show strong gains as the US weakening may spread to emerging markets and also to Europe.

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C. Raja Mohan says in The Indian Express that India needs to look at the big picture of modernization in a new world for world trade in which the US is reindustrializing, Europe is reindustrializing, and India is on the road to modernization by 2040 over the next 15 years. All three processes are happening at the same time. 

The old order of world trade destroyed the industrial base of the US and Europe, it also neglected India's modernization, happening with the unwitting cooperation and connivance of the business interests of the US and Europe. It will do little for India. India must also change it's industrial structure and modernization effort to fit into this new world and bring it's strengths to build a new world in which the US, EU and India modernize their economies, manufacturing base, and infrastructure in a win-win for all sides.

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US Universities awakening to the need to reduce costs after making college unaffordable to middle class. NIH says indirect costs are in the range of 60-70% at some elite universities, the proposal would cap this at 15% for all universities for federal funding. The purpose is to reduce administrative costs that are increasing and have universities take a hard look at finances not just increase salaries, hire more and increase prices for students to go to college. The savings generated could be $6.5 billion in this one action alone and some universities need to cut salaries and hire less to bring down their cost structure before a whole generation of young men are deprived of opportunities to go to college. Not everyone can be sent to apprenticeships and not all research needs to be funded. China and India and some European nations will be funding the same research with less. There is a Deepseek moment now not just for AI - for all research.

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Studies have shown that the root causes of the obesity epidemic are lack of education and cultural lift in the food intake and lifestyle of Americans, Europeans, with just moderate adjustments in the food and in exercize routines yielding as much or more than the 15%-30% improvement from weight loss drugs that when withdrawn for the low income demographic leads to further deterioration. For men these simple improvements also lead to improvements in the prostate and a healthier happier lifestyle reducing significantly the number one cause of cancer for men.  Yet pharmaceutical companies and the healthcare industrial complex in the US continues on its course like a mighty Mississippi roaring America into oblivion. This report says companies that dominated the weight loss industry are now facing knockoffs that wipe out a large part of the market of a Danish maker of weight loss drugs, with the panic facing obesity hit America hitting the healthcare complex that cares little about lifestyle education. ...

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Polish and other Eastern European immigrants to Ireland return home from the Ireland aand the UK as the economies of the 2 countries and unemployment deteriorate and improved job prospects draw the immigrants back home. In fact share of immigrants in ireland reached a high of 155 as Ireland averaged economic growth rates of 5% for many years. Nearly half a million received the irish version ofa social security number. Polish immigrants were the highest almost two thirds followed by Lithuanians and Slovakians. Hourly wages for Eastern European immigrants are 45% less than for Irish people with the same education and experience. Now Ireland's growth has dropped to 1.2% for the last quarter. The reversal is also of the similiar magnitude. A citigroup econ9omist in Warsaw estimates that half of Polish immigrants to Western Europe will return home in the next 2 years. In the UK half of an estimated one million Eastern European immigrants have already left says London Institute for Public Policy Research in an April report. As the immigrants return the currency dynamics also help the pound has lost 40% of its value against the zloty, Poland's currency, and this makes the UK less atttractive to immigrants. Overall the EU immigration opening has helped both sides, as it has helped stabilize the Polish economy and the UK has gained from the immigrants services as it moderated wage inflation and increased domestic demand and met the demands of the economy as it was growing. Now there is a fear that too rapid an exit of immigrants would hurt demand in these economies and also overwhelm labor markets in Poland. Another noteworthy feature of this immigration wave was the low cost of airlinne tickets which has helped travel across europe and also helped European integration. One immigrant a polish mechanic says that he felt more like a commuter than a migrant, as it conly cost $150 a round trip. How are things in Poland today as they return. Very very different. EU entry has really helped Poland through foreign investment and aid from Brussels to assist the country in its catching up progress. Average monthly wages have gone up 30% with construction wages up 50%. and inflation a low of 4.4%. The difference is striking in the medieval city of Krakow in the southeast that has emerged as an information technology and outsourcing hub. where a steady stream of returning workers is helping companies hire workers to meet the new growth. German commercial truck maker MAN has finished recruting 250 mechanics for a new plant in Krakow with 40% of applications from returnig workers. And those who are returning bring fluent English skills and expertise gathered during their stay overseas, and new attitudes to work. This happened to Ireland as Irish workers returned home in the early years of its boom, they hared skills and attitudes learned abroad, according to an economist at Dublin's Economic and Social Research Institute who sees the same thing happening in Poland....

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Knowing the thinking and mood of the younger generation of engineers programmers and other staff is critical. They are more optimistic and impatient about things so companies have to move quickly to change things to retain talent. The other major change is the number of young women that are joining. Nasscom the software industry association in India says that last year this was 35% and will rise to 45% by 2010. This is amazing rise considering that it started from very low numbers and these young women are more vocal than the men. It means companies have to keep their minds open to gender issues and respond. Giving young people a voice in the affairs of the company, giving them achance to be not lost in the crowd, a shot at challenging assignments for the talented, some kind of inhouse training program in management and in other areas so that they can keep upgrading their education and value to the company, some peers and superiors assigned to mentor new employees, hiring from smaller cities so that those who want to be near family can do so and have higher loyalty than with chasing high level talent in bigger cities and supplementing with good inhouse training , are a list of some of the things being tried by companies. ...

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Public opinion in France is divided about France's dependence on nuclear power. Ifop's survey of Nov. 13, 2011, shows 40% of the French are now "hesitant" about nuclear power, about 33% favor nuclear power and 17% are against it. About two-thirds of the ruling UMP party of Nicholas Sarkozy supports nuclear power, while half of the Socialist party supporters say they are not sure about the path ahead. The issue is becoming important in the election, as the UMP claims the Socialist party's proposal to shut down 24 of the 58 reactors if elected will cost thousands of jobs and solar power cannot take its place overnight. The French are a bit puzzled by the nuclear issue in contrast to Germany where the issue arouses strong emotions, because nuclear energy had become accepted in France till the Fukushima nuclear disaster raised safety issues. EDF which operates the plants plans to increase spending on safety measures and on maintenance after audits by the French nuclear regulator. EDF's share price was down 40% since the nuclear accident at Fukushima, Japan....

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How the engineered takeover of VW by Wolfgang Porsche and Wiedeking of Porsche failed. The economic crisis made credit tight and Porsche failed to get the support of its banks to get the money to finance the takeover. By December 2009 Porsche had already taken over more than 50% of VW shares, and after the German government amended alaw that prevented any outside holder of shares to control more than 20% of voting rights no matter how many shares they owned, Porsche appeared to be in aposition to control VW and have access to the 10 billion euros in cash reserves of VW. But the law that gave the state of Lower Saxony veto over decisions at VW, and the banks turning down Porsche for loans to finance the takeover led to the unraveling of this scheme. VW chairman Piech won the support of the premier of Lower Saxony, and the works council of VW, as this blantant attampt to control VW's cash reserve was seen as the work of a plunderer.

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German banks hold $28 billion euros or $37 billion in Greek bonds according to Barclays Capital using IMF data. This debt is now rated as junk by Standard and Poor's since last week. Just one bank, Hypo Real Estate, now owned by the German government after a bailout has $10.5 billion of Greek bonds. This gives a new twist to what is happening in Greece, with Germany involved through the support its own banks would need if Greece defaulted and these bonds become worthless. Total debt holdings of Portugal, Italy, Ireland, Greece and Spain for example at Hypo Real Estate is $52 billion. France is also heavily involved through its banks. It has $67 billion in holdings, including $9 billion held by the Bank of France, according to Barclays. According to BIS data American banks hold $16.6 billion in Greek debt. Even the healthy large Spanish banks like Santander have their problems, with Santander having $64 billion of assets in Portugal, according to analysts at Nomura in London. In Spain most of the bad debt problems are concentrated in the midsize banks, but if Portugal were to take a hit then the large banks would be affected adversely....

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The protests for democracy continue in Syria in May 2011. On May 20 2011, 26 protesters are gunned down. The Assad government continues to crackdown on the protests. Friedman sees the events in Syria having wide reaching impact on the Middle East. He calls it a keystone nation because of relations with Iran, the Golan Heights, the Lebanese Shiite militia Hezbollah, the long border with Turkey, the border with Iraq, and Hamas relations with Syria. Compared to Egypt the international community has been for the most part silent in its support for the democracy protests in Syria. Friedman also asks the question about rival sects in Syria and other Arab countries and what happens afterwards. Would a post Assad period lead to people from rival sects putting aside differences and working together to build and sustain a democratic government. He says there is uncertainty but also that something deep down is coming to the top in the Arab world- that Arabs want to be full citizens of their countries with a voice in their government and in the way things are run in their countries. ...

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Barack Obama speaks out on the Trayvon Martin case, how it could have been him 35 years ago as a black youth in Hawaii.

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Clinton backs Obama, with a "No Way, No How, No McCain" call at the Democratic National Convention in Denver, Colorado, on August 26, 2008.

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Greg Ip of the WSJ provides this exceptional report offering readers remarkable clarity on what the Republican Tax Law does- its high and low points.  High Points 1. It reduces the corporate tax rate to bring it in line with other advanced industrialized countries. The corporate tax rate in Germany and Japan is 30%, in the UK it is 19%. For 5 years businesses can write off capital equipment immediately instead of depreciating over a couple of years. This could boost investment and growth. 2.  The law takes aim at deductions that led to distortions. It limits the mortgage interest deduction, and caps the deduction for state and local taxes. This removes the incentive to pay more for homes that exacerbated the housing crisis in 2008. The Alternative Minimum Tax is largely removed. The Low Points 1. The biggest drawback is that lawmakers did not properly fund the tax cuts. Of the 10 costliest tax breaks nine were not touched, including employer health insurance, retirement savings, capital gains. Only the state and local taxes deduction was reduced. And a new tax deduction  was created, a 20% tax deduction for small business (proprietors and partnerships) paying taxes on their individual tax returns. Taxes on the wealthy or value added taxes, reducing tax breaks, is how other advanced industrialized countries paid for the corporate tax cuts, but did not happen here. Additional economic growth  to generate added tax revenues is the way Republicans in Congress say this is funded. Yet this is a questionable assumption as Britain reduced the corporate tax rate to 19% without seeing a surge in economic growth, as Greg Ip pointed out in an earlier WSJ article. At best the Joint Committee on Taxation estimates $500 billion over a decade in added revenues from added growth leaving $1 trillion to be added to the deficit. The WhartonPenn Budget Model (WPBM) estimates only $140 to $367 bill from the additional economic growth resulting in added tax revenues. Under this model only 0.03 to 0.08 percent added U.S. economic growth per year is expected from the Republican Tax Cuts. Such a situation would be bad  for the U.S. as the gradual improvement in Debt to GDP ratio to 78% following the financial crisis of 2008 would be sharply reversed taking the ratio to 97% by 2027. An unsustainable trajectory which will require tax increases in a few years and hurt investment in education, health and infrastructure into the future. This is what worries many experts most on both sides of the political spectrum today about what the Republican Congress has pushed through for a legislative "victory." This is why experts believe this is not serious tax reform and will require a new effort after 2019.   ...

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About 2.6 million eligible to vote people in Michigan and 3.5 million in Pennsylvania, and 1.3 million in Wisconsin did not vote in the 2016 election. The critical states this time are also Michigan, Wisconsin and Pennsylvania, and these three states went to the winner by less than 10,000 in Michigan, 20,000 in Wisconsin and 50,000 in Pennsylvania.  A NYT analysis of Census Bureau data for 2016 election reveals that most of these people who are eligible but do not vote have lost interest in both parties that show little interest in delivering for them. Many of them are shown to be lower income voters, voters doing 2 jobs, or voters struggling financially. Some are single child parents in today's social structures. Getting a small portion of this vote can make a difference in a close election.  From 1840 to 1900 the percent of voting age population that voted has been between 70 to 80%. By the 1920's this dropped to about 50%. And it has been around 55% since the period of the Great Depression except for elections in 1952 and 56 for General Eisenhower and 1960 for John Kennedy. Even Harry Truman's whistlestop train campaign in 1948 got only 51% out to vote. Even the Roosevelt FDR three campaigns in 1932, 1936 and 1940 got 52-58% of voting age population to vote. The highest of any election was the election that led to the Civil War in which Lincoln won where 81% of the voting age population voted. Is it possible that America was a relatively much more prosperous country in the period 1840-1900 before large scale immigration from poorer parts of Europe and then poorer parts of Latin America and Asia, and large scale urbanization. With ample land and independent farmers in the nineteenth century leaving less scope for the poverty that exists in urban areas and social decay in rural areas and small towns that is seen today. Resulting in a much more civic consciousness and awareness of America's future and destiny than exists today. By comparison voter turnout in India has increased to 66% in 2014 election and 67% in 2018 after alternating high and low between 50-60% since 1947. Some forecasts are for a high turnout in the U.S. in 2020 to exceed 60%. The bright side for democracy is shown by the 911 million people who voted in the last Indian election of 2018. ...

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After delaying taking a loan from the IMF, a multilateral lender known for setting austerity conditions for its loans, Pakistan finally accepts a IMF loan of $6 billion over 3 years. In August 2018 Pakistan turned to Saudi Arabia for $3 billion loan and deferring oil payments of a similar amount, UAE for $3 billion, and China adding another $2.2 billion. A sharp drop in the country's currency reserves left Pakistan little choice. Other problems were a overvalued exchange rate that hurt exporters under the previous government and fiscal spending on needed infrastructure that could not be matched with changes in tax collection. Pakistan has some of the poorest tax collection in Asia, depriving the government of the funds needed to finance infrastructure.  The IMF loan is a smaller loan so that Pakistan would feel less compelled to comply with the difficult conditions often imposed by the IMF that has made it unpopular in developing countries, particularly in Latin America. This is the 21st IMF loan to Pakistan. Only Argentina has had to turn to the IMF for 21 loans. For example the IMF conditions to Pakistan require increasing the electricity and gas prices. Under the IMF plan Pakistan must cut its budget deficit before debt service to 0.6% of GDP next fiscal year starting in July 2019 from the deficit of 1.7% expected this year.  To do this tax breaks of 350 billion rupees or $2.5 billion next year have to be removed. The central bank autonomy was also promised and with this 2 former Pakistani IMF officials now head the central bank. Because widening the tax collection base and better tax collection are promises made in the past to IMF which have not happened, this report in the Economist magazine says implementation in this IMF plan will also be lax, more so as the IMF loan is small and supplemented with funds from other countries. A cartoon in one magazine critical of the IMF shows the IMF officials from Pakistan negotiating for the Pakistan central bank with the IMF head Christine Lagarde. Increasing the Pakistan tax base is essential for Pakistan's development to invest in infrastructure similar to what is happening in India. Releasing funds for infrastructure, roads and railways, hospitals and education, requires a larger tax base in all South Asian countries. Without this internal capital and showing results of spending -with successful infrastructure implementation with least or no corruption or overspending- countries risk falling behind.  ...

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US president Biden gives a rousing and vigorous speech drawing a picture of his vision for the country and contrasting that with the chaos, prejudice and lack of action on key issues facing America of his predecessor. On defending democracy, on Ukraine and Europe, on the economy and jobs, on preschool and education, on pharmaceutical cost reduction, on fair taxes and cutting the deficit while investing in manufacturing and new jobs, on all these issues he drew a sharp contrast with the predecessor and former president. He also drew on the tradition of America for democracy and called on America to move forward in line with its values and decency and diversity, not go backwards in the way of his predecessor. He said it was not about being young or old as he was considered too young when he was the youngest senator of the US at 29 years of age, and now people talk of me being old. It was of not being old in the way that the oldest emotions are of hate and resentment reminding people of his predecessor's sharp language about other people and cultures. ...

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Apple appears to have peaked and it marks the end of an era. Americans have more to be concerned about than the latest incremental iPhone design with decline in reading skills among children, dropping mens college enrollments, cost of living crisis, and retiree poverty.  For the most part US prices are kept at last year's level as Apple is facing new competition and restrictions in China, with a new Huawei phone which matches the new iPhone. Apple has increased iPhone revenues by 44%, even though shipments have increased by 15%, with aggressive pricing, making iPhones generate $40 billion, 50% of total revenue. This aggressive pricing phase may now be ending as Huawei plans to increase global shipments by 20% even as the total smartphone market declined by 6% to 1.15 billion shipments. Apple has 55% of the US smartphone market and worldwide at 27%. This may be the peak and the end of an era in which Apple and other Tech companies not paying a fair share of taxes led to the defunding of infrastructure and public services. ...

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It makes for good political rhetoric, but in reality the flow of money goes both ways. A lot of investments are made by American companies overseas. This time the flow of oil money because of high oil prices, from the USA and Europe to the Middle East is being recycled back to the USA in the form of investments in the US through small equity stakes in companies and more so through purchases of capital equipment and services to build Saudi infrastructure projects. The $500 billion investment plan over several years in Saudi Arabia is to build everything from new cities, aluminium plants, electricity generation plants and chemicals and plastics plants. The fears and rhetoric are overblown, as the USA also invests overseas with holdings according to the Treasury department of $6 trillion of foreign stock and debt. The acceleration of foreign investment in the US is to be seen in the numbers, as the dollar gets weaker, and its more advantageous for Canadians and Euuropeans to invest here. Last year $414 billion of foreign investors money went into buying stakes in American companies and building factories and purchasing stock, according to Thomson Financial. Thats up 90% from 2006 and represented one fourth of all announced deals. This year in just 2 weeks foreign investors poured $22.6 billion in just the first 2 weeks of January, and that represents one half of all deals. Shows how quickly the picture is changing. One way of looking at it is that Americans buy a lot of foreign goods and the money Americans use to pay for a lot of imports is now being returned to the USA in the form of foreign investments. Note that foreign investment is desirable because it brings new ideas and technology and new management methods to the host country from other countries. These foreign investors in many cases are able to make these investments overseas because they are good at what they do, having them in the host country benefits the host country and shakes up competition in the particular industry in the host country that is receiving the investment. This is why economies once relatively unfavorable to foreign investors like Japan and S. Korea are now passionately seeking foreign investment to make their economies thrive through the exchange and inflow of new ideas and ways of doing things. The same can be and is true for the USA. The other aspect is that most of the investment is still from countries like Canada, Germany, Japan, S. Korea which are big free trade partners of the USA. Manufacturing investment is heavily skewed to European and Japanese companies. Foreign multinational investment (Sony, Toyota etc) grew to $43.3 billion in 2007 from $39.2 billion in 2006 according to OCO Monitor, and will accelerate significantly as companies like VW and other German companies find it cheaper to build in the USA and shift more manufacturing here. To get an idea why the rhetoric is overblown Canada spent the most in buying American companies, $65 billion in 2007, according to Thomson Financial. Russia spent $572 million and India $3.3 billion. How will this improve the chances of the USA making it out of this recession? Five million American work for foreign companies in the USA. Of these one third are manufacturing jobs. These jobs pay about 30% more than jobs in American owned companies. Figures from Treasury Department. There will be more of these jobs as companies like VW build plants here. Roubini Economics estimates that an infusion of about $300-400 billion is needed for the USA to overcome the effects of the current mortgage and credit crisis. $414 billion was invested in the USA by foreign investors according to Thomson Financial in 2007, going up from something like $200 billion in 2006. If this pace continues becasue of some of the same underlying reasons as the weaker dollar, stronger economies overseas, then $200 billion additional investments this year would add that much to a stimulus package of $150 billion by one estimate, to provide a boost of somewhere around $350 billion. In the range of the needed boost. Companies like IBM and GE which have significant investments in India and China and investments in software or infrastructure industries that are growing rapidly or Caterpillar with growth in construction overseas, may keep growing through this downturn. This recession may hit selectively and differently, not be a complete hit to the USA economy, and could prevent it from going beyond 2009 with recovery in 2010. ...

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In Europe, France, Spain, Germany and other countries are giving cash subsidies to customers to buy cars when they turn in older cars. These refunds range from 1000 to 2500 euros, and reward the purchase of smaller more fuel efficient vehicles. It has boosted sales in Europe where sales are running at an annual rate of more than 13 million because of the subsidies, according to Credit Suisse analyst, which is well above the 11 million level of last year. The average American car says the analyst has been on the road for 9 years similar to that in Germany, so it makes sense for the USA. He says it could increase sales in the USA to 12 million cars, down from the 16 million sold in 2007 or the 13.4 million rate of 2008, but far higher than the 9.5 million rate in the first few months of 2009. In Europe small cars are dominant and it plays to the markets of large carmakers like Peugeot, VW, FIat, and Renault. But in the US Japanese carmakers are dominant in the small car market. Detroit carmakers make too many large cars and pickup trucks so the impact would be less. But the program could be fashioned in the US on a drop down in size and increase in fuel efficency, so that the clear direction is towards smaller cars. Turning in a pickup truck for a family car like a Malibu or a LaCrosse might promote fuel efficiency, and move things in the right direction. Its useful to note that even in Germany more expensive cars or brands have barely benefitted German car sales jumped 21.5% in February, but mass market manufacturers recorded a 37% surge, while sales of premium cars fell 19%. In Italy which started its program Feb. 6, buyers receive 1500 euros for trading in acar at least 10 years old. Fiat Punto sales have shown a strong increase. Fiat's facory in Melfi, southern Italy, is now running at full capacity after running on areduced scale from October 2008 to February 2009. It makes the Punto. In France 30-40% of car sales are coming from the scrapping deal, according to French Auto Manufacturers Association. Overall sales are running at about 6% below last year's rate, but in the absence of the scrapping deal sales might be off 10-15%. One concern for the French is that sales not drop off after the scrapping deal stops.France saw this happen in 1997and 1998 after ascrapping deal in 1994-1996. However considering that the cost to the German government for scrapping deal was $2 billion, the solution to this would be continue this program till the economy recovers and car sales are strong. Considering the benefits for an important industry and the societal benefit in lower pollution, it would be worth the cost....

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An account by Journal reporters based on over 25 interviews with eurozone policymakers shows how the central players in the eurozone drama acted to defend their national interests during the period April to July 2011. On one side France's president Sarkozy, Frenchman Claude Trichet at the European Central Bank, arguing in favor of the banks not to take bondholder losses or haircuts on loans made to Greece. On the other side the Bundesbanks Axel Weber, and Jens Weidman, Jurgen Stark and German Finance Minister Schauble. The Germans argued strongly for bondholder losses to take responsibility for bad loan decisions by French and German banks. French banks had committed more loans to Greece than German banks and had more at stake. German public opinion was strongly against German taxpayers paying for the losses, making German politicians insistent that European banks take losses on their bad loan decisions, or Germany would not support additional loans to Greece. Throughout April to July the two sides were locked in an impasse. The French feared losses for their banks and a Lehman Brothers bankruptcy style situation. The Germans at the Bundesbank and the Finance Ministry were equally insistent. A July 2011 summit meeting did not settle the issue. The events not covered here from the July to the December summit of eurozone leaders resulted in bondholders taking 50% haircut on loans to Greece, reducing the debt burden in Greece after austerity measures led to popular protests. The French pushed hard for the ECB or the EFSF to be allowed to make large purchases of bonds of troubled eurozone countries in an effort to protect Spain and Italy from contagion through higher bond yields. The Netherlands and Finland supported Germany's position. German bankers Weber, Weidman at the Bundesbank and Finance Minister Schauble opposed large scale buying by the ECB of Italy's and Spain's bonds and Chancellor Merkel said about a common eurobond that "this is not going to happen." Governments changed in Greece, Italy, and Spain by Dec. 2011, which committed to austerity programs and spending cuts. Italian Mario Draghi was appointed with German support as new head of the ECB. In late December 2011 Draghi launched the Long Term Financing Operation for lending unlimited amounts at 1% for three year loans to European banks and relaxing the terms to accept government bonds and other debt as collateral for loans. The effect of this was to provide a large infusion of liquidity into the banking system in Europe and drastically bring down the yields on bonds issued by Italy and Spain....