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Criticism of the Supreme Court's decision on recognizing gay persons constitutional right to marry in a 5-4 decision, and Donald Trump saying he would appoint justices to reverse the decision, plus the litmus test proposed by Hillary Clinton for new justices to have rejected Citizens United campaign financing decision, are putting the highest court in the spotlight. Chief Justice Roberts says his decision to uphold the Affordable Care Act was something he would have opposed in a legislative session, but which he upheld strictly based on the law and the Constitution. Roberts points to the party votes for Sonia Sotomayor and Elena Kagan as showing that even the confirmation process is now a noisy affair, and the rancor spreading all the way to decisions of the court from people in the two political parties. Roberts says he writes opinions keeping his three sisters in mind who are not lawyers, so that if one of them picked up an opinion it would be easy to understand the issue and how it's resolved. ...

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Joseph Stiglitz writes that keeping the dollar as the reserve currency is no longer the option. He tells us that it comes with some hidden costs such as a weaker global economy. Having developing countries keep hundreds of billions of dollars in the US in low interest earning reserves makes no sense considering the needs of developing countries, and the improved prospects for the USA and Europe in exports to a growing developing country economies. He points out that a new global reserve currency, with an orderly transition, may be the most important reform to ensure the longterm health of the world's economy. Its bad for the USA to keep exporting T-bills, says Stiglitz, as it does not create jobs. And its bad for all concerned as it lowers global economic growth. Especially he says when it is so unseemly for developing countries not to use the money to improve living standards in their own countries, with the help of exports from developed countries, that in the end improves global growth and the global future....

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Economist Lawrence Lindsey says the Fed has boxed itself and has little choice but to keep interest rates low. Borrowing at the more normal interest rates of 5.7%- which is what it was over the last three decades- and not at the current 2.5%, would mean an increase in borrowing costs for the U.S. government of $800 billion in 2021, says Lindsay. Lindsay bases this on the U.S. debt growing from $14 trillion in 2011 to $25 trillion by 2021, and interest rates going back to normal levels by 2021. Just to put this in perspective Lindsay says it would require all the cuts Republicans and Rep. Ryan are asking for just to pay for the added interest, not even about reducing the size of the U.S. debt. This would be a disaster for the U.S. Treasury, so we're stuck with really low rates. The term used by economists is "financial repression." Savers and retirees will have to put up with low returns. Lowering unemployment is only one aspect of U.S. Fed policy, the other aspect is in the constraints Bernake faces....

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Portugal's finance minister Vitor Gaspar says all taxpayers will pay an additional tax of about 4% on annual income in 2013. The tax brackets will go down from eight to five raising average tax rates. Other measures include a "solidarity tax" on top earners of 2.5%. These tax increases will raise about 2 billion euros. Public workers will forego one paycheck, and there will be a new tax on financial transactions. Portugal's plan is to lower the budget deficit to 4.5% in 2013 from a deficit of 5% in 2012. The economy will contract by 3% in 2012 and 1% in 2013, with unemployment going up to 16.4% in 2013, according to government projections. Gaspar says "the tax rises will divide the effort equitably among the Portuguese population." Earlier tax proposals for raising worker payroll taxes and reducing employer contributions in a questionable effort to promote growth were discarded. This happened after they were seen as a transfer from workers to business and depressing consumer spending resulting in wide scale protests, with opposition also coming from the business community....

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The credibility of the US at stake in its ambivalent responses to the protests in Egypt against thirty years of one-party rule under Mubarak. Opposition leader and Nobel laureate El-Baradei leads demonstrators after prayers at a mosque in Cairo and is met by waves of police shooting tear gas. After returning to the mosque El-Baradei tells reporters that Mubarak's regime has closed the door to a peaceful transition with its use of the police in large numbers to stop the demonstrators. He said if the international community is not speaking now when would it speak up. He called the Mubarak regime barbaric in its treatment of the Egyptian people on the streets of Cairo and other cities. He held the US responsible for its wavering and hesitant approach to the popular revolt demanding democracy, human rights and the rule of law. By supporting the barbaric regime the international community should not be surprised if it loses all credibility in Egypt and the rest of the world, said El-Baradei. ...

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This WSJ editorial raises serious concerns about the outlines of the nuclear deal with Iran- the AP Protocol does not provide for any time, any place inspections of nuclear facilities, could Iran evade inspections by developing a new facility such as it did with the Fordo complex underground after 2006. After all it reminds readers that Iran signed nuclear protocol agreements in 2003, but failed to observe them, and set them aside altogether after 2006. And Iran is not like reaching an agreement with Costa Rica or Netherlands, says WSJ, it could look good on paper, but with monitoring weak and the Iranian intentions not clear, a lot can go wrong. One of the principal concerns says the WSJ, is the nuclear weapons technologies spreading in the Middle East to other countries as Iran gets a weapon, leading to a disastrous war a decade from now. It says this is why president Obama's response to criticism that its this or war is not enough. A lot of the details says WSJ, have still to be worked out....

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King points out that trade agreements are not what they used to be as most tariff barriers are whittled down. He says more than 70% of imports come into the U.S. duty free, and the average tariff is about 1.5% declining significantly in the last 2 decades. If all import restraints are lifted it would increase U.S. economic output by less than 0.05% by 2017, according to the International Trade Commission. This figure is also cited by Krugman in the NYT with a column saying the Trans Pacific Partnership(TPP) trade agreement pushed by the Obama administration is no big deal. King also points out that the U.S. already has free trade agreements with Australia, Peru, Chile, Singapore and other TPP countries. Some experts see China's success with setting up the Asian Infrastructure Investment Bank (AIIB) attracting India, UK, Germany, France and other countries, is creating pressure on the U.S. to come up with its own response in the form of TPP with Japan, Vietnam, Malaysia, Peru, Chile and other countries....

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Bloomberg Associates is a firm created by Mayor Bloomberg to help cities all over the world improve city living from Louisville, Kentucky to Mexico City. The focus is on cities using the expertise and experience gained in running New York City, and replicating some of the success in New York elsewhere. Public health, economic development and environment sustainability remain at the forefront. Other ideas include making more room for pedestrian plazas in busy areas, calorie counts in fast-food chains, curbing smoking, a customer-service hotline for city residents. This includes projects such as turning blighted or neglected neighborhoods into attractive public spaces and making subway friendly residential neighborhoods. In places such as New Orleans the Mayor's staff has already produced changes in the crime rate with innovative programs and financing from Bloomberg Philanthropies. Their will be no fees for sharing this expertise and knowledge. Joining the new firm are most of Mayor Bloomberg's top staff, including Amanda Burden, director of city planning. George Fertitta will run the firm....

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Philippe Varin faces some tough decisions when he takes over Peugeot-Citroen. Unlike the turnaroungd he achieved at Corus steel group where the booming demand from China for steel helped, this time the auto market in Europe is declining by about 30%. He has to navigate betwen the interests of the Peugeot family which has 45% of the voting rights, employees who are affected by the cost cutting, the French government which has required no closing of factories for as long as the company receives governement aid. Peugeot-Citroen received a low interest loan of 3 billion euros from the French government. Questions he will have to address, as do all auto manufacturers in the USA and Europe relate to overcapacity as demand declines. And for Peugeot this has to be tackled without factory closures. And the other major issue facing auto manufacturers worldwide is how much to focus on the fuel efficient small car segment. Peugeot has key strengths in this segment and Varin may decide on refocussing on this segment....

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A CEO of American Airlines from 1985 to 1998 offers his views on what should be done to create a healthy airline industry. He wants to see significant government investment to build a new radar system ffor American skies and to do it faster than the current pace. Till such time he wants to see the government to limit flights to what the current system can handle as airlines will not do so because of competitive position. He would like to see government set stringent financial standards fo new lowcost airlines if their only purpose is to gain some short term profits by gaining market share through lower prices and waiting for an IPO and then sometime later going out of business. He would also limit American concessions to open skies to all airlines and would prohibit offshore maintenance. To increase room for airlines to recover costs and make a decent profit he would lower the fees and taxes that are about 15% or higher of an airline ticket.

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With slow growth in sales of PC's which use Intel microprocessors, Intel CEO Krzanich plans to make job cuts and management changes. Intel first quarter profit was up only 3% on overall revenue unchanged from the prior quarter. Executives leaving are Ms Renee James staying till end of 2015 for transition planning, Hermann Eul and Mike Bell. Intel Capital chief Arvind Sodhani is retiring in Jan. 2015. Intel's efforts in smartphones have poor results, and sales of chips for tablets had to be subsidized leading to operating losses. Intel will reduce spending in 2015 by $300 million. Renee James was made president sharing the top position with Mr. Krzanich in May 2013 in a dual appointment. In practice it was Krzanich who took the leadership role at Intel Corp. In other changes security products, including McAfee, were integrated into Intel Operation's under general manager Chris Young. Josh Walden, general manager of new technology group now leads all product and research teams including wearable computing devices. Aicha Evans moves to the management committee....

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Daniel Yergin in released testimony remarksd before Conressional committee says that tight supplies are the real cause of the oil price increases but does not discount the effect of speculative investing which is more a result of the tight supplies than a cause of the rise in oil prices directly. He also says that investors looking to invest in oil because of the shortage psychology that has built up the price of oil and these investors cannot all be called speculators. In a rounded way this is saying that speculation or whatever term one uses for investors in oil has increased the price but this is largely a byproduct of the overall demand supply situation which is the primary factor.

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FR24 looks at all the presidential contenders in the French election. The fragmentation is evident in the French electoral scene similar to that in Germany. In a runoff for the second round on April 24 who these contenders support will be crucial for the outcome.  

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The US economy expected to grow 1.5% in 2008 down 0.3% from estimate in October 2007 World Economic Outlook after taking into account a recent update in the model that lowered all forecasts 2005-2008 by half a point. Of this about 0.2 or 0.3% may be the impact of the stimulus package which is included in the estimate. Is this a bit on the high side? Its expectation of growth suggests it does not expect a recession or that it will periodically revise its estimate downward based on new information and the extent of consumption, housing and investment deterioration it sees unfolding in the months ahead. For the European economy it has taken its earlier estimate of 2.1% down to 1.6%. This suggests that it sees the US crisis having an impact in Europe. China's rate of growth will be 10% down 1.4% from 2008 and the Middle East growth about 6% unchanged from 2007, Latin American growth 4.3% down from 5.4% in 2007. This suggests global growth outside USA will remain healthy. However its not clear what would happen if the idea of a recession in the US becomes likely with new information in coming months, and if this is introduced into the model how much would growth in China and the Middle East and India come down in that event. This is the kind of scenario that should also be available from the IMF to know the downside and whether the global growth would sustain till the US recovers from the housing and credit crises in years beyond 2009, given that it would take some time for the excesses there to correct themselves....

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Borrowing costs for Italy after the inconclusive elections of Feb. 2013.

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Polls just days before the French presidential election show independent candidate Macron getting about 60% of the 18-24 year age group. There is discontent in this age group because of high unemployment. The unemployment rate is 24% for people below age 25, higher than 18% before the financial crisis of 2008, compared to 7% in Germany for this age group. For people 25 to 29 years it is 14%. This is why Marie Le Pen has appeal in economically struggling northern towns. Yet most French people are finding it difficult to take on an agenda as radical as Le Pen's that takes France out of the eurozone. In the final debate just 24 hours before the vote Le Pen entered into a discussion about leaving the eurozone but showed she had no clear idea of what this would mean for France. She described Brexit as an example and Macron shot back that Britain was never in the eurozone to begin with, and it appeared that Le Pen was just hoping that it would all work out, without a clear grasp of the facts. She had no response to Macron on how an exit could create panic in the markets and lower the value of savings of ordinary French people by about 20%. On pensions she stated that 60 was the age for retirement under her plan opening herself up to the criticism that she had no clear idea of the facts as Macron pointed out- that it would mean lower benefits or higher payments into the retirement system. This may be why even some young people who see the banking experience of Macron as a liability, may be offset by others who see this as a possible asset because of the need for some valuable experience in an independent candidate, as described by Dalton.    ...

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Jean Claude Trichet is one of the last leaders from a generation that helped create the euro currency union and a pathway to closer union of European nations. For four decades he has worked at the upper echelons of European economic policy making. In accepting the Charlemagne prize he stayed true to his idea for closer integration in the European Union. He said- "Confronting the challenges of the future requires strengthening the institutions of economic union." He would like to see a finance ministry for the EU, saying that "in this union of tomorrow, or the day after tomorrow, would it be too bold...to envisage a ministry of finance of the Union?" Such a ministry would exercize oversight over European nations economic policies and exercize veto power over national budgets. In the current crisis in Greece such a ministry could take actions and make decisions applicable to Greece. Trichet's remarks were delivered in Aachen, Germany. At the very same time finance ministry officials from 24 European countries were meeting in Vienna to come up with a solution to the Greece debt crisis. A main stumbling block is disagreement between Germany and others including the ECB, about how to make private-sector creditors share the burden of helping Greece avoid a default. Trichet and the European central bank and other central bankers have rejected Germany's insistence of an extension on the maturities of Greece's bonds, because they fear this would be perceived as a default by financial markets.This in turn would lead to contagion effects spreading to Spain and Italy, and a Europe wide crisis. In direct exchanges between Trichet and French president Sarkozy, Sarkozy has told Trichet he represents the bankers views whereas Sarkozy and Merkel have to take public opinion into account. In fact in past resolutions of financial crises in Latin America this type of extension of maturities for bonds has been applied, as for instance in the Brady Bonds and negotiated settlement arranged by the U.S. for banks, and Latin American and some Asian governments. Search term "brady" and see Landon Thomas's piece Nov. 30, 2010, in the NYT. This becomes necessary when countries such as Greece, Ireland and Portugal are unlikely to ever be able to repay the debt without a renegotiation of the original debt agreemments, spreading the debt over longer maturities, and private creditors taking some losses. By shifting the entire burden on austerity and spending cuts the current agreements leave the EU lurching from crisis to crisis as the underlying situation remains unresolved. It is here that Trichet's laudable vision of European unity runs aground because of the failure to build bridges between the outlook of the financial community and the public opinion of Germany, Greece, Ireland, Portugal and other countries. The governments of creditor countries such as Germany seek a renegotiation for a restructuring of debt. The governments of Greece, Ireland and Portugal understand that severe austerity cuts alone with declining growth can never resolve the situation, and would welcome a restructuring especially because the cuts are deeply unpopular. The renegotiation has to be conducted with the full faith and credibility of the European governments, ECB and the support of the U.S. government, so that financial markets are given a certain reassurance that the situation will be managed to a successful conclusion, and not lead to contagion effects on Spain and Italy. When asked about this Nicholas Brady recently said this required "a unified decision." This would include money set aside for recapitalization of European banks that are affected by such a restructuring. In such a restructuring the German government and other European governments would still come up with taxpayer money for the resolution, yet the shared cost by all parties would create a fair and workable financial arrangement that has the potential for successful resolution to the sovereign debt crisis. This disconnect between the political leaders and the bankers is why observers say the Europeans have not been able to wrap their arms around this problem. ...

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Vietnam has seen rapid growth in the last 20 years as it joined the shifted away from the state planned economy similar to China in the late 1980's, joined the worlds trading system, freed up the economy and attracted foreign investment. But something doesn't seem right. Looking at the Vietnam growth curve, growth in Vietnam's GDP vs growth of world GDP the curve seems to be following a similiar pattern, there is a sharp downturn in the early 1990's with a V shaped bounce back and a sharp downturn in early 2000 followed by another V shaped bounce back in growth to this date. As America begins its first of several years of credit contraction and investment contraction followed by similiar patterns in some European economies like the UK, Ireland, Spain and a slowdown in the rest of Europe, the question hangs over growth in Asia, from South Korea and Taiwan where recent elections reflected these concerns in electing politicians who promised new ways of kickstaring their economic growth, to China, India and Vietnam where the concerns are about how to meet the growing expectations of the large numbers of people, probably the majority of the people in these countries who have been left out of the economic development experienced in urban areas and by the new middle class. Corruption, the stock market collapse or severe setback, and a slowdown in their main export markets, and are problems shared by all 3 countries China, India and Vietnam. India and Vietnam share the problems of a poor infrastructure. In this new environment Asian countries will have to come up with innovative solutions to maintain growth and quality of growth, as some of the chaotic growth of the last 20 years may have come at some cost like that of the environment in the case of China and better solutions can be found than growth that sacrifices goals in health care and other necessary goals of balanced development....

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The problems of vaccine access in Africa affect us all - this is the simple truth. Here the NYT gives letters from people on the frontlines, healthcare workers in Africa who in one situation in the Sudan had over 4000 people arrive some by canoe through floods and had only 545 vaccines. Africa Centers for CDC show 79% of people in Africa will take the vaccination. Vaccine access for Africa is something that should be on the top of the list for Biden in the US, Johnson in UK, Modi in India, Scholz in Germany, and for all world leaders.

 

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Krugman says there is cause for concern from May's U.S. jobs report of only 38,000 jobs added- low even with Verizon strike jobs added back in- compared to the 200,000 a month average since Jan 2013. One cannot read too much into one months report, yet the political uncertainty in a election year adds to the problem. The low interest rates near zero offering little possibility for rate cuts, make it difficult to come up with a policy response. Under a Clinton administration the infrastructure spending option would face Republican resistance.  It is not clear how a Trump administration would respond. Krugman says the jobs figure reflects a stronger dollar- a result partly of the Fed's plan to raise rates- that is hurting U.S. exports.