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Simon Johnson and Peter Boone say not taking forceful action with the large banks- taking them through bankruptcy and restructuring procedures as advocated by senior Federal Reserve officials like Peter Hoenig- will only lead to irreversible damage. The current Geithner-Summers policy being followed by the Obama administration is simply to hope that by fiscal stimulus and economic recovery the banks may be brought to sustained profits and be able to muddle through their financial problems. This Johnson argues is not likely to happen and the cost will be higher debt levels for America, irreversible damage as America faces low debt and financially stronger countries in Asia and sees its position in the world weaken. The muddle through policies for banks of the Obama administration have little prospects in the face of an IMF estimated $275 billion shortfall in capital on balance sheets at large banks (from the IMF Global Financial stability Report). Without aggressive action on the banks America's recovery and renewal will only delayed....

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For the first time since the 2008 global financial crisis a initiative has been put to voters for tackling executive pay and bonus. A large majority of 68% of Swiss voters supported the 24 item Minder Initiative which restricts executive pay and bonuses. The Minder Initiative sends a signal to the rest of the world, says Christa Markwalder, a legislator for the pro-business Free Democratic Party. It provides other countries with a distinct approach to corporate governance and executive compensation. The EU decision to impose strict limits on executive pay and bonuses influenced Swiss voters. The EU decision bans bankers bonuses from exceeding fixed salary without shareholder approval, and limits flexible pay to twice the salary. The 24 item Minder measure gives shareholders the right to block proposed executive pay and bonuses. It also has penalties for violators of 6 times annual salary or imprisonment of upto 3 years. Businessmen and politician Thomas Minder has worked for three years promoting his Initiative and it was finally put to voters in 2013. For the first time since the 2008 global financial crisis, serious action is being taken to limit excessive executive compensation and bonuses in banking and other industries. It comes as austerity measures and high unemployment are influencing public opinion in Spain, UK, Italy and other European countries which have suffered banking crises....

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The deal for buyout of Alitalia by Air France-KLM values Alitalia at0.10 euros a share about 80% below its closing share price of 0.53 euros per share last week. Air France-KLM will give one of its shares for 160 shares of Al Italia and will take on the airlines 1.3 billion euros in debt and losses of a millon euros a day. This values Alitalia at 139 million euros. The Italian Government has put in 4.3 billion euros in the last 5 years to keep Alitalia running till the European Comission ruled out any further help. Alitalia's market share in Italy has dropped to discount airlines like Air One Easyjet and Ryanairdropping from 80% to 30% in the last ten years. The new deal will drop Milan's airport considered to be one of the worst in Europe as a hub and use the airport in Rome ast he third hub after Paris and Amsterdam. It will also retain the Alitalia name. The fire sale of Al Italia shows how the new economic climate is affecting Europe and how a recession in the US could affect the market. At the time Al Italia was also running out of cash with only 282 million euros of cash left at the end of Jan 2008....

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Barry Ritholtz lists the causes of the financial crisis, He says New York Mayor Bloomberg's exoneration of the financial industry is simply false- what he calls "the Big Lie"- even though Congress, regulators and the Greenspan Fed acted irresponsibly and created favorable conditions for the actions of the financial industry.

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Abbott Laboratories agreement to pay $1.6 billion in civil and criminal fines for promoting unapproved off label uses of the neurologic drug Depakote, to sedate older patients in nursing homes. The acting associate attorney general, Tony West, said: "Not only did Abbott engage in off-label promotion, it targeted elderly dementia patients and down played the risks apparent from its own clinical studies." Abbott aggressively promoted its use in nursing homes. It also aggressively promoted the use of the drug for schizophrenia between 2001 and 2006. In 1999 Abbott had to discontinue a clinical trial testing Depakote's effectiveness against dementia after results showed increased incidence of anorexia, drowsiness and dehydration.

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Ko Bo Kyi spent years in prison after protests over the army annulling Burma's 1990 elections. Pages of a magazine article on Mandela's autobiography were smuggled into Burma's Insein prison where he was jailed. A song about Mandela sustained Kyi and fellow prisoners in prison. He escaped to Thailand in 1999 after a second prison term and quickly obtained a copy of Mandela's "Long Walk to Freedom."

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Hubbard points out that beyond the public show of confidence Saudi Arabia is a society undergoing change and the future remains uncertain. In Jan. 2015 King Salman, 79, succeeded King Abdullah when he died at the age of 90. With the drop in oil prices and the Saudi role to avoid production cuts, the Saudis have a buget deficit of $39 billion for 2015. Reserves are estimated at $750 billion by the IMF. Saudi policies under Salman will remain unchanged.

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A government watchdog in Germany keeps track of what members of Germany's parliament the Bundestag earn in secondary income from speaking fees and other sources. The watchdog is called Abgeordnetenwatch or parliamentarian-watch. German parliamentarians are now required to list what bracket they are in with the highest at 250,000 euros with no ceiling set. One exception is for lawyers, consultants and farmers who can avoid transparency for upto 3.3 million euros. Unusually these professional backgrounds are left as exceptions. Still Germany is making an effort in this direction where such an effort is absent in the U.S. leading to a credibility gap for established parties and politicians, and leaving an opening for criticism from outsiders who can say they have no connection to lobbyists. German members of parliament earn an income of 9300 euros a month.

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A new Pew Research Center Survey shows prime minister Modi enjoying 88% popularity, very high ratings for a world leader. More unusual is that Modi's popularity was 87% in a Pew Survey in 2015, showing extraordinary resilience. This comes after moves to remove the large denomination rupee notes under what is called demonetization to take out some of the black money in India and increase tax revenues that were lost due to evasion. In South Asia tax evasion is rampant, much more than in countries like Italy of the eurozone. The move was difficult as it required being sudden, and a shift to use of debit cards and ATM's which required additional effort, slowing the economy. The other moves such as on GST tax were designed to facilitate doing business in India with one tax and free movement of goods replacing different state by state taxes. Business has not responded quickly to support Modi, and the Indian economy being prepared for the long term growth Modi hopes to generate is slowing in the short term. GDP growth has dropped to 6%. A bullet train planned in western India with help from Japanese financing and technology is being criticized unfairly because of the collapse of an old bridge near a railway station in Mumbai. Bruce Stokes, Director of Global Economic Attitudes at Pew Research, says the survey was done after demonetization but before the GST tax overhaul. This is not likely to change Modi's high ratings. The GST overhaul has been on the agenda for many years for all political parties in India. The views of Modi are not necessarily the same as for his BJP party which are lower for the party, the party gaining more from Modi's efforts and leadership, including in his home state of Gujarat. ...

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Jason Zweig of the WSJ points out that Obama is using the behavioural aspects of regulation that were ignored uptil now, in his proposal for a new Consumer Financial Protection Agency. These aspects were researched by Professors Thaler and Sunstein agencyof the University of Chicago in their book "Nudge". Sunstein is to head the WHite House's Office of Information and Regulatory Affairs. He is friend of thePresident as they both taught at the University of Chicago Law School. Thaler is an economist at the University of Chicago. THe idea is to offer information in a simple manner that consumers can understand and to have in the menu several products that are simple and unmistakably clear and these anchor all other products. Products that act weirdly, conceal information or are against consumer's interest can then be identified by the consumer and regulators.

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Its incorrect to call a loan that has only slightly lower, same or higher monthly payment after modification, a loan modification. The intent is to make a loan affordable in monthly payments for the borrower, for it to be a meaningful modification. Says Tom Miller, the Attorney General of Iowa, "it should'nt be called modifications if people pay more or approximately the same." Many lenders and banks do not want to have to mark to market a whole set of loans of one type in one geographical region, as an accounting rule now requires, just because they have modified one loan of that type, because their reserves are severely depleted and most are already or nearly insolvent. So their way of discouraging loan modifications as a solution is to respond by saying that loans go into foreclosure even after modification, when the modification they are talking about is tacking on interest penalties and fees that accelerate the home into foreclosure in some cases, and in others by leaving payments higher or the same make foreclosure just as likely as before. Tom Miller, attorney general of Iowa, also says that " if you do real modifications, the default rate is significantly lower." Some mortgage companies say that default rates drop significantly, some to as low as 25%, when loan payments are reduced to the 30-40% of borrower income range, which is becoming the standard for a meaningful modification. Analyst Ron Dubitsky's research at Credit Suisse confirms this, showing lower payments reduced defaults to less than 50%. Research by Credit Suisse and Alan White, a law professor at Valparaiso University also show that at this time loan, 2 years into the foreclosure crisis, modification has mostly resulted in higher monthly payments. White says banks like Wells Fargo, a large servicer of loans, have done have modified few loans as apercentage of their delinquent mortgages. Sheila Bair and others have long advocated reducing loan payments to 30-40% of monthly income since early 2007, because foreclosure is costlier for banks than loan modification, but met resistance from the banks and lenders and their lobbying groups. The relevant question is that if the banks are misquided in pursuing this course, and its not in the interests of the banks or the country's economy- because accelerating foreclosures or not taking modification action in the middle of a huge wave of layoffs may result in a even bigger wave of foreclosures that threaten housing prices and effectively leave banks insolventleading to nationalization- then what purpose did all this serve except to exacerbate the crisis and increase the price tag of the government's and country's ultimate rescue of homeowners?...