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New York Times Original article ›
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Frank Rich on the ticking bomb in the banking system and the bank lobbying that has kept reform from happening. Phil Angelides leads the Financial Crisis Inquiry Commission which is due to begin hearings soon. But says Rich, Angelides who is following in the footsteps of Ferdinand Pecora who investigated the 1929 crash as chief counsel of the Senate committee that did the investigating, will have to deal with a lot of resistance as he tries to alert the public to the need for action before a new crisis develops. For this to happen there will be aneed for more awareness of what happened, and a serious investigation, and prosecutions where necessary. Interestingly National City Bank was investigated then by Pecora. It is the predecessor of today's Citibank. At the time National City repackaged bad Latin American debt as new securities which it sold eaily to investors who later lost badly. Weill and Rubin at Citigroup made a series of bad decisions at Citigroup leading to huge losses at the bank, for which they have not accepted responsibility....
Washington Post Original article ›
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Ben Van Heuvelen documents in the Washington Post what Ali Nabhan and Bradley pointed out in the WSJ in May 2009, that the officers in the Iraqi army lacked the training and discipline to act as an effective fighting force. These early indications proved correct and were ignored by the Iraqi government and the Obama administration till it was too late with the fall of Mosul and the ensuing chaos in Iraq.
Wall Street Journal Original article ›
Wall Street Journal Original article ›
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Casey describes the crucial policy errors in Brazil with over spending and lack of transparency in the years leading to the crisis in 2014-2015. Brazil raised interest rates half a percentage point in May 2015 to 13.25%. Inflation was at 8.13% in Brazil in March 2015. Brazilian companies have large dollar denominated debt accumulated during the boom years which needs to be refinanced as its currency the real declines. With current policies economic growth is likely to continue at 0-1%. Russia made policy errors with the departure of Kudrin as finance minister for Putin's second term as president. Policies to attract foreign investment, controlling military expenditures, and continuing growth were reversed as Russia took positions on Ukraine that led to western sanctions, capital outflows, and a sharp decline in the ruble. By May 2015 the ruble and oil prices had recovered from lows, but the ruble was still 35% below the level in June 2014, and the oil prices were still only two thirds of the peak in 2014. Russia sees the decline in the ruble as a way to reduce imports and increase import substitution for many products. The economy is weakened by high inflation- inflation was 6.9% in March 2014, going up to 16.9% in March 2015. In May 2015 Russia lowered the target repo rate by 1.5 percentage points to 12%. Russia faces stagflation- high unemployment with low GDP growth, and high inflation....
Wall Street Journal Original article ›
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The constructive contribution made by the G-20 meetings of leaders towards building agreement on economic and other policies for peace and progress in the global economy. The meetings were especially useful for coordinating policy and addressing issues arising in the global economy after the 2008 financial crisis. Here Li Baodong, China's vice minister for international organizations and conferences, international economic affairs, describes the path ahead: IMF reforms implementation, better coordination of macroeconomic policies, pursuing the anti-protectionist and free trade policies with further support to the WTO and ministerial MC9 meeting in Bali in Dec. 2013, and infrastructure financing proposals for developing countries on the agenda at the St Petersburg, Russia, G-2- meeting in Sept. 2013. Baodong says the mechanism called the Framework for Strong, Sustainable and Balanced Growth as part of the G-20 meetings is a major achievement. Each G-20 economy submits it macroeconomic policy plan for a Mutual Assessment Process under this arrangement. The progress from the Bretton Woods financial architecture to the new arrangement- from the G-6 to the G-20 to include developing countries from India to Mexico and Brazil- is another major achievement, not fully recognized by the public, says Baodong. Interestingly Baodong makes particular mention to global rebalancing, rather than pushing what he calls the impossible task of increasing demand to get growth. This is a realization coming to China's economic policymakers under the new Jinping-Keqiang administration after the overly aggressive effort to stimulate demand in the 2009-2011 Stimulus, and the ensuing financial problems in the banking and credit system. It is indicative of the policy shift and its implementation underway in China in 2013-2015....
The New York Times Original article ›
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This editorial in the New York Times is strongly critical of former president Barack Obama for accepting $400,000 in speaking fees from Wall Street for a single speech. It says the news is causing people to question the ideas and words presented by Obama in his books about the dangers of losing sight of the interests of ordinary people. It gives the impression says the NYT, that Obama is cashing in like everybody else, and that his talk was empty. The editorial says the millions raised by Hillary Clinton led to her defeat in the election. Obama is reported to plan a foundation with the work of training a new generation of political leaders. This NYT editorial says it would be better to stay true to vision and purpose, to walk the talk for president Obama, especially now that a recent poll shows two thirds of voters, including about half of Democrats say that the Democratic Party is out of touch with the interests of the American People. By associating this closely with wealthy donors leading Democrats contributed to this. During a period when some of the remarkable achievements of the last fifty years such as the European Union are being called into question, when ordinary working people, young people and older people are struggling, this is all the more a tone deaf approach by politicians. The idea of helping train a new generation of political leaders through a foundation sounds bizarre in this context, and seems to suggest politicians believe there is always a solution through marketing their audacity and money.   ...
DW.COM Original article ›
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German perceptions of Mikhail Gorbachev are shown here in DW.com. He is revered in Germany because of Gorbachev's efforts to end Soviet rule in East German state called the GDR, leading to the fall of the Berlin Wall. Gorbachev supported German reunification but did not do this is in a way that ensured that ordinary Russians and citizens of the GDR could make the transition to democratic processes in a smooth way. He also failed to grasp that economic transition could be difficult and would require extensive aid and grants from the west, and that safeguards and protections for retired pensioners and vulnerable sections of society needed to be in place. The following is a reflection of the background in political government and economy of the events in Europe leading to the war in Ukraine.  As a result Gorbachev's instincts were right by first 1956 as a student, and then 1979 as government official about the need for democratic processes to realize the real potential of Russia, just as has happened in many countries that lacked these processes for change in government- Japan, Germany, South Korea, India, Brazil and many countries in Asia and Latin America. But not realizing that these countries made the transition with considerable American and British assistance. Even where there was no direct assistance indirectly the British setup the first limited Swaraj or free rule in India, with elections and elected assemblies in Indian states in the 1930's, following the pattern in Dominion states Australia and Canada. Mohandas Gandhi negotiated within these processes for rights of South African Indians and Colored people, gaining experience, including study of British law.  A son of poor farmers in the agricultural region of North Caucasus, in Stavropol, it is relevant today that his maternal grand parents were from Chernihiv in Ukraine. He came to power in 1980 after entering the Politburo that year. These were the waning years of Leonid Brezhnev, president of the Soviet Union who followed Nikita Khrushchev (1953- 1964). Khrushchev was from eastern Ukrainian region near Donetsk. Leonid Brezhnev was a protege of Krushchev since 1931, from Kamianske, Ukraine.   Gorbachev was influenced by Khrushchev's speech that denounced Stalin in 1956 in favor of a freer and more open society. Khrushchev, became first secretary of the Communist party in 1953 after the death of Stalin and set the pace of post war Soviet society from 1950 to 1964. He removed the fear of the dictatorship of the proleteriat working class, increasingly dictatorial under Lenin, and blatantly arbitrary under his successor to make Soviet Union a freer society.  Yet his tendency to make decisions on his own without consulting others, and the failure of agriculture in the Soviet Union including food shortages led to his replacement by his protege Brezhnev. Brezhnev's whole career was built under Krushchev in Ukraine, in the army in Ukraine, and as a political leader in the Soviet 18th Army that entered Prague in 1945 defeating the Nazis. Why is this relevant? Gorbachev was educated at Moscow State University when the Soviet Union was in the Sputnik era, and felt at the time that it could reach the 1950's standard of living in the US- very different from the earlier leaders. Yet he may have been too much of an optimist and not hands on in understanding the working of a modern economy as large as Russia and the interests of different groups of society that had to be be balanced and protected. His understanding of the US and of how the US and British economies had evolved was limited or nonexistent. The isolation of the Soviet period may have compounded this. The Russian state in the Soviet Union could not simply unwind the power of the state and its intervention and everything would come out right of its own accord.   Leonid Brezhnev, the Ukrainian Russian who succeeded Krushchev from 1964 to 1979 let the system of Soviet rule remain as it was, in the Great Stagnation, leading to lethargy, lack of innovation, and a weak economy with military expansion. Gorbachev tried to regenerate the system by opening it up, but failed to see that there was a risk that it could come apart quickly as it did in just 4 years after he became president in 1985. Only the centralized power of the state had kept the Russian state together from the Tsarist period through the Communist period. The risks of this Gorbachev failed to grasp. What if it happened too quickly without a safety net for the people who could not make the transition. What lawlessness and failure of the rule of law could happen. The US and Britain had evolved their democracies over centuries. Wars were fought in the US and Britain over rights and responsibilities of kings and parliaments. In the US Lincoln fought the civil war not just for emancipation but to ensure safeguards for free white men on the farms so that Labor did not get disabilities placed on them by Capital (entrenched forces of Capital of which the southern plantation economy was only one aspect.)  Japan and Germany were set up as democratic states through American power and constitutional frameworks with Marshall Plans or agreement to take in unlimited imports from Japan. This bad scenario happened in Russia because Gorbachev failed to set the conditions first and work patiently to achieve them including introducing limited  elections and parliamentary processes first in Russia.  Leaders such as Yeltsin who succeeded Gorbachev in 1989, winning the elections that followed, failed to provide a safety net for the vulnerable in the 1980's. Unemployment increased rapidly, life expectancy dropped in Russia, and the economy failed in the early years after 1980. A Marshall Plan like that offered to Germany could have helped but Gorbachev's failure may have been his failure to provide this transition by arranging for West Germany and the US to support a planned transition, a kind of Marshall Plan of Aid, and maintaining a gradual move to democracy as the country was given time to learn institutions of American and British parliamentary democracy. No such Marshall Plan was negotiated for a smooth transition over inevitable obstacles, no safeguards were put in place for illegal efforts to control the state by rogue elements and to seize assets of state companies, no efforts to first introduce limited elections and parliamentary processes for learning democratic process in Russia, and the people of Russia were left with a memory of the this period as a bad lawless period from 1989 to 2005.  Leading to the situation today under Putin of aspiring to the Soviet period as a kind of period that had offered Russia the world recognition it had lost. And this had happened even though the Russian economy had recovered and the standard of living had risen under Putin. Putin's career spanned the period as a Russian official in Dresden, Germany Democratic Republic or Soviet period East Germany to working in the St Petersburg City Council under Yeltsin. He personally witnessed the fall of the Berlin Wall and the fall of the German Democratic Republic from Dresden and Gorbachev's refusal to build a transition period for the changes so that it would not be traumatic for the GDR. Even after reunification these traumas remain in some segments of the older population in East Germany that saw themselves as neglected and support extreme right wing parties in eastern German states by 2020- considering the Soviet period as one in which their lives were less neglected.  After three terms as president Putin with his own traumas from that period in Dresden, and with a mother lost in the period after the Nazi invasion of Russia, a father who survived the Battle of Stalingrad, saw the period of lawless behaviour in the collapse of the Soviet Union as the"greatest geopolitical disaster of the century."  Putin and people around him made missteps and miscalculations launching a war in Ukraine, leading to the situation today- jeopardizing hard won gains for the Russian economy. By 2022 Russian standards of living had risen and the economy was in the best shape it had been in the modern period since the Industrial Revolution. Yet largely exposed because of the dependence on oil and gas during a period of climate change and focus on building future economies free of fossil fuels.  Putin in his own peculiar logic may have seen this as the only opportunity in 2022 before deliinking from fossil fuel reduced the importance of the Russian fuel dependent economy to make some territorial readjusments in Ukraine with a quick war taking Kviv. That turned into a massive miscalculation with the emergence of nationalist fervor in western Ukraine spreading to the whole country of 40 million people. In the future to 2030 with phasing out of the fossil fuel economy, Russia without the connections to the US and European Union's technology and resources it had during Putin's three terms, and facing strict sanctions from US and EU, faces a difficult future. This has cautionary lessons for all countries- the US that read too much into the fall of the Berlin wall and indulged in a losing proposition with free markets that damaged its infrastructure and manufacturing with shifts to China, China understanding of how it to was dependent on the world economy for its future development, India that had to navigate a difficult period and what lessons to draw for building a bigger economy, the EU realizing the failure of its policies of depending on Russia for energy and China for manufacturing with fragile supply chains,  and Russia that there were twists and turns and the need for safeguards and experience building democratic processes before these processes would work for the economy, its people and for Russia as a nation. ...
Wall Street Journal Original article ›
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A slight shift in American opinion favoring a deal with Iran is shown in a WSJ/NBC poll in July 2015 compared to the poll in April 2015. Support for reaching a nuclear deal with Iran remains stable at 36% in both polls, the opposed drops by 6 percentage points to 17% from 23%, and the percentage of people who say they do not know enough to formulate an opinion goes up to 46% from 40%. The intricacies of a nuclear technology deal and the sites involved lead to a high percentage of don't know enough to give an opinion. Factors hindering a deal include inspection of military sites, and Iranian intentions. Factors favoring reaching a deal now is the risk that this would mean Iran would go back into isolation and the opportunity to work with moderates might be lost. The Rouhani administration was an effort by voters to elect a government that could ease or remove sanctions to improve the economy and living conditions- its failure would lead to Iran losing an opportunity to open up to the world. The pressure from the U.S. Congress and Israel served to push for a verifiable and effective agreement to control development of nuclear technology for weapons systems. Behavioural factors involved are the very young population in Iran which has no memories about the period before the revolution in 1979- 70% of the population of 74 million are people under the age of 35. This group is eager for ties to the outside and could change Iran's outlook and policies int the future towards moderation. Risks in not reaching a deal also include the possibility of the Saudis developing nuclear technology and nuclear proliferation. Winners from a deal because of the flow of Iranian oil to world markets and a period of extended low oil prices are the U.S., Europe, China and India. Germany gains new markets to replace the growth in the Russian market after sanctions. Lifting of an arms embargo, an added risk in the last days of the talks, would be mitigated by making the lifting of that embargo very gradual....
Washington Post Original article ›
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Krauthammer cites Congressional Budget Office numbers that show the Obama U.S. health care law continues the spiralling costs of health care with new government mandates at a time of severe budget cuts in education and other areas- for 2013-2022 the costs come to $1.76 trillion. The initial Obama administration figures of 10 year costs of $938 billion announced in 2010 reflected the fact that the new U.S. health care law would take 4 years to fully go into effect. Costs after 2021 are shown to be $250 billion each year in the CBO figures. The law is now before the Supreme Court in 2012, which has to decide on the basis of the limits of the Commerce Clause.
Economist Original article ›
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The Economist points out (in this cover issue on India-Pakistan relations) several fundamental facts. The first is that the current state of relations betweeen India and Pakistan hurts Pakistan the most. It makes a much smaller country and smaller economy bear the burden of defense against a large neighbor- defense takes up much needed allocation of funds for infrastructure and development, education and healthcare. It also weakens democratic institutions and their development by an overdependence on the military for governance. Poor India-Pakistan relations have significant adverse effects on the U.S. In fighting the Taliban U.S. forces are fighting a force that Pakistan's military helped create and support from its early beginnings as a way to counter Indian influence. With an Indian-Pakistani peace settlement of issues in Kashmir and other outstanding issues the U.S. would be in a significantly better position to disengage from the region, especially when the entire Middle East is moving in a new direction in 2011. Consider the difficulties in establishing peace in Northern Ireland, and between Turkey and Greece, and the difficulties of establishing peace between India and Pakistan cannot be considered even more difficult. Pakistan and India muddle along- neither side is doing much to take the initiative. For the U.S. disengagement from South Asia can be best achieved by pushing for a settlement between the two countries. Pakistan and India have much to gain from a settlement. Considering the progress made in Ireland, such places as Yugoslavia, and in Turkish-Greek relations, there is a lot more that can be done and should be done to bring India and Pakistan together. In Ireland diplomatic efforts were made by U.S. envoy George Mitchell, and in Yugoslavia U.S. envoy Holbrooke made diplomatic efforts towards the Dayton accords. Greek-Turkish relations have advanced to the point where Erdogan and Papandreou, the Greek and Turkish prime ministers, discuss solutions to the Greek debt crisis. This includes options to reduce Greece's defense expenditures in the light of Turkey's new foreign policies. The lack of such efforts to break the deadlock between India and Pakistan by the U.S,. the U.K. and other countries involved in the NATO mission in Afghanistan, the emphasis on a military solution supported first by Gen. McChrystal, and then by by Gen. Petraeus, all show a lack of understanding of the real issues that need to be tackled- issues relating to a peace settlement between India and Pakistan....
Economist Original article ›
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In its May 2011 special report on international banking the Economist points out the need for banking regulators to take stronger action than they have so far. What it calls "pre-emptive insurance" it says is needed - stronger regulation, larger capital cushions, and some form of separation of different kinds of banking. Without this the dangers of excessive risk taking and banks that are "too big to fail" will continue to threaten the world's economy. Banks that are smaller and better capitalized says the Economist can fail more gracefully than the large mega banks that exist at this time. In fact the banks today in the U.S. are larger than at the time of the 2008 crisis. Other analysts also point to the lack of major changes in banking and financial structures today compared to the situation before the 2008 crisis, both in Europe and the U.S.

Pakistan: Hard road ahead

Economist Original article ›
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Maleeha Lodhi, a former Pakistani ambassador to the U.S. and Britain, has edited a collection of essays in a new book titled- Pakistan: Beyond the "Crisis State." It tries to form a new construct to move the debate on Pakistan into a future in which Pakistan can exist as a "normal country" free of a paranoia about India that affects its outlook, and free from the military connections that have shifted the focus from development that a friendly neighborly coexistence with India would provide. Intriguing essays include one by Saadat Hasa Manto who goes back to 1951, when the Cold War was at its peak and the U.S. formed a relationship with Pakistan based on military assistance, with only small fraction of aid going into development programs. Syed Rifaat Hussain, professor of strategic studies at Quaid-i-Azam University in Islamabad puts it directly: Pakistan needs to become a normal state and the only way to to do this is for the rivalry and obsession with India to be resolved and put behind it. As it now stands the U.S., India and Pakistan all stand to gain tremendously in such an outcome- the U.S. disengagement from Afghanistan and the Taliban because at its core the Taliban issue goes back to the Pakistan rivalry with India, Pakistan and India because it puts the focus on development, infrastructure building, and economic gains....
Wall Street Journal Original article ›
Wall Street Journal Original article ›
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Nour Malas and Joe Parkinson report from the town of Makhmour, retaken by Kurdish Peshmerga forces following airstrikes on ISIS militant positions. The crisis situation 20 miles from Erbil, capital of the Iraqi Kurdistan region and the coordination between Iranian advisors, U.S. military advisors, and the Peshmerga to push back the ISIS. Peshmerga say young Sunnis in the town joined the ISIS in droves, something never seen before. It also reveals the situation after the failure of the Maliki administration to build a state with support from all parts of the Iraqi population- Shiite, Sunni, Kurds and tribes- leading to the radical alienation of Sunnis. The late awakening of Iran, the U.S., and moderate Iraqis both Sunni and Shiite, to the dangers of the Maliki policies. The unraveling of the decade of Iraq rebuilding by the U.S. in such rapid manner leads to the stepping down of Maliki and beginning of a new non-sectarian approach and policies. The vacillating in the Obama adminstration's policies towards Syria and Iraq leads to a lack of direction in the region. ...
Economist Original article ›
Wall Street Journal Original article ›
New York Times Original article ›
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Bruce Reidel, Obama administration advisor on the war in Afghanistan, conducted a policy review in 2009. He says a policy of engagement he advised in 2009 now needs reshaping. He points to recent events that show the Pakistani ISI and the military who run Pakistan are in direct conflict with U.S. policy in the region. Especially after the attacks on the U.S. embassy in Kabul and the killing of a former Afghan president who was expected to lead peace talks. Reidel says this requires a reshaping of U.S. policy and a policy of containment which would reduce military assistance to Pakistan, and at the same time shape policies that would help the people of Pakistan, such as reducing tariffs on textiles.
Washington Post Original article ›
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The truth is very different from the rhetoric coming from the Obama administration about helping Main Street America and ordinary workers against "fat-cat bankers," says Goldfarb. Under the Obama administration banks have grown larger and gained more influence over administration decisions. No conditions were made part of the agreement that would require banks to lend a portion of the money handed out to the banks to ordinary borrowers. And not much of significance was done to help homeowners under water, which would enable a faster recovery. In this respect the policies slanted in favor of banks of the Obama administration worsened the prospects of an economic recovery. Experts from Reagan advisor Martin Feldstein- who as early as 2008 advocated serious help to homeowners under water to reduce principal and interest- to the FDIC's Sheila Bair and Princeton Prof. Krugman, across the ideological spectrum, perceived this being in the national interest. Feldstein's first op-ed on his plan appeared in the Wall Street Journal on 3/7/2008, followed by ones on 4/15/2008, 10/4/2008, 1/20/2010/ 10/12/2011 in WSJ, and a oped on 10/30/2008 in the Washington Post, repeating the call for siginificant debt reduction to homeowners. Banks had extraordinary influence on successive administrations in the U.S., both Republican and Democratic- the Clinton, Bush and Obama administrations- so that policy actions could be distorted from what would otherwise take place. A study by two University of Michigan professors shows that banks did not increase lending after receiving government money. Instead taxpayer money was used to invest in risky securities for profits from short term price movements, resulting in gains of about 10% in investment returns. Ran Duchin, one of the two professors, says helping ordinary borrowers was not the most profitable use of capital for banks. Without the necessary conditions from the Obama administration, the banks depolyed capital in ways that did not help the economy. Similiarly when banks needed to be restructured no preparatory action was taken because of resistance within the administration- a request by President Obama to Treasury Secretary Geithner for preparing a plan for the restructuring of Citigroup was ignored, according to a report by Goldfarb and Wallsten on 9/17/2011 in the Washington Post....
Wall Street Journal Original article ›
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J.P. Morgan Chase announces $2 billion in trading losses in May 2012. The Chief Investment Office unit made a bet with a trading strategy that CEO Jamie Dimon said had grown very complex. These losses could grow or shrink during the rest of the year.
New York Times Original article ›
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Ghannouchi of Tunisia's Ennahada Party puts forward ideas for a pathway that Islamists could follow to integrate into the political life of Middle Eastern countries- compromise, working together with non-Islamist parties for the common good, focussing on economic development, pursuing moderate Islamist ideas, bringing in those excluded from the political process thorough a new inclusiveness, and respecting the opposition. He sees the successful election in Tunisia in which Ennahada worked with the opposition parties to ensure a smooth transition, as a model for other countries and the Arab neighborhood. In 2014 another process of smooth transition after elections, and respect for the opposition, happened in Indonesia with the election of Jakarta governor Widodo to be the new president. This set another model of respect for democracy, fair elections, respect for the opposition, focus on economic development and inclusiveness, for Muslim countries in another part of the world. Pakistan is another Muslim country which is working to create a model in the presence of much violence from Pakistan Taliban, and interventions by the military in politics. Assistance from the U.S. helped Iraq make the transition under the Bush administration till it unraveled with the policies of the Obama administration. Libya had the potential to make the transition with continued western cooperation and support- a change in administrations in the U.S. and France resulted in policies not supportive of a stable transition. The whole process now needs to be fostered carefully by western liberal democracies. Here Ennahada's Ghannouchi tells the world about the lessons learned by Islamist parties themselves for pathways to embrace for more inclusive societies focussed on economic development and progress....
Wall Street Journal Original article ›
BusinessWeek Original article ›
New York Times Original article ›
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Robert Gordon of Northwestern University describes the problems in American Education and how this is the first generation which will not do better than its parents in educational attainment. The cost says Gordon comes in lower potential economic growth rates.
Washington Post Original article ›
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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.
Wall Street Journal Original article ›

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