LyrArc Article Gist
Voter fatigue with the Conservatives under prime minister Harper is showing up in the province of Ontario. The area around London, Ontario, and Toronto is critical in the 2015 general election. A large loss of manufacturing jobs has left this key manufacturing region of Canada so weakened that the recent 20% decline in the Canadian currency is not leading to a rebound in the manufacturing sector. The Liberals under Justin Trudeau have promised to run a slight deficit to invest in infrastructure that would help the manufacturing sector, while Harper's Conservatives plan to keep the status quo. The vigorous campaign run by Trudeau, the son of a former prime minister, is also helping the Liberals, who are moving ahead in the polls.

LyrArc Article Gist
Dilution of the Volcker Rule by defining "hedging" as covering bank risk on a "portfolio basis," "including aggregate risk of one or more trading desks." The new wording is in a 174 page draft proposal for the rule released by regulatory agencies. The Federal Reserve, the FDIC, the CFTC, the SEC, and the Treasury Department are putting together the final wording. This opens the door for banks to engage in proprietary trading on their own account. Experts say this makes it possible for financial firms to make all kinds of bets on the market, by defining the risk of its portfolio broadly, such as a U.S. recession. Additional changes are the deleting of the requirement that chief executives pledge their firms are not engaging in proprietary trading. Another change that is being debated is whether to require banks to report all trading to a single repository so that regulators can see if there is systemic risk. The result of this would be a watering down of the original Volcker Rule provision in the Dodd-Frank legislation, that banned proprietary trading after the 2008 financial collapse on Wall Street....

LyrArc Article Gist
The Muslim Brotherhood in Egypt and its leader Khairat Al Shater. Al Shater talks to the WSJ's Kaminski on his plans for Egypt and his demands for reinstatement of the elected parliament, the newly elected president of Egypt Mohammed Morsi taking that position, and the military backing off from its decree of unlimited powers over the president and parliament. He says he does not want a collision with the military and prefers to achieve the goals over three or four years, feels the military betrayed them, and admits to having too many disagreements with other pro-democracy groups in Egypt. His new emphasis is on a broad based effort and national accord to bring democracy and the rule of law in Egypt. Al Shater is a new breed of Muslim Brotherhood leaders in that he is a businessman having made money in furniture, software and other businesses, and at the same time a devout Muslim who spent years in Saudi Arabia. An interesting fact about the Muslim Brotherhood is that many of the leaders are academics, engineers and doctors or businesspersons, yet devout Muslims....

LyrArc Article Gist
Yannis Palaiologos, a journalist at Katherimini newspaper in Greece, gives his assessment of the situation in Greece before parliamentary elections in Jan. 2015. He says Samaras's New Democracy Party coalition with Pasok has lost momentum ever since the European parliamentary elections. Yet the left party coalition led by Alexis Tsipras is unlikely to win outright and will need to ally with the centrist parties or the Communists, even with the 50 seat bonus given to the winner under Greek election rules. Tsipras will need to ally with centrist parties and moderate his policies to stay in the eurozone. Chancellor Merkel has said a Greek exit will be manageable. A majority of Greeks want to stay in the eurozone, but find the high unemployment of 25% and steep decline in the economy with a loss of 25% of GDP under continuing austerity policies difficult to accept.

LyrArc Article Gist
This editorial in the Economist looks at China's relationship with Russia. It says the Ukraine conflict and western sanctions have resulted in Russia moving closer to China. Yet the two countries have competing interests in central Asia, and different relations with India and Vietnam, in the Asian region. Russia is also wary of China copying designs of Sukhoi aircraft in sales to China of advanced military technology. The major oil and gas deal signed in 2014 provides Russia with a new outlet for oil and gas with the cooling of the relationship with Europe. Yet Russia has strong ties built with Germany over the entire post war period, and differences have emerged in U.S.- German relations. Germany's relationship with Russia- cooled by sanctions and German wariness over Russian intervention in Ukraine and Russian wariness over NATO close to its borders- spans 7 decades and is likely to remain strong in the long term. This comes from the shared sense of awareness of the terrible conflicts of an earlier period, just as it has for French-German relations, and from the strong efforts made by Germany to preserve the relationship and peace in Europe. Chinese president Xi's visit to Moscow on May 9, for celebrations of victory over Nazi Germany, will be followed by a visit May 10 by Chancellor Merkel of Germany. A factor in German-Russian relations is the close trade links, cultural exchanges, and history going back to the GDR where Chancellor Merkel is from, built up over many years, that are likely to set the long term future of relations. China's dominant partner relationship in the China- Russia relations does not bode well for the future of relations, compared to the equal partner relations with its European neighbor, Germany. In this different light Ukraine is a temporary pause, in German-Russian relations and peace in Europe, a situation which is in China's long term interest as it focusses on its economy and the next phase of development for a modernized economy. Especially as China continues to build on its own vital trade relations with Germany and the European Union, the latest example being Germany, other EU nations, and India, joining the China sponsored Asian Infrastructure Investment Bank. ...

LyrArc Article Gist
Bruni of the NYT interviews the new Mayor of Rome, a transplant surgeon who lived most of his life in Pennsylvania. The effort by expatriates like the new mayor Ignazio Marino to give Italy a new start following the Berlusconi era and the stagnation in Italy's political and economic system. Marino won with 64% of the vote. Many of the people Bruni talked to in Italy are deeply conscious of the difficulties facing Italy as it tries to put itself on a new path, making a transfer to a younger generation, ending the Berlusconi era, and puting aside the sclerotic ways of the past.

LyrArc Article Gist
Vernon Smith asks the question why when $10 trillion in losses were experienced in equities in 1999-2002 the financial system did not collapse, and in 2008 losses of $3 trillion in mortgages held by homeowners resulted in a collapse of the financial system. In the 2002 period the losses, he says, were borne largely by institutional and individual investors who largely owned the assets outright. In the 2008 crisis homeowners purchased about 90 to 100% of the housing assets on margin, and declines in value of 50% or more in the low price tier were seen for homes bought at the peak of the bubble. These losses were transmitted to banks and lending institutions. The consumption binge added to the debt of households. The result is that lending went down sharply for durable goods consumption, and this is seen in the decline of auto sales of 41% from Feb. 2008 to Feb. 2009. The collateral damage then occurs in retail and labor markets. This is similiar to how Ben Bernanke viewed the Great Depression crisis in an important paper- the inability of the financial system to perform its economic role of lending to households for durable goods consumption and to companies for production and trade. This understanding is different from the Friedman view of a contraction of the money supply, and the view that excessive speculation caused it. Bernanke's experience studying the causes of the Great Depression uniquely qualified him to address the causes of the global financial crisis of 2008....

LyrArc Article Gist
Members of the U.S. Congress question GM CEO, Mary Barra, about a failed ignition switch. Members of Congress cite a 2005 memo saying the defect would not be corrected because it would cost 90 cents per car and the warranty-cost savings were about 10-15 cents per car.

LyrArc Article Gist
The main thrust of the article is contained in 3 content links: first one is how the Resistance as the Hezbollah cals itself has made itself part of the social fabric, the second the peculiar set of events thaat led to this, the third about the peculiardemocratic representation system that was designed after the Lebanese civil war. Content Links 1. Hezbollah as part of the social fabric. Hezbollah legislators pushed through a $35 million drinking water faility, a waste disposal project of about $35 million and a $68 million road project in the Shiite dominant Bekaa Valley. See the reference to the organic farm and other economic and charitable projects in Solomon/Leggett WSJ 7-21-06, financed by Iran. 2. The Peculiar Set of Events that Led to Hezbollah integrating into the Lebanese social and political fabric. The Lebanese civil war began in 1975 and formally ended in 1989 with accord that reserved ccertain number of parliamentary seats and key positions for each sect or religious group. The Shiites had 27 and Sunnis 27, the Christians 64 and the Muslims 64 in the 128 member Parliament after the 2005 elections. The President has to be a Maronite Chrisitian, the Prime Minister a Sunni Muslim, and the Speaker of Parliament a Shiite Muslim, according to the accord. The Shhites led by Hezbollah took the maximum number of seats available to Shiite Muslims during the election, 35 according to this article though 27 is shown under the earlier Solomon Democracy article. After the election which followed Syrian withdrawal from Lebanon, the Shiite parties joined the coalition government an took 2 ministries , energy and labor, and negotiated veto powers over any cabinet decisions. 3. The Lebanese Democratic System that emerged from the 1989 accord. This gave Maronite Christians, Sunni Muslims (for long time priviliged and better educated groups in Lebanon compared to the less well educated Shiites having higher rates of unemployment and illiteracy as well as less access to governace, ) a proportionally bigger say in the government. About 40% of Lebanon's population is Shiite, but their representation in the Parliament of 128 seats is a maximum of 35 seats, with the rest going to other Muslims and Christians. Ali Nasr refers to this in his key article for this group. In a Lebanon with a Shiite Revival this still leaves more progress in democratic representation for the Shiiites in the future. ...

LyrArc Article Gist
Many of the towns with manufacturing plants in 1992 have switched sides from Democratic in 1992 to Republican in 2016. This explains Donald Trump's success - he tapped into discontent with Democrats who supported trade agreements such as TPP and did little to take up the cause of workers in areas hit hard by foreign manufacturing and imports. It also explains why Republicans are now favoring protectionism and Democrats supporting free trade, traditionally the opposite was true.   As the U.S. manufacturing workforce diminished in size from 15% of the U.S. workforce in 1992 to 8% in 2017, it shifted from cities with unions to blue collar suburbs. Factories in traditional Democratic places were closed down and these cities ceased to be manufacturing centres. Pittsburgh ceased to be a major manufacturing centre as manufacturing jobs declined by 37000, and service industries increased by 168,000. This resulted in the manufacturing heartland going through Michigan, Minnesota, Wisconsin, through Ohio and the Carolinas and into the deep South. In these places whites without college education took up manufacturing jobs and identified with the Republican party's focus on social issues and abortion restrictions. So big is the shift that labor unions that represented 20% of manufacturing workers in 1992 represented only 9% of workers in 2017, according to economists at Georgia State University. Bill Clinton won 49% of working class counties where workers were at least 25% of the workforce. By 2016 the 860 such counties were down to 320 about two thirds now gone, and Mr. Trump took 95% of these counties. The change is dramatic. Voters that identify Democrat are now from cities, more educated, and less likely to be identified as blue collar. As the economies of these cities has shifted to finance and service industries, these residents have not accomodated the conservative cultural views. and have shifted to embracing more immigration, LGBT, gay rights on social issues. Before there was one mention in the 1992 Democratic platform of LGBT says the Journal, now there is 19 mention of rights for LGBT. Republicans have now shifted from privatizing Social Security, and now support some infrastructure spending. Republican platform now calls for free trade that is fair trade. And this has support from the left and the right. Factory owners and factory workers are united in their opposition to free trade rules that hit American factories. Union leaders say the Democratic Party left us. The Democratic Party gets more support and identifies more with Silicon Valley- Mr. Obama's TPP trade agreement benefitted Silicon Valley more than it did auto plants. The change happened over many years and Mr Trump capitalized on this. ...

LyrArc Article Gist
This report in The South China Morning Post in Hong Kong, gives insights into the Chinese position in trade war with the U.S.  China has its own internal groups which support China being able to take a leadership role in world affairs. Xi Jinping made giving China a prominent role in the world a feature of his presidency. China  has this internal audience and its own sense that China's resurgence was won with hard work and cooperation, plus dedication of the Chinese people. In the past Japan and South Korea also used state subsidized industries, and subsidies to gain leadership in key business sectors involving high technology. China would see this state subsidies model as its own model of development. From this standpoint the U.S. demands on subsidies as unfair competition could be seen as changing a key part of its economic model.  Asking China to put everything in writing and show tangible proof of enforcement as the U.S. insisted in talks, was too much for the Chinese side. China said trust us to do this, and lift the tariffs based on our verbal assurances. The U.S. having seen decades of no progress on this point, wanted tangible proof before tariffs were lifted. Added to the demands on subsidies were the demands for no more of what the U.S. calls stealing of U.S. technology through forced transfer of technology by U.S. firms as a condition to operate in Chinese markets. With the U.S. lagging in 5G technology and Huawei ahead the issue resonates on the U.S. side. Add to this Mr. Trump's key voter base includes the former Democratic party supporting workers who have shifted to him because of trade agreements and policies of Clinton and Obama that hurt American workers through seemingly endless closure of manufacturing plants from Chinese competition.   ...

LyrArc Article Gist
U.S. Defense Secretary, Leon Panetta, held three way talks with Egypt's president, Mohamed Morsi and the head of the military, Hussein Tantawi. Panetta said of Morsi- " I was convinced that President Morsi is his own man." Panetta said Morsi is committed to democratic reforms and representing all Egyptians. President Morsi sent a letter to Israeli president Shimon Peres expressing deep thanks for a Ramadan greeting and expressing hope for new peace talks with the Palestinians. The U.S. preparations for a potential conflict with Iran and the civil war in Syria to oust the Assad regime have given new urgency to reduce tensions in Egypt between the different factions including the military.