LyrArc Article Gist
The simple fact that countries like Greece and Portugal cannot adjust their exchange rates under the existing euro currency arrangement remains a critical problem says Krugman. Krugman points out that till 2007 Greece's budget deficit was no higher than America's as ashare of GDP than the deficits America ran in the 1980's, and Spain actually ran a surplus. The global financial crisis changed all that as inflows of capital dried up, revenues plunged and deficits jumped. Now membership in the euro area becomes a sort of trap in that Greek costs which rose quickly in the boom years now need to come down in relation to German costs, and the only feasible way of doing that would be to devalue the Greek currency, now impossible under the euro currency arrangement. The euro currency he says is in serious danger unless forceful action is taken to avoid a chain reaction that starts with a Greek default.

LyrArc Article Gist
Goldman founder, Marcus Goldman's son, Henry Goldman, helped create the concept of valuation of companies based on their earning power at the turn of the century. Around this time public finance was in its early stages and credit was based on balance sheet assets. Goldman took public companies like Studebaker, Sears Roebuck and May Department Stores, and formed a partnership with Henry Lehman of Lehman Brothers. He maintained close contacts with Germany during that time. The book by his grand daughter June Breton Fisher is titled- When Money Was in Fashion: Henry Goldman, Goldman Sachs, and the Founding of Wall Street. It an apt title about the Goldman style and culture. When Henry Paulson, former CEO of Goldman was asked during a college reunion what languages he had learned and all about his travels by a classmate, Henry replied that he had learned the language of money and that was the only language he would need.

LyrArc Article Gist
Nokia is initiating a search for a new CEO to replace Mr Kallasvuo who became CEO in 2006. Since then Apple's iPhone has changed the market and Nokia has not been able to match the trend set by iPhones in the mobile phone device market. Nokia's stock has fallen 42% since April 19, 2010. Nokia's response to the iPhone was to replace its mobile phone executive and to create a separate operation for smartphones. Nokia plans to have a new line of smartphones in 2010 to compete with the iPhone. The main problem is its operating system software which needs to be more sophisticated. Nokia holds about 40% of the cell phone market with Europe and countries like India being its strong points. But Nokia's margins in India are low because of intense competition. Apple has already surpassed Nokia in the profit in phones, making $1.6 billion in profit in the third quarter of 2009 compared to Nokia's $1.1 billion.

LyrArc Article Gist
Mohamed Hanif of the BBC's Urdu Service points to the manner in which the CIA and the ISI collaborated in the two time destruction of Kabul. And he points to a Pakistani view outside of the military which is not obsessed with India and would like to get down to the basics- electricity and infrastructure, better lives, and a safer neighborhood. In this perspective the Pakistani military and the Americans both do not understand the basic needs of the large majority of Pakistanis yearning for a better life. Contrast this with the Thomas Friedman piece which complains on the other side, with a note of innocence, of becoming a sucker in this game of a two-faced Pakistani military and intelligence services using the Americans for their own game, supporting the Americans and the insurgents at the same time. Hanif almost has the last word in this, pointing to the ordinary Pakistanis who are just poor and looking in.

LyrArc Article Gist
Germany recorded 9% growth, in the second quarter of 2010. Martin Wansleben, managing director of Germany's Chamber of Commerce and Industry, says the recovery pace is too fast and unsustainable. The spurt in growth may be shortlived and was mainly a result of a surge in exports to Asian markets. The countries that benefited from this growth are in Northern and Eastern Europe. France recorded 2.5% growth, Austria and the Netherlands 3.5% growth. Eastern European countries that help Germany export also did well, with Slovakia at 5% and Czech Republic at 3% growth. By contrast Southern European countries, Greece, Portugal, Spain, and countries like Ireland have not benefited. German growth has not resulted in markets for other countries as German consumer spending is tight. See the link to the expansion of the low-wage sector in Germany and the downside of this; with average wages actually falling in Germany in recent years.

LyrArc Article Gist
The real author of a favorite quote of Martin Luther King Jr. was from Theodore Parker, an abolitionist, Unitarian preacher, who died in 1860 on the eve of the civil war. It was the work of people like Parker which made it possible for Lincoln to sign the Emancipation proclamation. Parker wrote in 1853: "I do not pretend to understand the moral universe; the arc is a long one.... But from what I see I am sure it bends towards justice." He also wrote, says researcher and author Jamie Stiehm, the words: "A democracy-- that is a government of all the people, by all the people, for all the people." Dr King loved to paraphrase Parker by saying- "How long? Not long. Not long, because the arc of the moral universe is a long one, but it bends towards justice." Stiehm says Obama attributes it to King, but King made it clear that he was borrowing from a fellow preacher, and Lincoln's contemporary, named Theodore Parker.

LyrArc Article Gist
The jobless rate of 7.1% in Germany in April 2011, is down from 7.8% in the prior year. In the states of Bavaria and Baden-Wurttemberg, where BMW and Daimler are located, the unemployment rate is down to 4% in April. Jurg Kramer, chief economist at Commerzbank in Frankfurt, says this could lead to higher inflation. Inflation went up to an annual rate of 2.6% in April. The ECB raised the official interest rate to 1.25% in April, but Kramer says the rate appropriate for Germany is more like 3%. The euro is rising with expectations that the ECB will raise rates further. The euro was at $1.49 on April 28, 2011. Kramer also cites some factors that could slow inflation and wage increases in Germany- most union wage contracts continue till 2012, and the change that allows people from Eastern European countries such as Poland and the Czech Republic to be easily hired.

LyrArc Article Gist
India's central bank chief, Rajan, favors a lower inflation target of 4%, with fluctuations of 2% up or down. Lower inflation is critical for India to achieve higher growth rates. The World Bank lowered the rate of growth in the global economy but kept the rate of growth of 6.4% for India unchanged. Rajan also favors creating a more formal system for setting rates, with a committee like the Open Market Committee in the U.S. deliberating over the different factors for such a decision. Rajan was a professor at the University of Chicago, and chief economist at the IMF, before joining the central bank. Central bank policies have helped stabilize India's currency, the rupee. The lower cost of oil for India with an oil import bill of $100 billion is a big boost for economic growth. For the global economy this comes at a time when China's growth rate is slowing to below 7%.

LyrArc Article Gist
Peggy Noonan, quotes from "Hiroshima," by John Hersey, written one year after the disaster from the dropping of the atomic bomb on the city of Hiroshima in Japan. About 100,000 people died instantly, and another 100,000 lay sick or dying in the first moments of the bomb's explosion- as a sheet of light like the sun cut across the sky in an instant. She rightly points out that it is 70 years since the bomb was dropped, and people in a new generation no longer remember the bomb and what happened. That earlier generation struggled with the thought of the bombing for decades. Now it is only a faint memory, and Noonan does a great and profound service by reminding readers of what happened, and why they should care. In the chaotic situation of the Middle East the risks of the bomb and nuclear proliferation are a serious issue that is not getting the attention it needs. Everything stops. Life sinks into the earth. It can happen.

LyrArc Article Gist
Abigail Johnson, brings a different style of management to Fidelity Inc. compared to her father "Ned" Johnson. Both are quiet and like to stay out of the limelight, but Abigail is more methodical. Her father was known to take risks to build the company. Abigail is cautious and likely to study each situation very carefully before making a decision. She also requires input from managers at Fidelity who are not accustomed to this. "Ned" Johnson rarely asked for advice and made decisions on his own. Abigail believes actively managed funds will do well once the market performance improves. Critics say this trend is not temporary, as investors have shifted funds into passively managed equity funds at Vanguard, and into ETF's. Morningstar shows about 17% of all mutual funds are now passively traded funds compared to 10% in 2006, a shift of about $700 billion. On ETF's Abigail preferred to partner with Black Rock, because it had more experience in the field.

LyrArc Article Gist
Greg Ip points out that Saudi Arabia's effort to get back market share is not working so far as shale oil producers continue to increase production. OPEC now confronts a very different competitor in the U.S. shale oil industry- 77 different producers produce 75% of American oil production, each acting like a tech startup, with access to capital markets which are continuing to provide capital. These producers can increase or reduce production with agility, and act differently from state owned oil producers or the major western oil companies. He cites Goldman Sachs figures showing average rig in Texas Eagle Ford shale yielding 5000 barrels a day in the first year compared to 2000 barrels in 2011. This analysis also shows shale oil production cost on a declining curve- $80 in 2014 and $60 in 2015, which could upset Saudi calculations with the advances in technology. Majors such as ExxonMobil are also moving forward with the technological advances.

LyrArc Article Gist
Ted Forstmann thinks we are in the second innings , and just at the beginning of the pain that will happen as the country tries to clear up the financial mess from easy money and errrors of the financial industry, pain that will lead to the overhaul of the country and the economy. The crisis taht started in October 2007 is just making its way in the early stages and expect a lot more to happen. He has a story that he was told by Warren Buffett about a country and an economy like ours that first there are the innovators, then there are the imitators, and last there are the idiots who enter the scene. This is what happened here. The ofcourse a lot of stupidity takes place. Curiously he does not find fault with anybody, not Greenspan who did not seee the consequences of a to easy monetary policy, not the financial industry that got us into this bind, or the consumer who borrowed heavily.

LyrArc Article Gist
The capitalist system has to be made and shaped to human purposes, by responsible caring human beings who care for their fellow human beings, for the world they live in and for the environment of earth, its air, water and trees. And there are consequences in not living in harmony with the natural and human world outside and the spiritual world inside us. Levin hads a son who was a teacher in the New York city schools helping disadvantaged and poor young adults who died in the violence that has become part of this school system. Could Levin with his knowledge and contacts in New York city done something for the very school system that has so much violence and poverty and difficulties with education, working with coworkers like Mayor Bloomberg,on improving the city environment of schools, homes and neighborhoods, as a way of healing the wounds and seeking redemption and quiet for the soul through others?

LyrArc Article Gist
Krugman has some legitimate concerns. Noting that 600,000 jobs were lost in February, 2007, which would mean several million jobs lost, anywhere from 5 to 7 million jobs lost in 2009. In the face of this generating 3.5 million jobs by the end of 2010 as Obama plans to do, looks like not having done enough, and letting the worst effects of the downturn go on. And the lack of a plan to resolve the situation of failing banks, which are only drawing more of the government's capital, leaves continued weakness in credit markets and the economy that will hurt the unemployment picture through 2009. So in spite of all the rhetoric and good intentions, the lack of experience in dealing with a crisis of this magnitude, political deadlock, and an element of trial and error, learning and observing, as the President and his advisors deal with the evolving crisis, leaves the American economy exposed to many risks.

LyrArc Article Gist
The Environmental Protection Agency moved to assume authority over 14,000 coal burning plants, refineries and industrial complexes that emit more than 25,000 tons ( or emissions from burning 131 railcars) of of greenhouse gas emisssions, and are the source of 70% of the U.S.'s greenhouse gas emissions. The bill exempts the smaller facilities, "every cow and Dunkin Donuts," as Lisa Jackson EPA administrator put it. It exempts millions of other sources like bakeries, dry cleaners and hospitals, and focusses on the 400 largest facilities that do most of the environmental damage. These facilities will be required to obtain construction permits and prove that the best available technology has been applied. Lisa Jackson said we are not going to go ahead with business as usual, and it will give President Obama something to show at the Copenhagen talks. Senators Kerry and Boxer are introducing legislation that will be fought by the power plants, and this move by the EPA will be challenged by the power companies....

LyrArc Article Gist
Coorodination, forbearance and multilateralism are three ways to keep economic nationalism from disrupting a global trading system that has benefitted all countries. Even the small moves to help home countries like the the move for US steel in the American stimulus projects, and the demonstrations supporting "British jobs for British workers", and other steps that quietly find their way into individual countries efforts to protect their home industries and jobs, can over time build up into something that would exaggerate the size and extent of this economic downturn. Forbearance and leadership from the US government on this issue and by leading developed countries is vital. So is the effort to develop a coordinated effort through close consultation and joint monitoring of progress. And equally important is multilateralism which works to help emerging countries hit hardest, and help prevent millions from sinking back into poverty, thereby destroying the hope and aspirations that had propelled the global progress in improving living standards....

LyrArc Article Gist
Important research presented by experts from University of Chicago, Princeton university Goldman Sachs and Morgan Stanley, presented at a forum in New York on the Federal Reserve organized by the University of chicago and Brandeis University. The presentation indicates that there will be amagnified effect of the current credit crisis once you take into account the accounting rules to use market prices and the risk practices of financial institutions that lead to adding to reserves. They calculate that leveraged institutions like banks, thrifts and securtities dealers will want to boost their capital to asset ratios by 5% because of the increased risk. Even after raising $100 billion in new capital (such as the money raised from sovereign funds) these institutions will still try to shrink their assets of about $20.5 trillion by about $2 trillion. The impact of this would be to restrict lending in a magnified effect and could cost the economy about 1.5% points in growth.

LyrArc Article Gist
Inflation on an annual basis hit 27% in June. The central bank widened the band it alloed the dong to rise or fall against the dollar each day from 1% to 2% and announced a devaluation of 2% in June 2008. At this time the dollar buys 19000 dong on the black market compared to the official rate of 16600 dong, and the official rate is climbing up to the higher unofficial rate. A large part of the inflation is caused by a flood of foreign investment and bank loans to state owned companies, and the spending by state owned companies. The state owned companies like the Vietnam Shipbuilding Industry Group are controllinng their spending. Some of the inflationary influx is investment from foreign manufacturers trying to escape rising costs in China, showing the risks if this and other factors are not carefully managed. Recently Greenspan advised Vietnamese premier Nguyen Dung to mop up the liquidity surge and restrict spending by state owned firms.

LyrArc Article Gist
Friedman draws attention to a very important thing that a perceptive eye like his has grasped, there is too much rhetoric on the democratic and Obama side about focussing on Afghanistan without knowledge of whats going on in the field and all the risks in haphazard involvement and expansion of the war, reminiscent of the small war that was going on in south east Asia when Kennedy assumed office. Another young and inexperienced President who needed to show that he could be tough and just as the cold war was taking shape with the Berlin airlift and other events in Europe. The early years of the Kennedy administration led to an haphazard expansion of the war without fully understanding the situation in the ground. Scweich and Rory's account and the cable by the British ambassador in Kabul and other links show that the war there has to be very carefully handled by the most capable people knowledgeable about what is happening in the ground.

LyrArc Article Gist
The British governmet announced its own bailout plan. It offered to recapitalize its banks with an injection of capital i exchange for preference shares. It offered banks like the RBS, Barclays, HSBC upto 50 billion pounds to shore up their capital. It also provided guarantee of 250 billon pounds to help banks refinance debt and the Bank of England will double the amount it lends to banks under the special liquidity scheme to 200 billion pounds. The aim is to restore trust in British banks and allow banks to lend to each other and lend to consumers and companies which is becoming difficult or is even frozen and the financial arteries getting clogged as banks are afraid to lend to each other similiar to what is going on in the USA. In Spain the government announced it was creating its own 30 billion euro fund to buy assets from the nation's banks.

LyrArc Article Gist
GM shares dropped by 31% October 8, 2008 to a postwar low. And Jeff Schuster head of auto forecasting at JD Power says the global market in 2009 may experience an outright collapse. The slowdown will extend to Europe, China, india and Brazil. Previously JD Power estimated sales at 14 million for 2009 now it thinks it will be more like 13.2 million in 2009 and this may come up for revision as the economic downturn deepens with higher unemployment, loss in savings, and collapsing consumption. With access to financing drying up, and sales collapsing GM is rnning low on funds to run day to day operations and is expected to be acutely short by the end of 2009. Ford faces a similar situation. One forecast by Citigroup global markets in the link in Detroit News October 9 points to only abot $1 billion remaining by the end of 2009 and even with asset sales generating some $5 billion being thin ice for GM.

LyrArc Article Gist
S&P credit analyst put GM and Ford on credit watch with negative implications saying both companies face a serious challenge to liquidity in 2009. And said in an interview that "these companies need a lot of liquidity to run their businesses, and they could approach the minimum levels they need if nothing changes." For GM liquidity concerns are rising because losses for the last 3 and half years have reached $70 billon and credit markets have locked it out of new financing and stalled asset sales such as the Hummer brans and its medium duty truck unit. All this has rattled investor confidence including slipping sales numbers in the US, Europe and in emerging markets like Russia. GM had the larges one day decline in its history by 31% to $4.76 on October 9, 2008, a postwar low for GM stock, and Ford fell 22% to $2.08. In fact GM's intraday low was $2.26! for an astonishing collapse.

LyrArc Article Gist
Tata Consultancy Services acquired Citigroup's India based outsourcig unit Citigroup Global Services for $505 millon in an all cash deal. With that deal TCS alo got a $2.5 billion contract to provide process outsourcing services, application development and infrastructure support to Citigroup and its affiliates over 9 and half years. This is notable because the Citi contract is the biggest ever for an Indian company, as previously Indian companies have operated with smaller scale deals lasting 2-3 years and worth $50 to $200 million. In October 2007 TCS signed a 10 year $1.2 billion contract with Dutch group Nielsen. What this does is enhance TCS capabilities and expertise to go head to head with companies like IBM and EDS. The Citi acquisistion adds 12,000 employees and $280 million in revenues to TCS. TCS had 111,000 employees before the Citi Global Services acquisition and this expansion will enable it to compete more effectively with IBM and EDS/Hewlett Packard.

LyrArc Article Gist
African Americans from Chicago, Harvard Law School and other places in Obama's background, some of whom came into government with the Clinton administration are likely to assume leadership positions.John Rogers of Ariel Capital Management, Valerie Jarrett, are from Chicago. Some of them are at law firms like Jeh Johnson who is a fellow partner of Theodore Sorensen speechwriter for President Kennedy. These are a new group of younger African Americans different from the earlier generation of Andy Young and Vernon Johnson. Eric Holder was deputy attorney general under Clinton, now his name is mentioned for Attorney General. Ties in Chicago include ties to Martin Nesbitt, a close friend, who is chairman of the Chicago Housing Authority and a real estate developer. Harvard Law School admits 30 to 40 black students each year, and it has 1400 black law school alumni, more blacck law school graduates than any other school except Howard University. And its a source for fundraising and other contacts....

LyrArc Article Gist
The Hispanic vote counts for crucial vote margins not only in the southwest but in places like Pennsylvania and Virginia where they are 5% of the voting population. About 10 million Hispanics voted up from 7.8 million in 2004 accounting for 8% of the voting population. That is an increase of 2.2 million voters and abig part of grass roots efforts to get them to register both by Hillary Clinton, and Obama. This grass roots effort was crucial. And mobilized by immigration policies of the Republicans and by the economic downturn and by a new generation of younger latino voters they voted nationally 66% to 32% for Obama over McCain. In Florida the older generation of Cuban Americans were eclipsed by new younger Cuban American voters and South and Central American immigrants giving Obama 57% to 42% edge over McCain. In Colorado the Latino vote was 17% of the vote with 73% of Hispanics voting Obama. Newly registered voters were 35% in Colorado, 34% in Florida.