“For the Communist Party, having tens of millions of jobless Chinese milling around with no social-security safety net is the most serious threat since the Tiananmen Square riots nearly 20 years ago,” writes Malcolm Moore of The Daily Telegraph.

From Reuters:

“Morgan Stanley reported a much wider-than-expected $2.2 billion quarterly loss on Wednesday on plummeting markets and poor trading moves, while banking and brokerage fees sank.

“It was the bank’s second loss in the last five quarters, and six times deeper than expected, driven by a laundry list of setbacks: $1.7 billion in writedowns of leveraged buyout loans, $800 million in writedowns of assets held in bank units and $1.8 billion in principal investment losses.”

Economist Arnold Kling discusses how to “get rid of excess leverage in the financial sector.”

“Foreign car manufacturers, the so-called transplants, have been setting up shop in the South for a quarter century now, starting with the plant that Nissan opened in Smyrna, Tennessee, in 1983. It’s still operating. Nissan added a second plant in Canton, Mississippi, in 2003. Two years ago, Nissan moved its American headquarters from southern California to Cool Springs, Tennessee, just south of Nashville,” writes Weekly Standard executive editor Fred Barnes.

“The auto production numbers in the South are staggering. A dozen years ago, Alabama produced zero cars. Now it turns out 750,000 annually at Mercedes, Honda, and Hyundai plants. Three years after Mercedes opened its SUV factory near Tuscaloosa in 1996, it doubled the size and output. A Honda plant halfway between Birmingham and Atlanta went on line in 2001, and the next year the company spent $450 million to expand it, adding 2,000 more workers.

“The southern auto industry mocks Detroit. The transplants make money and aren’t asking for help from Washington. The recession has curtailed car sales temporarily, causing the transplants to slow production. But they are expected to expand again once the economy recovers. Volkswagen is currently building a plant outside of Chattanooga, which will produce 150,000 cars a year. But VW, with ambitious plans to increase its American sales, obtained an environmental permit that allows it to make 512,000 autos at the site. Volkswagen, by the way, has moved its main American office from Auburn Hills, Michigan, to Herndon, Virginia.”

Read the whole thing.

American Enterprise Institute scholar Andrew Biggs makes the case against cutting payroll taxes.

The Washington Post tells the extraordinary and harrowing story of Shin Dong-hyuk, who escaped from a political prison in North Korea.

From The New York Times:

“Goldman Sachs, long the envy of Wall Street, has not reported a loss since the stock market crashed in 1929. But the panic of 2008 is about to put an end to its long, profitable run.

“After dodging the kind of losses that crushed rivals when the financial crisis first erupted, Goldman is now expected to join the swelling ranks of Wall Street’s losers. Analysts expect the bank to post a quarterly loss of about $2 billion, or $5 a share, on Tuesday.

“Like most banks, Goldman is suffering as its investments plunge in value. But a loss for Goldman—a firm at once admired and loathed by its rivals—would punctuate a year of grim news for the financial industry and underscore how even the mightiest in the industry have fallen.”

Roy Smith, a finance professor at New York University’s Stern School of Business, discusses how recent government interventions will affect executive compensation.

“The root of today’s financial crisis can be found in the government’s effort to use the banking and financial system to expand home ownership,” argues American Enterprise Institute scholar Peter Wallison.

From a speech last week by Glenn Stevens, governor of the Reserve Bank of Australia:

“The most striking real economic fact of the past several months is not continued U.S. economic weakness, but that China’s economy has slowed much more quickly than anyone had forecast. Our own estimates suggest that Chinese industrial production probably declined over the four months to October. Some of this might be attributable to the effects of the Olympics but surely not much. Some of it reflects the weakening in Chinese exports to major countries. But more than that seems to have been occurring. I am not sure that many economic forecasters have fully appreciated this yet. There is every chance that the rate of growth of China’s GDP is currently noticeably below the 8 percent pace that is embodied in various forecasts for 2009.”

How does the happiness of a person’s friends affect his or her own happiness?

“Attending Islamic finance conferences these days, it’s hard not to notice how this investment class is catching on,” writes Bloomberg columnist William Pesek.

“The world’s roughly 1.5 billion Muslims need a way to bank and invest according to Islamic Sharia law, which bars receiving or paying interest on loans or deposits. A massive market infrastructure is being built to facilitate clients that include wildly rich Persian Gulf oil tycoons.

“Yet isn’t this industry being pirated by the Bank of Japan, Federal Reserve and other central banks destined to offer interest-free loans? As U.S. President Richard Nixon, echoing Milton Friedman, famously quipped in 1971: ‘We are all Keynesians now.’ By 2009, we may all be Islamic bankers, too.”

“China’s decision on Friday to link domestic fuel prices to the international price of crude oil, but increase consumption taxes on gasoline and diesel sharply to spur more efficient use of energy in the medium term, raises the question whether the incoming Obama administration might be tempted to do the same,” writes Reuters columnist John Kemp.

In an editorial today, The Washington Post makes the case for raising gas taxes.

“Christina Romer, who has been selected to be chairwoman of the Council of Economic Advisers, is something of a cipher to most non-economists. That is a pity, since she is among the most interesting and impressive of Mr. Obama’s choices. She is one of the world’s pre-eminent economic historians and her scholarship makes her particularly well-suited for advising a president during this tumultuous period,” writes Harvard economist Edward Glaeser.

Economists Susan Woodward and Robert Hall examine five strategies for stimulating the economy.