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Difficulties facing China from an overheating economy, a property bubble in many cities,, and a 22.5% jump in March in the broadest measure of money supply being the latest signs of trouble. The government announcement will show the economy growth at 12% rate in the 1st quarter of 2010 vs. 8.7% in 2009. The problem is that China may have acted too aggressively when the central bank increased money supply and state-owned banks in China's centralized banking system were ordered to jack up the lending. The $586 billion stimulus sent even more money to construction and energy companies. Without effective steps and fast the Chinese economy could run into serious problems.

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Turkey's lira depreciates by 21% in 2013 and an additional 7% by January 24, 2014. The central bank uses up a third of its foreign exchange reserves or $19 billion in intervention to support the lira since June 2013. The intervention on June 24, 2014, did not work and the lira continued its downward slide to 2.30 to the lira. The political protests in Turkey and divisions within factions in the government about corruption probes has led to a political crisis and investors pulling back from Turkey. The central bank failed to increase interest rates as expected by investors and suggested by the IMF. Inflation is running at 7.4% for 2013. In August 2001 a currency crisis caused the banking system to collapse. The financial position is stronger than in that crisis, yet the recent political crisis and the large current account deficit has badly dented investor sentiment.

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A mid-July 2011 CBS poll on where Tea party supporters stand on raising the debt ceiling and on a balanced deficit reduction approach combining tax increases and spending cuts. This poll shows 66% of Tea Party supporters saying Republicans in Congress should compromise on their positions to reach an agreement to raise the debt ceiling. Only 31% said they should stick to their positions even if this meant not reaching an agreement. On a balanced approach 53% said it should be the path taken including tax increases and spending cuts for a solution to deficits, and 45% said only spending cuts was the right way. This shows a more flexible Tea Party than is presented in the media reports and strident statements of politicians.

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Fitch Ratings downgrades Brazil's bonds to double-B-plus in Dec. 2015, a junk rating from an investment grade rating. The yield on Brazil's 10 year benchmark dollar denominated bond increased to 6.97% from 6.7%. Other emerging markets such as Turkey and South Africa now expect ratings downgrades in 2016 as the U.S. Fed raises interest rates. Standard & Poors downgraded Brazil's sovereign debt to junk status in September 2015. GDP in Brazil declined 4.5% in the third quarter of 2015 from a year earlier. Brazil's currency, the real, declined by 32% in 2015, making it harder for companies that borrowed in dollars to pay off debts. President Dilma Rousseff is facing impeachment proceedings following a corruption scandal at Petrobras.

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New York state governor Andrew Cuomo says the turnaound in the last 15 months for the state budget shows that things went from "a model of dysfunction to a model of function."

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Criticism of the EU's handling of the Greece crisis by IMF officials in a report. The report says the actions taken for debt restructuring in 2012 should have come much earlier to reduce the debt burden and the size of austerity measures in Greece. Similiar criticism has been voiced by president Hollande of France and in editorials by the WSJ. President Samaras of Greece says the sharp cuts in spending reduced potential for growth in the economy.

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From a skate board maker in Zaragoza to other small businesses laying off employees because banks hit by bad loan losses in the housing bubble are calling in their loans, the situation is rippling across Spain in 2012-2013. It will only worsen an already bad unemployment situation with 25% unemployment. Banks are being consolidated and are expected to take bad loan losses under new rules, and increase their capital reserves to account for bad loans. Many of the cajas savings banks are closed or merged with other banks in other regions resulting in loss of contact with local business. Of 45 regional savings banks only 13 remain. The effects of this are being seen across Spain as small and medium sized businesses are seeing banks call in their loans leading to large layoffs. Here a small business owner in Zaragoza with 1.3 million in skateboard sales to 20 countries, sees its bank call in a 250,000 euro loan, and has to layoff all his employees. A childrens shoe company Colores in Zaragoza shuts down for lack of credit. This is happening quickly as banks in the case of Colores are calling the full amount of the loan immediately and the effects may impact Spain for years. About 60% of the economy and 80% of the jobs are from small and medium sized businesses in Spain, and half a million small businesses have closed in the last few years....

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Macroprudential policies of central banks in S. Korea, Indonesia, China, Canada, and other countries, as concerns grow about a housing and credit bubble.

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China's jobs situation is holding up better than expected with lower levels of economic growth. In 2014 there were 115 job openings for every 100 applicants, according to an official labor survey. Part of the reason is that the services sector is playing a larger role in growth. The services sector contributed 3.8% to growth in 2014, compared to the slower growing manufacturing sector, which contributed 3.0 percentage points. With problems in heavy industry and real estate this is reducing the need for larger stimulus spending. Official figures for GDP growth in 2014 are 7.4%.

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Krugman points to the connection between the failure to achieve debt reduction through debt forgiveness and the sluggish economic growth in the eurozone and U.S., five years after the global banking and financial crisis of 2009 and four years after the beginning of the eurozone debt crisis in 2010. In the U.S. debt reduction for homeowners was delayed with a wave of foreclosures, and in Europe austerity budgets were the norm as Germany pushed hard for austerity policies. In 2014 small relaxation of austerity to give relief to voters took place in Greece, France, Italy and Spain, with austerity budgets still in place. Growth also slowed in Germany to slight contraction in the third quarter and no growth in the fourth quarter of 2014. This is leading to the formulation of new policy to address growth challenges in the eurozone. Debt to GDP is growing in eurozone countries and Britain because of lack of growth, even though spending cuts have been made, showing the need for rethinking policy. ...

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Brett Arends cites several factors for his skepticism about the 4th quarter 2010 US stock market rally. Cyclically adjusted price to earnings ratios that are 75% above their average value. A market value for US equities excluding financial stocks, that is within 15% of the October 2007 peak. Fed data that shows nonfinancial corporations have debt of $7.4 trillion at the end of the third quarter 2010, an increase of $250 billion in one year, and up from $5.5 trillion in 2005. This Fed data shows the debt for nonfinancial US corporations is 58% of their net worth, up from 41% five years ago. US consumers are still have the kind of debt burdens they had in 2008, with US households having reduced their debt by only about 3.5%. Arends says the leveraging is through the roof when you add up the debt that government and corporations have run up. Total debt has risen to $36 trillion, up 15% from the fall of 2007. He cites other experts who were right for the last decade who are skeptical this time- Rosenberg at Gluskin Sheff, Albert Edwards at S.G. Securities, John Hussman at Hussman Funds. The latest analysis by Jeremy Grantham at GMO is that large cap US stocks are not likely to beat inflation by much over the next 7 years. Arends has not mentioned global risk indicators such as the asset price bubbles developing in emerging markets, and the sovereign debt restructuring needed in debt burdened countries of the European Union. Analysis by the Economist in year-end 2010 points to the diverging directions of austerity in Europe, spending in the US and asset price bubbles in emerging markets, as a disturbing sign for 2011-2012. Risks in the US that Arends has not mentioned include problems in housing. Nouriel Roubini sees problems in housing in 2011. ...

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As the Obama administration plans a large stimulus spending plan that may approach $1 trillion over several years, considering also the second phase of the $800 billion first phase stimulus, there is a concern that there may be wasteful spending and social costs of borrowing and spending by the government of such proportions. In economics jargon this hinges on whether there is amultiplier effect of spending, higher if its efficiently and well spent with less impact on private consumption and investment, and lower if the opposite were true. The assumption behind amultiplier of 1.0 for an additional bridge or road is that resources like manpower and capital that would be otherwise idle are deployed to produce something useful. An increase in one unit of government purchases increases by one unit the real gross domestic product. The government has effectively created the additional bridge or road without a cut in anybody's consumption or a businesses investment. The other contrasting approaches are to say there is a multiplier of zero, meaning there is a social cost in two ways. One the reduction of consumption and the crowding out of businesses investing in new products and technologies for example, and second in the inefficent use of resources if a government bureaucracy is put to work allocating money and the additional dangers of favoritism and corruption. To say that there is a multipier of 1.5 would mean that the government figures out a way to get private investment through conversion of plants for automotive parts say to make wind turbine blades by giving incentives, tax benefits and grants, spends on a dilapidated road and public transportation infrastructure that may provide benefits in increased growth capacity over future years. The limits of a government bureaucracy and inefficiency of government would in this case be addressed by transparency rules adopted and measures that track progress that are freely available to all citizens say on a website on the internet, and by bringing in fresh management talent from the private sector. There appears to be no generalization that can be applied for one multiplier for all projects. It may be that the multiplier will vary with the project. Some projects like the conversion of a factory making unneeded auto parts to a badly needed wind energy part, to change the dynamics of energy market pricing, to meet energy needs and cut emissions, may end up having a multiplier much above 1.0. A redundant or less needed bridge has a lower multiplier than a bridge rebuilt before it leads to breakdown. And also the complication that too large a movement in one direction say of stimulus spending, might result in a shift of the curve towards a smaller multiplier and diminishing returns, as the resources to track such a large expenditure and the talent to adminster are overextended. The social cost of private investment not making that investment in new technology, new product or improved product has to be figured into all this, both at the conceptual level as all costs and benefits may not be picked up in the analysis, and at the macro level keeping in mind that the animal spirits, as they were once described, may just not be there to absorb the huge outlays which a government can make. These do not come without an opportunity cost and borrowing costs. All this leads one to to conclude that spending has to be carefully evaluated and projects assessed on a case by case basis for costs and benefits. The spending has to be balanced to provide just as many incentives for private investment to invest in new products and technologies. One way the Obama team is attempting to address this is to include a $300 billion tax cut for businesses and individuals. The business tax cuts are aimed at helping small business with losses, and for future investments and making hires and forgoing layoffs. The other part relates to careful evaluation of spending projects and transparency so the people can see if they are effective. See the link to this....

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International issues took on larger significance for the U.S. Federal Reserve in September 2015 as it looked at a small increase in interest rates. Schwartz points to the memories of the 1997 emerging market crisis and how fragile economies like Mexico were adversely impacted by rising rates in the U.S.. Mexico needed a large bank bailout and contagion spread to other countries. Kenneth Rogoff says the risks are real with declining commodity prices and falling currencies of emerging markets such as Brazil, Indonesia and Russia. Ripple effects would carry over to India and other countries. The sharp slowdown in the Chinese economy in the second half of 2015 was too recent for the Fed to take any sort of risk in September 2015.

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A small tax on the $800 trillion foreign exchange industry of 0.005%- with the tax on currencies where the leaders of these countries approve like Merkel of Germany and Sarkozy of France- would generate much needed money to help the word's poorest, says Philippe Jouste-Blazy, a former foreign minister of France. For instance he says tuberculosis killed nearly 1.8 million people in 2007, and caused the GNP of some countries to fall as much as 7 %. THis would bring serious gains to economic growth in the poorest countries. Look at the $1 to $5 tax imposed on airline tickets in France and 10 other countries since 2005.It has raised $700 million and financed three quarters of the AIDS treatment now being received by the world's HIV positive children. Unitaid, is an organization Blazy leads. It manages the money from the airline tax, and has negotiated 50 to 60% reductions in the price of pediatric anti-retroviral drugs in low income countries. The reason why the banking community should support this tax. One it is tiny, 0.005% on a foreign exchange transaction, and should not affect the flow of transactions. It is done automatically by computer systems. The currency trading system right now is untaxed. More importantly the bankers says Blazy have been benficiaries of taxpayer money. Isn't it time to give back to those worst affected by the global crisis the bankers helped create? Does'nt it create more credibility for the global financial, monetary and trading systems? He says the tax money could be managed by the Global FUnd to fight AIDs Tuberculosis and Malaria, with upholds programs in 100 countries to high performance standards....

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Mohamed El-Erian, CEO of PIMCO, on the European crisis. Things he says to watch, whether the Greece problem is treated for what it is, which is a solvency not a liquidity problem. The current solution he says relies too much on fiscal cuts which can end up worsening the recession, and keeps Greece under a cloud that will further reduce new investment and lead to drops in GDP, and the increase in the debt-to-GDP ratio for Greece is likely. He calls defending Greece's high debt not something that can be defended with the actions taken to date. Other things to watch are whether ways can be found to limit the damage for European growth and the world economy, and whether serious steps can be taken to limit market swings that are a result of investors again overleveraging themselves. See other expert opinions Shiller, Grantham, Roubini. As in earlier comments he sees slower growth ahead.

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Concern about slowing growth in China with rising inflation. The problem of opaqueness of the financial system and of banks that are both listed companies and run by the government, and how this could accelerate a slowdown at some point with accumulated problems in the financial system. A sense that China's growth model has reached a limit, and whether there will be a soft landing.