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Peter Coy call for debt forgiveness- writedowns of debt for debt burdened European countries that have no chance of ever repaying the debt, and writedowns of mortgage loans to homeowners in the U.S. who are under water. The alternative is to trap the productive capabilities of the countries as they struggle over many years to pay down the debt, even as the economy is contracting. This would drag on for many years, and is bad for the U.S. and bad for Europe. By taking the writedowns now, and making the arrangements to make this possible for banks and other lenders, the economies of the different countries can resume growth much sooner and leave these problems behind.

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India's central bank chief, head of the RBI, responds to questions on managing commodity prices and keeping inflation under control.

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A new generation of younger leaders takes over at the European Central Bank under Mario Draghi. Belgian economist Peter Praet succeeds Peter Stark of Germany in the Economics Department. Portugal's Vitor Constancio is vice president. Jorg Asmussen, 45, from Germany is on the ECB executive board, so is Benoit Coeure, 42, from France, and Klaas Knot, 44, from the Netherlands. Asmussen will head the ECB's International Division. Jens Weidmann,43, is the new head of the Bundesbank. The result experts say could be a reorientation of the ECB's outlook away from the rigid anti-inflation stance of Draghi's predecessor, Claude Trichet, and a willingness to try new approaches to help Europe tackle this recession.

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David Walker, a former official of the central bank and the British Treasury, takes over as chairman of Barclays bank in Britain. Walker was part of British government required reviews of the financial industry and an inquiry into RBS. He has argued for better disclosure, and is well respected in British banking. Walker will have to find a replacement for Bob Diamond, the CEO, who resigned following the LIBOR rate manipulation investigation.

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The National Credit Union Administration (NCUA) files lawsuits against J.P. Morgan Chase and Royal Bank of Scotland (RBS) for losses suffered on $50 billion in mortgage bonds held by the NCUA. The NCUA is the federal regulator for credit unions in the U.S. More than 40 credit unions failed and a large number have suffered losses and are in a weakened condition because of the mortgage crisis. Because of the losses the credit unions have to pay more into the NCUA fund, pay less on deposits and charge higher rates on loans. About $800 million in damages is sought by the NCUA, which would go to NCUA's insurance and emergency support funds.

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Informational capital that was lost in the 1930's as local banks went out of business and the information on credit worthy borrowers disappeared and with it the credit to all businesses dried up leading to great unemployment. Are community banks that took losses from their holdings of Fannie and Freddie shares and some going out of businesses suggesting a loss of informational capital in the present crisis. Some of these banks will be acquired by other larger banks so that would limit the loss of informational capital. And bad policy compounded the problems in the 1930's. Now the FDIC andf the Fed with support of Treasury will be looking at the smaller local banks to see that that banking sector continues to function.

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A 12% drop in Russia's RTS stock index on March 2, 2014, as Russia occupied the Crimea in Ukraine. The Russian economy was slowing down before the crisis. This is likely to reduce foreign investment in the economy. The ruble has declined 9% aginst the dollar in Jan-Feb. 2014. As a temporary measure the Russian central bank made a rate hike on March 2, 2014 of 1.5% to 7%. This is a difficult act for the central bank as raising rates could push the economy into recession.

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India's central bank, the RBI, lowered interest rates by a half percentage point to 8% in April 2012.

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Monthly reports are issued on bank lending by the Treasury. The report for February shows business lending is down by 24% in its dollar value from the previous month, and a similiar decline in student, auto and credit card lending. The only increase is in mortgage lending as government efforts to hold down interest rates heave led to a refinancing boom. The two largest lenders Wells Fargo and Bank of America reported a 35% jump in mortgage lending in February over January. Businesses are charged more for loans by Chase, which it says is to reflect increased risks, and Chase has sharply reduced its business lending. This is bad news for the economy, because it means businesses will continue to pull back, and some businesses will layoff employees and others may close for lack of financing. The other link to the report in the WPost about the consumers who have jobs, but are acting flat broke suggests consumption will continue to decline, which puts stresses on businesses as sales revenues for all sorts of products decline across the spectrum of the economy. With less acess to costlier financing, and declining sales, the picture of continued large job losses is being etched, and will continue to be etched as these are becoming things that will not change for a long time. Banks are insolvent or close to being insolvent, so lending is only like to change if the government takesover the banks and puses through lending at attractive rates. But it has to do this quickly, before confidence drops to a level where the demand for loans just isn't there. China is able to push lending through the banks because government controls the banks, this cannot happen in the US unless the government actually steps in to take over the insolvent banks and push through a large lending program. In this sense the Obama program while admirable and helpful to stabilize things a bit, is only part effective, and can never really restore confidence or a serious measure of economic stability because of the three pillars of progress in this situation, it can impact only two directly- foreclosure prevention, and business plus consumer lending. The third consumption is something it can only indirectly control through foreclosure prevention and lending, but which is headed down as Americans convert to a frugal lifestyle. And in these two areas of foreclosure prevention and business lending the government is failing. The fourth pillar of progress in the recovery is employment, and this is also an area the government can only indirectly control through stimulus spending on infrastructure, education and energy, but is largely influenced by foreclosure prevention- which keeps home prices from falling rapidly and overshooting and reduces household wealth- and business/consumer lending. These are ER (f) FPL (CE). Economic Recovery as a function of Foreclosure Prevention and Lending, and Consumption and Employment, where indirect control is shown by ( ). With not much in place for FPL- the only two variables government can directly control if it takes strong and immediate action before its influence on these two variables begins to diminish over time- Obama's inexperience and learning curve and failure to take bold action to get serious results on FPL, may result in admirable demeanor and rhetoric but medicore results and a struggling economy for years to come. ...

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Bank of America's mortgage unit will have a new head who reports directly to CEO Brian Moynihan. Terry Laughlin who worked previously with Moynihan at FleetBoston Financial will head the unit. The unit is called the "Legacy Asset Servicing" group and has 1.3 million delinquent loans. This is part of an effort to deal with the losses from delinquent loans. As part of this effort the bank will exit the busiess of reverse mortgages to concentrate on critical areas. Because of the bad loans that came with the acquisition of Countrywide in 2008, the mortgage unit lost $8.9 billionin 2010. In the fourth quarter the bank also recorded a $2 billion noncash impairment on a drop in value of that business and took a $4.1 billion provision to cover buybacks of mortgages that government agencies and others purchased from Countrywide.

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Puerto Rico has issued $72 billion in debt, about 70% of its GDP, by offering tax breaks to wealthy investors. It is now faced with a declining population, a shrinking tax base and a large public sector. Puerto Rico's inability to pay its debt will affect hedge funds which hold its distressed debt. Mutual funds have reduced holdings of Puerto Rican debt as its debt was reduced to junk status. Commercial banks hold insignificant amount of Puerto Rican debt. Municipalities in the U.S. have improved their financial situation by cutting spending and increasing taxes in recent years, reducing any contagion effects. Only 13% of Greece's debt or about $47 billion is held by private banks. Over 80% of the debt is held by the European Central Bank, the European Financial Stability Facility, the IMF and European governments. The ECB's quantitative easing program will support countries such as Spain, Portugal, and Italy, and other countries during the now likely default of Greece in 2015. This will limit the contagion from Greece. China's debt situation and excessive rise in stock market and housing prices poses more risks because of the size of the Chinese economy, and through the effects on commodity exporting countries such as Canada, China and Australia, and the economy of Hong Kong. China has large reserves which it could use to bailout banks if the situation were to arise, and could cut interest rates. China's financial system is relatively closed reducing direct effects of contagion. Ip says outsiders have placed too much confidence in China's leaders to manage a crisis, and in the condition of the financial system, because it is opaque, lacks transparency, statistics are not reliable, and not enough is known about the true condition of the economy....

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The yen is at 134 to the dollar in June 2022 having dropped by 22% in 2022. The US Fed is increasing rates while the Bank of Japan is keeping its low interest rate policy. Japan's inflation is at 2.5% compared to 8.6% in April 2022 for the US. The last time the central bank intervened to buy dollar was in 1998 with severe yen overvaluation which is not the case now. The yen's weakening means the parts Japan imports from its supply chain in Asia now cost much more.

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The Bank of Japan's plans to buy 100 trillion yen of Japanese government debt in 2 years to fight deflation is having a positive effect on the eurozone economies. Japanese investors are buying eurozone sovereign debt. J.P. Morgan estimates the increase in investments for overseas bonds by Japanese investors in 2013 at 45 billion euros. This is lowering the yields on the sovereign bonds of France, Netherlands and Austria to record lows and lowering the yields of sovereign bonds of Italy and Spain. The 10 year yields on Italy's government bonds declined to 4.326%. Yields on 10 year Japanese government bonds was 0.514% on April 8, 2013.

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The US central bank the Fed plans to raise interest rates by 0.75 percentage point after the 9.1% US inflation report for June 2022.

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The authors of the book Red Capitalism, two bankers, Walter and Howie, describe the evolution of China's banking system from the early days of 1974 to the present day. The account shows a sophisticated system of markets and companies, but behind the facade, is a more primitive system with its good side and problem areas. Risk is hard to define or capture in this system as the system is for the most part closed, trading entirely with itself. State controlled banks deal with stae entities in ways that are not so transparent. This distorts external perception of China's solvency. state debt for example is low, about 20% of GDP by one measure, but when all government obligations are added together, the authors say it is 76%. The whole business of providing, receiving and regulating money involves different state entities. As the system trades with itself, critical information about liabilities and pricing is concealed or difficult to figure out. The lack of outside entities setting prices disrupts efficient capital allocation and lets excesses grow within the system, making for concern about the future of this system.This is especially true considering that with the Asian crisis of 1997, then the US banking crisis of 2008, and the current crisis in the Euro-zone countries banking systems, excesses eventually take root....

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The Reserve Bank of India (RBI), India's central bank, left rates unchanged in October 2012. RBI Governor Subbarao says inflation could go above 8% by January 2013. High global oil prices and a weaker currency are adding to food price increases to push inflation higher. The RBI lowered its growth forecast to 5.8% from 6.5%. Mr Rangarajan, chairman of the Prime Minister's Advisory Council said the RBI will not lower rates till January 2013 unless there is a significant tendency for a decline in inflation before then.

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Analysts and experts says Turkey faces a debt bubble like that facing Spain and Ireland. The budget deficits in Spain and Ireland were considered manageable before the banking crises in the two countries. Turkey's short term borrowing- most of the $221 billion in outside financing needed for the private sector in 2013 is in short term loans. The large current account deficit and rate of growth in credit approaching IMF warning indicators are a problem. Volatile capital inflows could reverse as investors look for safe havens with the continuing street protests in Istanbul. Earlier currency crises in 1993 and 2001 were currency crises from volatile capital inflows. Turkey's central bank is trying to manage this situation and has $100 billion in currency reserves. But it is the hidden buildup of external debt by banks and companies in Turkey that worries analysts like Richard Segal at Jefferies bank in London. A $400 billion public spending plan, over 50% of Turkey's $770 billion GDP, is being prepared by the Erdogan government for the 100th anniversary of the founding of the modern Turkish state in 1923, showing that the scale of public spending is not under control. Analysts say at some point the huge credit bubble will burst, as it has in other countries including Spain, where the central bank appeared to have things under control. The street protests add political risk to the increasing risk for emerging markets with the U.S. Federal Reserve's policy shift to increasing interest rates....