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S&P said it will maintain India's credit rating of triple B minus, the lowest investment grade rating, yet it may downgrade it to "junk status" in the next 2 years. S&P said this could happen "if the external position continues to deteriorate, growth prospects diminish, or progress on fiscal reforms remains slow in a weakened political setting. India's growth rate declined to 6.9% in the year ending March 31, 2012, down from 8.4% the prior year. The problem is that India's current account deficit is growing rapidly with the high import bill for energy supplies. The current account deficit is now at 4% of GDP. The trade deficit increased to $185 billion in this fiscal year, up 56% over the prior year. Additional problems are finding ways to finance the deficit with foreign capital, as European banks are pulling back during the current eurozone crisis. Commerce Secretary Rahul Khullar says this could be a big problem. Net foreign capital investment is declining rapidly from $72 billion in February 2012 to $387 million in March, with a net outflow of $27 million in the April 1-25 period. The budget deficit, which has drawn the attention of the RBI, India's central bank, and of S&P, is at 5.9% of GDP for fiscal year ending March 31, 2012. This is larger than the government target of 4.6%. The government has set a deficit target of 5.1% of GDP for the fiscal year ending March 31, 2013....

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This editorial in the NYT calls for the IMF and the EU to rip up their I.O.U.'s after five years of debt negotiations with Greece and a contracting Greek economy. German public opinion looks at it differently having shifted to favoring Greece's exit from the euro. Chancellor Merkel says "if the Euro fails, Europe fails," what she means by this is that the economic responsibility of countries in the eurozone is a condition for the Euro to succeed. The two sides are far apart as Greece faces a "yes" or "no" vote to remain in the eurozone in the July 5, 2015 referendum.

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The Roberts Supreme Court's liberal leaning tendency with swing Justice Anthony Kennedy in 2014-2015. Bravin describes the tendency of the Robert's court to stay with the status quo. Restraint and stability appear to be strong preferences for Justices Kennedy and Roberts as seen in the ruling on the Affordable Care Act, and in the ruling on the Environmental Protection Agency. The four liberal Justices on the court, Kagan, Sotomayor, Breyer, and Ginsburg voted consistently together in 2015.

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European Union leaders including European Council president, Herman Van Rompuy, European Commission president, Jose Manuel Barroso, ECB president Mario Draghi, and Eurogroup finance ministers head, Jean-Claude Juncker, draw up a 10 year road map for "a genuine economic and monetary union." The prime ministers of Italy, France and Spain push jointly for deposit insurance to cover European bank deposits, Europe wide banking supervision, and bailout funds to directly purchase sovereign debt of Italy and Spain without conditions. This takes place June 22-27, 2012, with the EU leaders increasing pressure on Germany for the first time in concerted fashion. Ms. Merkel and her coalition partners the Free Democrats see this as an effort at mutualizing debt. Merkel says Europe will not have total sharing of debt "as long as I live," in her talks with Free Democrats.

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Friedman describes the lack of decisionmaking, initiative and courage in the Eurozone, India and China to tackle difficult problems. During his visit to India he describes the problems India faces. A serious problem with lack of good governance within the democratic framework. India also has a growing population that will soon surpass China's population, which makes the task of development that much harder, with the small steps India is taking to move forward not making a serious impact. Azim Premji, chairman of Wipro, described it this way: "There is a complete lack of decision-making among leaders in the government. If prompt action is not taken, the country will face a setback. You must appreciate how serious it is." Friedman sees a similiar situation in the eurozone countries as new governments are being formed in Greece and Italy by Papademos and Mario Monti, both technocrats from the European Union. This has the added complication because these experts have not been elected. The fact that they have support and goodwill is because of the failure of the political class in Greece and Italy. The failure of the political class in the U.S. is evident from the stymied negotiations over the deficit, and the lack of leadership from President Obama....

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This story by Emmarie Huetteman describes the effort of three Republican women in the U.S. Senate who had the courage to listen to the different voices in their home state and use their informed judgement in deciding how to vote on a Republican healthcare bill or Affordable Care Act repeal effort. Especially when they heard that it would hurt people in their state, the elderly, low income and other vulnerable people without offering alternatives. Even when this meant resisting pressure from fellow Republicans. The senators are Capito of West Virginia, Collins of Maine, and Murkowski of Alaska. This is particularly significant at a time when too much polarization has led to paralysis in coming up with informed discussion and good solutions to problems. It is also significant that senators from the midwestern states such as Iowa- Mr Grassley, and Kansas- Mr. Moran, also joined the effort to listen first to people back home in their districts before making up their mind. 

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Scott Anderson of the NYT provides an indepth look at the Arab World and its fragmentation through the eyes of five people from each part of the Arab world- Egyptian, Kurd, Syrian, Iraqi and Jordanian. He says the countries that fell apart are precisely the ones that were formed by the British and the French, and Italy, following the defeat of the Ottoman Empire  using divide and rule policies- Britain in Iraq, France in Syria, and Italy in Libya- without much thought given to setting up viable nation states. This is why Iraq has a Sunni-Shia divide, Syria has similar divisions, and Libya with a largely tribal based structure, never really held together after the colonial powers left, and were held together only by strong dictators. Today's problems trace back to these historical events. This is complicated by the largely young demographic and restlessness of the people for change coupled with problems of underdevelopment in education, tribal loyalties, religious loyalties, and lack of political and social structures that could keep the countries together as change and transition to democratic processes took place. The role of the military further complicated matters in Egypt. Even Iran experienced these divisions because of the intervention of the great powers including Russia in Iran since 1900, leading to swings between liberal governments, foreign power supported governments, and a swing back to religious leadership as at present. This is one view of the region, others are presented by Ramadan (Oxford),  Bernard Lewis (Princeton), and leaders in Qatar and Emirates, other experts, some of whom point to the failure in leadership and the elites to find solutions to the problems of underdevelopment, in education, health, infrastructure, and aspirations for a voice in their governance. As the same divisions left by colonial powers affected Asia- in India, China, and Korea, but a larger vision of progress prevailed through crises and difficulties.        ...

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Daniel Yergin of consultancy firm IHS describes the geopolitical disputes in the Middle East between Russia, Saudi Arabia, and Iran that are leading to likely continued oversupply of oil in 2016, keeping prices in the $30-$40 range. Saudi Arabia is not likely to change its policy of going after market share, Venezuela is affected but lacks a voice in OPEC decisions, Russia continues its policies in Syria and Iraq under the Putin government affecting other Sunni states, and Iran following the lifting of sanctions is likely to ramp up supply to make up for its lost market share- all leading to an extended period of low prices. This situation benefits China, the European Union countries, India, Turkey and the U.S. in a period of slow economic growth in 2015-2016. Russia looks to use this period of low oil prices to shift to domestic industry after a period of rising imports when oil prices were high. The Saudis seeing their interests in the region threatened by Iran and Russia, and dissatisfied with the foreign policy of president Obama, see a policy of pushing for market share as appropriate in the current geopolitics of the region....

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A statement by German Finance Minister Schauble that Germany would be able to accept inflation of between 2 and 3% showed the new flexibility of the German position after the election of Hollande in France. Schauble said on April 10, 2012, Germany would find inflation "in the corridor between 2 and 3%" acceptable. The ECB's target is 2%. Earlier the Bundesbank in statements to the German parliament indicated that higher inflation rate in Germany was acceptable if the overall eurozone rate remained near target. This would give other eurozone countries an opportunity to improve competitiveness. Schauble also indicated willingness to accept higher wages in Germany because of years of wage concessions by workers in Germany. France's major parties, unions and industry are in agreement on a plan for reducing wages to avoid layoffs. This gives the normal process of adjustments in free markets a chance to function to restore competitiveness and balance. It also addresses the concerns of workers in Germany who would benefit after a decade of wage concessions, and improve consumption in Germany, as demand for Germany's exports adjusts to a slowdown in the global economy....

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The prospects for a coalition government of the PD of Luigi Bersani and the parties supporting outgoing prime minister Mario Monti. This is the best outcome for the eurozone and for lowering Italy's borrowing costs on debt.

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A Nikkei poll shows only 36% of people in Japan support a reinterpretation of Article 9 of the Japanese Constitution to allow "collective self defense," and 51% disapprove. Prime minister Abe cites the need for "thorough debate," and legislative moves in this area will be held back, to gain support for reforms in the agriculture and other sectors. Abe appears to have lost some goodwill for reform measures to launch the Third Arrow. In an address to the Australian parliament in English Abe made a committment to the principle underlying Article 9 by saying- "This vow that Japan made after the war is still fully alive today." He also stated that Japan woud never let the horrors of World War II be repeated. Japan and Australia have agreed to share military equipment, and Japan has a role in developing a submarine fleet for the Australian navy of 30 billion Australian dollars (US $28.1 billion). At about this time in Beijing U.S. leaders for the foreign and finance ministries, Lew and Kerry, met for the Strategic and Economic Dialogue sixth round in Beijing's Diaoyutai State guest house. China's president Jinping, probably aware of the waves created by its own assertive stance in the region and the response of neighbors and Japan, said that the Pacific was large enough to accomodate both the U.S. and China....

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Different estimates on how quickly and how much additional oil would come into world oil markets if sanctions are lifted. The time estimates range from quickly to 6 months for additional new supplies into world oil markets. Estimates of how much production can be added range from 500,000-800,000 barrels a day from private estimates to 1 million additional barrels a day from Iran's oil company, if sanctions are lifted. UK foreign secretary, Philip Hammond, says "there is still a long way to go if we are going to get there." He told a parliamentary committee that the nonnegotiable part is a window of one year advance notice if Iran were to break out and go for a nuclear weapon, which would be based on technical expert opinion of how long it would take Iran to build a nuclear weapon using its knowhow and materials at that Mr Zanganeh took over as oil minister after the election of Rouhani as president 18 months ago. Zanganeh calls the effect of sanctions and the mismanagement of the previous government as "a catastrophe," and he has tried to instill anew discipline in the oil sector. Iran currently produces about 1-1.2 million barrels a day under sanctions, half of earlier levels before sanctions were tightened in 2012 because of the nuclear weapons development issues....

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How to deal with Bush era tax cuts is a big issue dividing Democrats and Republicans in the U.S. If no deal is reached by Jan 1. taxes on the average middle income family would increase by $2000 in 2013. Median inflation adjusted income declined 8.9% to $50,054 in 2011 from $54,999 in 1999, and economic mobility has fallen. The Democrat's position is for Bush tax cuts to apply to incomes below $250,000. Peter Orszag of the Congressional Budget Office and Jared Bernstein point out that while this makes the tax code move in a progressive direction it also creates handicaps in providing a sufficient revenue base to support middle class spending programs down the road. According to the Tax Polcy Center, if Congress is unable to reach agreement and all tax increases go into effect Jan 1, taxpayers in the bottom 20% of income distribution would see a $412 increase in taxes compared to an increase of $633,000 for the top 0.1%. New York Mayor Bloomberg has supported eliminating the Bush tax cuts for all groups, saying there is no free lunch. Alan Krueger, head of the White House Council of Economic Advisors, says the trends caused by globalization and skill-biased technological change which have increased inequality are likely to continue or accelerate. ...