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In Suzy Hansen's interview with Greece finance minister Varoufakis in the NYT, May 20, 2015, Varoufakis says his worst fear is that the EU will insist on the 4.5% surplus. He says he cannot budge on pensions because of the way the elderly have suffered, and on collective bargaining rights for workers. The EU proposal made by Hollande and Merkel after stalled negotiations shows the EU conceding on the surplus and collective bargaining, but asking for some cuts in pensions. Dendrinou and Stamouli provide some details of the proposal of Hollande and Merkel for Greece that is emerging after stalled negotiations. The proposal sets targets for primary surpluses- revenues minus expenditures before interest payments- of 1% in 2015, 2% in 2016, 3% in 2017, and 3.5% in 2018. Under the existing program for Greece the targets for surpluses were 3% in 2015 and 4.5% after 2016. The reduction is 2 percentage points for 2015 and 2.5 percentage points in 2016 for the primary surplus from the prior program. Greece's pensions system will have to come up with savings of 0.25%-0.5% of GDP in 2015, and 1% of GDP in 2016. Another major concession by the EU is no reduction in the number of public sector workers in exchange for the Greek government's commitment not to reverse previous measures taken to open up labor markets by prior governments. In place of immediate measures to make firing workers easier, further consultation with the EU will take place. Greece will be asked to simplify its VAT system to 2 rates of 11% and 23% which would generate higher revenues. Greece had asked for 3 rates, which EU officals say did not come up with the extra 1.8 billion euros, or about 1% of GDP....

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German chancellor Merkel will visit Greece in an effort to mend strained relations. She accepted an invitation from Antonis Samaras, the prime minsiter of Greece after recent elections. It gives Merkel an opportunity to show her support for Greece and makes it more likely that Greece will remain in the eurozone.

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Signs that the consumer credit boom in Turkey is reaching alarming proportions are evident from the surge in credit card use. Credit card debt has increased by 20% in 2011, after an increase of 23% in 2010. There are an estimated 3.7 million delinquent cardholders and 2.5 million cardholders who only make the monthly payments. The Turkish regulators are now requiring cardholders to payoff at least half of the balances before they can use ATM's for cash. Banks charge interest rates of about 29% and cardholders who are using credit cards for the first time -as more of the Turkish people are joining the middle class during the country's decade of high growth- do not understand the risks. Turkish banks, Garanti, Yapi Kredi, and Isbank, are in the list of top ten card issuers in Europe, according to Nilson Report. Card purchases average $3,500 per year, in a country with per capita income of $12,300. Turkish banks have pushed card use, with Garanti Bank's website giving users cash for frequent use of cards, and asking users to show the card even if they are buying an apple at the grocery store. The volume of personal consumer loans has doubled since 2009, because Turks use the consumer loans to pay off the high interest rate balances on credit card debt. Analysts at ING Group in London who follow Turkish banks say the delinquency rates will be above 9% in 2012. The IMF's Global Financial Stability Report of Sept. 2011 has identified the credit growth to GDP ratio as one of the key factors leading to an economic crisis. This was true for the U.S. before 2008, for Portugal and Ireland before the eurozone crisis. China's credit growth was up 29% in 2009 and Hong Kong's up 30% according to the IMF Report. Turkey and Vietnam also have high credit growth to GDP ratios according to the IMF. Turkey's high capital inflows can quickly reverse in a crisis increasing the risks facing the country....

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Efforts by the government of prime minister Erdogan to keep Turkey's interest rates at the same rate as inflation, with an effective real interest rate of zero. Erdogan strikes out at what he calls the "higher interest rate lobby." Erdogan's party fears a downturn in the Turkish economy could affect the government's referendum on a new constitution. The IMF sees a high credit growth to GDP ratio as a warning light for countries and Turkey is identified as one of the main countries facing this problem.

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Signs that Turkey's economy is growing and consuming beyond its capacity. The current account deficit is now at 8%, and foreign credit is helping finance the boom. General purpose consumer loans are growing rapidly- at 42% in 2010, and at 61% on average from 2005 to 2008- according to Standard Unlu, an Istanbul based investment bank. Banks are known to send text messages to borrowers if they qualify, so that the money can be picked up at the bank branch. Turkey has gone through two boom bust cycles- in 1994 and in 2001. The central bank of Turkey has increased the level of interest free deposits banks must keep at the central bank, a move designed to reduce lending. However Turkey's younger generation of consumers are on a spending binge, and access to personal loans is easy. Signs of an asset bubble are easy to find. A 24 acre plot in Istanbul's city center sold for $33.3 million.

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Julie Creswell and Graham Bowley look at the history of setting ratings for Greece at Moody's credit rating agency. Greece always had a history of problems with its credit standing including two defaults in its history. In 2004 Greece admitted to providing false statistics to enter the eurozone, saying that it had run deficits for each year since 1997. Before joining the eurozone Greece was assessed an interest rate of 15% on Greek bonds, after joining the eurozone borrowing rates dropped to 5%. Was such a large differential justified purely on the basis of the assumption that the eurozone would back Greece. Moody's held onto its A rating on Greek debt right upto December 2009, two years before the country faced certain default. Pierre Cailletau, Moody's head of sovereign debt ratings till the spring of 2010 admits that Moody's assessment was "mediocre" and that this is a very, very steep fall to see in a ratings- something had gone very, very wrong. The ratings agencies say bankers were selling the idea that the Greek growth story was real. This suggests bankers did not read Greece's financial history of defaults, did not understand the lessons of the recurring Latin American debt crises that countries such as Argentina could only absorb capital upto the point of productive capabilities. And the euro currency founders had left a weak gap - the perception through an implied guarantee that the whole eurozone would ante up the money for the failings of individual countries- into which bankers and Greece's political class rushed in. ...

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President Obama's call for boosting the minimum wage from $7.25 to $9.00 in his 2013 State of the Union address designed to lift millions out of poverty.

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Under the rules for the European currency and the European Union there is no mechanism or process of fines or other sanctions to promote compliance to debt and deficit rules. In the case of Greece, an examination of budget reports shows that Greece never met the deficit rule of 3% for any year except 2006 and it has never been within 30 percentage points of the debt ceiling. Greece's statistics are faulty and deficit figures are continually being revised upwards. Several times the figures were quadruple what was initially reported in late 2009, for instance the deficit figure was 3.7% of GDP, then revised to 13% of GDP, setting off the current crisis for the Euro and the European Union. In 2001 Greece failed to reflect $2.2 billon in military expenses. According to Eurostat, the EU statistics authority this was 10 times what was saved from the derivatives swap arranged by Goldman Sachs to trim Greece's deficit. That transaction trimmed the deficit by one tenth of a percentage point.

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Palaiologos of the Kathimerini newspaper in Athens, Greece, says the early euphoria of support for Tsipras is fading, as the negotiations with the EU require Tsipras to go back on his election pledges and require difficult choices. He points to a poll from the University of Macedonia putting government support of its negotiating strategy in April 2015 at 45.5%, down from 72% in February 2015. He says the Syriza government has conveyed different and contradictory messages, wasting a lot of the goodwill in Europe for Greece's position, and by backtracking on agreements put Greece back into recession. Greece needs to take responsibility for how deep the crisis is compared to a country like Ireland or Portugal, because of dysfunctional public administration and political systems, says Palaiologos. The EU and Greece need to make a fresh start after all the false starts of the early part of 2015.

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With government bond yields at 12% in Jan 2012 Portugal is unlikely to be able to return to bond markets in 2013, even if fiscal targets are met, according to analysts. The S&P downdgrade of Portugal's debt to junk rating has worsened prospects. Portugal's economy is expected to contract 5.8% in 2012 and 3.7% in 2013, according to Citibank. Portugal has to repay 9 billion euros in debt due in Sept. 2013.

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After 16 months of talks political leaders from Dutch language Flanders, French speaking Wallonia, and multilingual Brussels, historically at odds with each other, come up with a new arrangement for running the country in 2011. Belgium will move closer to being a confederation like Switzerland, with powers and funds shifted to the regions. Of particular significance is the resentment by the Flemish people in the north of an administrative arrangement that was setup along French lines. The new devolution of powers gives autonomy to the Flemish region. In the past frequent coalition governments have added to the political instability.