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The European Banking Authority has lost credibility after two rounds of stress tests by the EBA failed to turn up the problems at Spanish banks that required a $125 billion recapitalization by the EU rescue fund. Now EU officials are turning to the European Central Bank as the eurozone's main banking regulator. The U.S. Federal Reserve is performing this role after the 2008 financial crisis, with the FDIC in charge of bank closures and resolution. ECB president Mari Draghi says, letting the ECB perform supervisory tasks, a decision made at the June 28 EU summit talks, is fully in line with the bank's mandate. Separate decisions will be needed for a bank resolution authority like the FDIC. The ECB will then have to hire hundreds of banking experts to make on site visits to eurozone banks and check their loan books and make independent assessments of bad loans, bank risks, and capital requirements. The important thing is an agency which is free of local and political interference to make the correct evaluations....

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In an intervew with WSJ's David Pearson, Tom Enders, CEO of Airbus, points to the changes at Airbus after improvements in governance in 2012, leading to a smaller role for the governments of France and Germany. One is the shift away from Europe. Compared to 2004 when Airbus orders were 50% from Europe, this has dropped to 10% in 2014. Airbus is also staying away from a 623 million euros loan from Germany for the new Airbus A350 widebody jet, because of pressure from the German government to allocate work to German factories. The same policy will be followed in future programs to rely less on government support. Enders does not want to be tied down to certain workshare agreements imposed by governments with the loans. In 2012 Airbus reduced the role of the German and French governments with a large increase in the percentage of shares traded on stock markets. In the past the funding was critical for programs. Today Airbus has 9-10 billion euros on its books because of booming sales.

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Hirofumi Gumi, a top official of Japan's Financial Services Agency, during the administration of prime minister Junichiro Koizumi, says he cannnot understand why America is making the same mistakes as Japan. It took some tough actions under the leadership of prime minister Koizumi (2001-2006)- after 6 years of failed policies till 2002 following Japan's banking crisis in 1996- that helped restore the country's banking system. Under Heizo Takenaka, as head of the agency supervising banks, a large part of the bad loans in the Japanese banking system were taken off the bank's books. Some banks with insufficient capital, such as Resona Bank, were nationalized. Takenaka told the banks not to cover up or pretend the problem was not big enough, and declared he was not open to negotiating. Gumi says Takenaka's tough actions helped to restore credibility in the country's banking system. One of the key lessons from Japan is that no stimulus is likely to succeed until the banking sector is fixed. This is the lesson the Obama administration has failed to grasp....

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Tibet's history with the invasion ordered by British India's Viceroy Lord Curzon in 1904. China's version of the events is of imperialist invasion of Tibet. After the British withdrew from Lhasa, the Chinese Manchu rulers of Qing dynasty sent 2000 Chinese soldiers to occupy Lhasa. This ended in 1913 with the fall of the Qing dynasty. In 1951 Chinese Communists occupied Lhasa a second time. China's former president Hu Jintao spent time in Tibet during the Cultural Revolution. China has movies and books which show the imperialist occupation of Tibet and events of 1904 in that light. The significance of Tibet is also in the context of being a factor in the worsening of relations between India and China leading to the border conflict of 1962 and border tensions since.

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The culture wars around the national debt and government spending as the national debt reaches $12 trillion.

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Brooks says moderation will prevail in the Senate and the House if the Republicans win in the midterm elections of 2010, as there is considerable legislative experience in the Republican leadership ranks. Boehner, Jon Kyl, Lamar Alexander, Eric Cantor and others, he says will act as forces of moderation, as future wins will depend on the record they build in the next two years. There is a sense that majorities on either side of the political spectrum will be transitory, emphasizing the pressing need to build a good record.

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The Russian economy had GDP decline of 2% and was relatively not affected by the shutoff of imports of oil and gas from Europe in 2022. Gas exports to Europe began declining in the summer. The EU ban on seaborne oil from Russia and price cap went into effect in December 2022. Russia made a huge stimulus of 4% of GDP in 2022. The result is that only now in 2023 is the full impact being felt on the Russian economy.  WSJ reports that in January and February Russian exports of oil and gas revenue which makeup half of the budget fell by 46% year over year, while state spending jumped 50%. Analysts estimate that it would take a price of $100 for Russia to balance its books. Yet the Group of Seven price cap on Russian oil has brought it down to $50- the price the Ministry of Finance says Urals crude sold in February. This is a deep discount to the $80 price of Brent Crude, the US benchmark.  A bigger problem is the downward trajectory the Russian economy faces in future years. Worker shortages are severe for industry and a shift to wartime production does not add to productivity or productive capacity. The cut off from access to western technology and western financial markets will have a severe impact in the productive capacity for the economy, for oil and industrial production in the years to 2030. Russia needed to protect against the gradual shift away from fossil fuels to fight climate change by shifting the economy in a new direction using its access to western technologies not just China's technologies. Instead it now finds itself in a period of 1 year in 2022 when oil revenues surged with prices jumping from the war, and then a steady slump in all the inputs of development- supply of labor, capital and technology declining rapidly after 2023 as the costs of the Ukraine invasion are absorbed into the economy. As this report points out it is the social contract that similar to China's social contract of growth and improvement in standards of living that led to people having a large measure of confidence in the government. It was not fully grasped but it was the access to American and European Union plus Japanese technology, manufacturing, capital and markets that made this possible. With this absent the situation changes to put Russia, and China to a lesser extent as long as it trades with the west, on a different trajectory.  ...

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Spain's finance minister, Luis de Guindos, announced a two year plan in which Spanish banks are required to set aside 50 billion euros for losses on bad real estate and other loans. This is part of the effort to restore the flow of credit in the economy. He told a news conference: "At the moment credit is falling by around 5% or 10%." Banks have been slow in Spain to get rid of bad assets and proceed with a bank cleanup.The provisioning for losses required under the plan is by type of asset- for undeveloped land this will be raised to 80% of value from the 31% used currently, for new homes this goes to 35% from 25% used currently. The idea is to get banks to sell these properties at today's prices and give Spaniards an opportunity to buy these homes as opposed to letting this remain on the bank's books. Banks that merge will be given one year, other banks will be required to do this in one year. The cleanup will make it easier for Spanish banks to obtain financing in international markets, and in turn improve the flow of credit in the Spanish economy. ...

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Land prices went up by 500% during the last decade and developers went on a building spree in Spain. 800,000 units were built in 2007 alone. Many of these developed areas are now ghost towns. Coastal villages were turned into residential areas for vacationing Spaniards and for retired people from other parts of Europe. At the peak of the boom in real estate the construction sector accounted for 12% of GDP, double the level in Britain and France. Spain's deputy finance minister, Jose Campa,says that the adjustment in housing prices has already taken place. Yet housing prices are down a modest 12.8% from the peak according to the Bank of Spain. And that leaves plenty of skeptics. The estimates of the central bank, the Bank of Spain, are that banks in Spain have $280 billion in "problematic exposure," on their books, out of $580 billion invested in real estate and construction. With the lack of adequate disclosure it is hard to estimate the real exposure of Spanish banks. To improve investor confidence, the Bank of Spain is forcing banks to make more disclosures and to acknowledge bad assets faster....

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Sim Shagaya and his online internet sales business DealDey in Lagos, Nigeria. He started with cupcake sales, a status symbol in Lagos. Because of online fraud most people in Lagos will not give out their credit card numbers. Dey gets around this by having motorcyclist riders deliver the goods and collect payment in cash. He has a 10,000 square foot warehouse near the Lagos airport, where motorcyclist delivery personnel take off for deliveries all over Lagos, with stalled traffic and delivery instructions like turning left where a lady sits with her plantains. He is planning a site that will be modeled on Amazon. Germay's Rocket Internet also plans to launch soon in Lagos, after opening in India, China and Brazil. Shagaya left Google S. Africa to start the business in 2005, initially starting a site based on the Groupon type business of selling vouchers. Items that sell well and are not returned are books, movies and videogames. Shagaya hopes to increase customers from the current 150,000 to 1 million for a Lagos population of 15 million, of which 5 millon are online on phones and computers....

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German chancellor Merkel and France's president Hollande meet in Notre-Dame de Reims cathderal for a service that commemorates the 50th anniversary of a mass held at Reims cathedral. That Mass was held at Reims in May 1962 with the hope for a lasting reconciliation between Germany and France in a region affected by recurring wars, and was attended by Konrad Adenauer and Charles de Gaulle. The service in July 2012 brings together two leaders after tense discussions at eurozone summit meetings on the future of the eurozone and austerity measures. It is also a reminder of the deeper ties that bring the two countries together after a century of conflict, and the resilience in the face of difficulties shown by a previous generation of leaders in building these ties. It needs to be remembered that it was German chancellor Kohl, Angela Merkel's mentor, one of the postwar leaders who promoted European unity during the period of German reunificaton, who speeded up the agenda for the creating the eurozone and euro currency without the necessary underpinnings of deposit insurance and a eurozone financial regulator with powers to examine the books of European banks and exercize financial supervision. ...

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Deborah Lucas, Finance Professor at the Kellogg School of Management and her views on the bailout plan and alternatives. She does not believe that the markets are near panic and thinks that Congress should move slowly before it passes any legislation. She is glad that the Treasury proposal has failed. She does not think piecemeal guaranteeing of assets is that valuable. In her view they need to do the harder thing, that is to really have a direct discovery process, where they figure out who they are going to shut down, and what its going to cost. Government examiners she says should quickly examine the books of every major financial insitution involved in the crisis, including insurers, pension funds, and banks, determine which are the weakest and which can survive. Ms Lucas points to the Federal Reserve and FDIC actions in the deal for Citigroup to take over Wachovia on Sunday as examples of how the crisis is already being addressed. Her thinking is that the core problem is a crisis of confidence , which can only be resolved with increasing transparency, not a government bailout....

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At the 2 day summit in Brussels Sarkozy and Brown are pushing for tougher oversight of banks. Brown wants strict standards for capital reserves of the banks and having financial markets open their books.

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Sorkin talks with Oliver Stone, director of the movie "Wall Street: Money Never Sleeps." The movie opens this week in New York and shows life on Wall Street in 2008-2010. Its a sequel to his previous movie on Wall Street and shows the side of Wall Street that has been extensively covered in the media recently.

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WHO estimates $1 trillion in costs from mental health issues, from depression and anxiety disorders each year in the lost productivity for the global economy. The cost of mental health productivity loss is huge. Here a knowledgeable researcher and expert tells us that psychological avoidance makes things worse. If we are trying to squash discomfort hastily we are avoiding. It becomes a crutch says Luanna Marques, author of several books and a physician at Massachusetts General Hospital, a crutch that rather than alleviate anxiety exacerbates it. Understanding the patterns of avoidance its process is the first step. Science induced ways can help us sort this out. Reacting only makes things worse, it fuels the fire leading to even more problems like operating a pressure cooker without a valve. Replying hastily to an email that upsets us or raise our voices without considering the consequences. Retreating is an act of moving away or pulling back from anxiety inducing situations. This only tends to increase anxiety as the underlying situation is still there. Then there is Remaining which is sticking to the status quo to avoid the discomfort of change, such as clinging to a job or a relationship even when we know it is not good for us. Marques suggests three science based methods to fight all this, and fight psychological avoidance the powerful enemy. First Shifting by checking in with our thoughts, particularly when anxiety comes knocking. In these moments we often have black and white distorted thoughts when we are telling ourselves something is such and such. Shifting is taking off the dark, monochrome glasses and seeing the world in color again, says Marques. She asks one to challenge your thoughts, clean out your lenses. One says- I have a lot to bring to relationships, I have had successful relationships in the past. One can now sleep better at night and set you on a journey to follow what matters most to us. The opposite of avoiding she says is Approaching, which is not charging at your fears head-on, but taking a step that feels manageable. One asks oneself what is one small step I can take towards my fears and anxiety to overcome avoidance. Even the smallest step can rewire our brain. Aligning is living a values driven life, says Marques. The daily actions now align with what matters most to us- our values in life. In intense anxiety emotions not values dictate our actions. To lead a values driven life we need to first identify with our values, for health, family, work, or anything else. Then we dedicate time and effort to our values. In conclusion it is not about being fearless , but about not letting fear dictate our lives, says Marques in this excellent approach she has given. ...

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Fannie Mae's top management paid lobbyists from both political parties to reduce any government or congressional oversight of the company. Gretchen Morgenson and Joshua Rosner describe the situation that led to the financial crisis of 2008 in their new book "Reckless Endangerment."

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The collapse and saving of Bear Stearns, and what it means for the financial system after the collapse and failure of Lehman and bailouts of AIG and Citigroup.

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Joe Nocera joins Simon Johnson and other experts in saying that Fed Governor Daniel Tarullo's suggestion to raise capital requirements of U.S. banks to 14% makes sense. He quotes Anat Admati, a fiance professor at Stanford Business School, who says the only way to get rid of bailouts is to raise capital requiremets to an adequate level. The Wall Street Journal editorial on June 16, 2011, also supports the higher Tarullo capital requirements. Why is it that European banks and the Basel III accords provide a 7% capital reserve requirement phased in over many years- to as far out as 2019- if this is the case? The European banks are in much worse shape than the U.S. banks especially with Irish, Greek and other debt on their books and Basel III is designed to accomodate this. The governor of the Bank of England, Mervyn King, is also advocating higher capital reserve requirements than Basel III, including the flexibility for countries like Britain and Sweden to set their own capital reserve requirements based on their own situation and the need to protect taxpayers. The U.S. stands to gain a lot from setting its own standards if France and Germany and other European countries decide to user lower standards through Basel III....