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China's GDP growth for the second quarter of 2012 was 7.6% from the prior year. China set a target of 7.5% GDP growth in March 2012. About half of the GDP growth in 2011 was generated from investment spending. As part of a new Stimulus China is increasing bank lending and moving forward development projects in energy and infrastructure. Bank loans showed an increase from 793 billion yuan ($124 billion) in May 2012 to 920 billion yuan ($144 billion) in June 2012.

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A call from German chancellor Angela Merkel to the Greek president to hold a referendum on Greece's participation in the eurozone. Political parties in Greece denounced it as considering Greece a "protectorate" coming from the Syriza party, to calling it "unacceptable from the New Democracy party. Karel De Gucht, trade commissioner of the EU, and Olli Rehn commissioner of economic affairs, issue conflicting statements. Gucht says the EU and ECB are working on preparations for Greece's exit, and Rehn says that this in not the case, that Greece is staying in.

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Google's head of operations in India, Rajan Anandan, cites estimates of 200 million new internet users in India by 2014. An estimated 100 millon Indians were online in 2010. The surge in internet use is expected with the roll out of high speed internet technology and expected sales of low cost smartphones using Android software. Most of the Indian advertising dollars go to print and television advertising. As a result online advertising spending is only about 200 million dollars. One aspect of Indian user behaviour is the preference for the internet as the first source for research when it comes to buying cars or other products. Google has 63 million Indian users for its search service, according to ViziSense, an Indian web metrics firm. Anandan says Indian advertisers could benefit from an Internet first strategy to reach affluent urban consumers.

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ECB president Mario Draghi describes the problem of financial fragmentation in the EU, as each country's national supervisors ask their banks to withdraw their activities to within national boundaries. This ringfencing of liquidity positions means the interbank market is not functioning. Draghi says this financial fragmentation is within the mandate of the ECB to correct. He points to the risk of convertibility that has more and more to do with the premia being charged for Spain's and Italy's government bonds, not just the perception that the counter party can fail.-"To the extent that these premia have to do with factors inherent to my counterparty, they come into our mandate, they come within our remit." Draghi's effort to define the issues of financial fragmentation, and sovereign premia "hampering the functioning of the monetary policy transmission channels," is critical because the ECB sees it important to act within its mandate. The final point he makes is a political one about the future of the euro: "When people talk about the fragility of the euro, and the increasing fragility of the euro, and perhaps the crisis of the euro, very often non-euro area member states or leaders underestimate the amount of political capital that's been invested in the euro. We view this, and we are not unbiased observers in Frankfurt. We think the euro is irreversible. And its not an empty word now, because it preceded saying exactly what actions we are making that would make it irreversible." On the progress made, the acceptance of one financial and banking supervisor by member countries of the EU is seen as part of the idea of shared sovereignty necessary to put meaningful supervision across national boundaries in place. And on the structural reforms and deficit controls needed to be put in place he sees "the pace has been set, and all the signals that we get are they don't stop reforming themselves."...

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The home price decline is shifting from Las Vegas, Miami and Phoenix to other U.S. cities in 2011. Seattle, Minneapolis and Atlanta are seeing large declines in home prices. Seattle is down 31% from the mid-2007 peak and still has 10 percent to fall, according to real estate site Zillow.

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Reinhart and Rogoff, 2 eminent economists who worked together on a book on financial crises since 1300, think that the current crisis has much deeeper to go, and the slight recovery in financial markets does not suggest that the imbalances in the economy are corrected. They point to economic weakness as a mechanism by which these imbalances are corrected. For example the economic weakness may be corrected by the weakening dollar resulting in accelerating exports from the U.S. The 1987 crisis had overvalued stock markets relative to earnings as an imbalance, and the 1998 LTCM crisis excessive hedge fund borrowing. Once these underlying imbalances were corrected the economic recovery was back on track. But the Fed's bailout of Bear Stearns has only put the financial markets on a safer footing. It has done little to correct the basic imbalances in the economy of over indebted consumers, and of lost wealth in housing, at the very moment that there is restricted access to credit. The financial market crisis only opened up the weakness from the extremely high leveraging used by the investment firms something like 1:30 by firms from M. Lynch to Goldman Sachs. The Fed's actions gave them time to shore up their finances and recover and the interest rate cuts and government checks help the economy, but not significantly enough to promote investment or increase consumption. The government checks would be used experts estimate for paying down debt and in this way it helps indebtedness a little, but does little to support consumption or promote investment, This the Fed's action also fails to do. The economy contracts and exports help the economy in recovering. The contraction itself say these economists is a necessary mechanism to make the adjustment in every crisis, until something else like exports helps create a recovery. Take December 1997, the Korean crisis. In this crisis the Korean companies invested heavily and were overextended , they borrowed heavily from the banks which in turn borrowed from overseas in dollars. When the Korean currency hit a record low against the dollar it became difficult for Korean companies to pay the increased cost of the dollar loans and many companies failed. As investment was slashed unemployment went up from 3% to 7.9%. Ted Truman, who worked on the Korean rescue effort as a Fed official, is now a scholar at the Peterson Institute of International Economics. He sees as similar to the overexpansion of housing and consumption in the U.S., the overexpansion and excessive borrowing in Korea's corporate sector in the years preceding 1997. After the rescue in Jan 1998, the Korean currency recovered by rising 63% in that year. Did this mean the crisis was over, just as the Bear Stearns bailout leads to gradually settling markets this year? During 1998 the Korean economy sank into a deep recession, the economy shrank 6% in 1998 when it was used to growing at 8%. Nouriel Roubini, another economist, who heads RGE Monitor, a financial and economic forecasting service, sees it this way. First, the mortgage loan imbalances are set into correction mode mechanism, then second, the economy contracts from housing and consumer debt going in reverse mode, then the third effects come into place as this feeds back into the financial system in the form of defaults on industrial loans, municipal bonds, and consumer credit. Additional sequences are in finacial system distress and government and Fed response to set the corrective mechanisms in place, but to also reduce the distress to the financial system and ensure that it is safe. We are where the first effects have ocurred, but before the second and third effects which should take place sometime in 2008 and 2009. The importance of understanding this cannot be overstated for business, planners, and investors because conducting business in this environment or planning or investing will require special skills and temperament which are different from the skills and temperament required in the expansion mode if one is to produce good results....

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The Wall Street Journal's reporting in Sept, 2011, on France's bank BNP Paribas. Contributor Nicolas Lecaussin quoted a BNP Paribas executive saying the bank no longer had access to dollar funding. There is a loss of dollar funding to French banks from U.S. money market funds as the funds reduce exposure and shorten maturities. Analysts point to the French banks having one of the lowest ratios of liquid assets to short term funding needs in Europe. This reporting was questioned by BNP Paribas and French government officials. This happened as central banks including the U.S. Fed intervened in markets in September 2011, to ensure full availability of dollar funding to French banks.

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The $350 billon in proposed cuts to Medicare and Medicaid in the 2011 deficit reduction talks will do little to reduce the rapid rise in medical costs. Instead it shifts the costs to seniors, state governments and public hospitals. Gail Wilensky, former head of Medicare under the first President Bush and now a senior fellow at Project Hope, says this should not be confused with real reform to Medicare which reduces the rapid increase in costs. It does little in the way of fundamental changes that would reduce the growth in costs. About $53 billion comes from reductions to senior's ability to buy extra Medicare supplemental insurance or Medigap. Another $14-26 billion would have the government reduce payments to hospitals for unpaid debt. The few items to curtail fraud in the use of CT scans or purchase of power wheelchairs would provide savings of $2-3 billion over 10 years. $4 billion comes from lowering Medicaid payments to hospitals treating a high percentage of low income patients, hospitals such as Cook County Hospital in Chicago, San Francisco General Hospital, and Parkland Hospital in Dallas....

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WSJ reporters Corkery and Yoon give a remarkable account of the individual homeowners and investors inside one toxic subprime mortgage security from Countrywide Financial Corp. named CWABS- 2006-2007. There is Amanda Gavini of Fort Myers who continued making mortgage payments against the odds after a illness and death in the family. And a couple Donald Mudd- Patricia Starr who were approved by Countrywide for a $171,000 adjustable rate mortgage loan at 8% with a $10,000 down payment for a home in Port Charlotte, Florida. The approval came only 3 months after the couple emerged from personal bankruptcy in 2006, and by 2009 Mudd was missing payments. Other borrowers such as Mrs. Gavini in Florida took out two loans at 7% and 11% in 2006, have continued making payments and are still unable to refinance under the HAMP or HARP government programs. It is because of these homeowners who continue to make payments helping the security price recover, that one of PIMCO's funds which owns a stake in this security has made good returns. Hedge fund Marathon Asset has also made good returns on this security because of the U.S. government's Public Private Investment Program to help banks recover by providing government incentives for purchase of these securities from banks. This was a way to get banks holding these subprime securities to resume normal lending in financial markets....

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The shift away from Iranian oil with U.S. pressure and sanctions, and higher oil prices, could pose challenges for the Indian macroeconomic outlook in 2020.

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An assessment of the Financial Regulatory Reform that is emerging in House and Senate Bills. Yes reforms will be passed but will they prevent another crisis and are they tackling the root causes of the financial crisis. The assessment here is that they fail on both accounts. According to Christopher Whalen of the Institutional Risk Analyst it tackles the symptoms more than it responds to the causes of the crisis. He sees the response in the areas of derivatives trading, credit ratings agencies, consumer proteciton agency, as inadequate to meet a future crisis.

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ECB president, Mario Draghi, said on March 25, 2014, "we will do what is needed to maintain price stability." Annual inflation in the eurozone declined to 0.6% forecast for the eurozone, 0.9% for Germany, and a negative 0.2% in Spain, for Feb. 2014.

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Krugman points to financial deregulation, cross border financial flows, private debt in dollars and depreciating currencies, and the U.S. Federal Reserve's low interest rate policies, as the main culprits for bubbles and the emerging market crises in the 1990's and 2013.

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Pierre Razoux, a French historian provides this account of the Iran-Iraq war that lasted from 1980 to 1988, at a cost of 680,000 people killed and $1.1 trillion in war destruction and money diverted from the economy. In 1980 Saddam Hussein of Iraq launched the war by attacking Iran which had just come under the Ayatollah Khomeini with the fall of the Shah of Iran in 1979. The war dragged on for 8 years with Khomeini persisting in the war. With U.S. and Saudi policy to increase production bringing the price of oil down from $30 to $10 designed to bring Iran and Iraq to the peace talks, as well as the Soviet Union to withdraw from Afghanistan, all three being major oil producers. The dollar also weakened by 37% during this period. The diplomatic isolation of the Khomeini regime made it more difficult for Iran to buy arms on credit than Iraq could, leading to the war ending with Iran finding it no longer possible to continue the human losses. The Carter administration, particularly with National Security Advisor Brzezinski, tilted towards Iraq to oppose Soviets in Afghanistan, and the Saudis also supported Iraq during the early period. Under president Reagan the U.S. began covert and direct assistance to Iraq to prevent an Iraqi defeat early in the war. Rumsfeld visited Baghdad in December 1983 and March 1984 to organize the U.S. effort to oppose Iran. This may have laid the seeds for future conflicts that lasted through the administrations of the elder and junior Bush. As Razoux points out the Revolutionary Guards became entrenched from this period in Iran's history, making it difficult for election process to work or elected governments to operate. 23 months following the end of that war in 1988 Saddam Hussein launched a war on Kuwait, leading to the U.S. led Gulf war and the entry of the U.S. into a ground combat role, which was followed by the invasion of Iraq under George Bush after 9/11 attacks. The twin wars in Afghanistan and Iraq are estimated to have cost the U.S. over 1 trillion dollars. The result today is largely the division on the ground into Shia regions under the Revolutionary Guards and the Shiite government in Baghdad, and Sunni regions led by Islamic State and autonomous Iraqi Sunni tribes, ignoring the Iran-Iraq boundaries set in the colonial period by the French and the British. In all the amount spent in the Khomeini-Saddam war of $ 1 trillion being about $2 trillion in today's money, and the $1 trillion spent by the U.S., means about $3 trillion has gone into the wars in this region. This comes at a time of deficits in government budgets in the U.S. and a deep recession in the U.S. and Europe. It also explains why the U.S. public is reluctant to take even the minor action such as giving a standoff "no-fly zone" protection to the rebels in Syria, and supported the Obama administration in its reluctance to keep even the basic military force in place to protect its diplomatic mission in Libya, where the cost would be small relative to earlier enlarged military missions under the two elder and junior Bush administrations. The result is that refugees are pouring into Europe from Syria and Libya, through Turkey. Turkey itself is host to millions of refugees in camps along its border. The vacuum and the withdrawal of the Obama administration from the region has led to the rise of Islamic State with covert assistance from Sunni regimes in the region to counteract the growing influence of Shiite Iran. It also may explain the Iranian people's support for the nuclear weapons effort through years of sanctions, leading finally to an agreement with the Obama administration that relaxes sanctions in exchange for a future possibility of acquiring nuclear weapons. Lost in the conflict is the Arab Spring of 2012-2013, with the Tunisian democracy the only surviving result of that movement for democracy and awakening among Arab peoples. The Reagan administration in its aggressive anti-Soviet position made large errors- including ignoring human rights abuses and use of chemical weapons in the Iran-Iraq war, by supporting Iraq and reversing position after Iraq's invasion of Kuwait, having a disastrous effect on the entire region decades later. Much of the Obama administration's reluctance for any action may stem from the U.S. role in this period and its consequences of protracted conflict. ...

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This report in the WSJ points to Democrats having won consistently 18 states plus District of Columbia adding upto 242 Electoral College votes in every election since 1992. Democrats need 28 more to cross the needed 270 votes. Republicans consistently having 13 states with 102 electoral College votes. Demographic changes in recent years have shifted to where Hillary Clinton may not need to devote resources to Colorado and Virginia because of a more favorable position there.  Carrying Pennsylvania with these 2 states would put Clinton over the 270 required. Vice Presidential candidate for Clinton, Senator Keane is from Virginia and is popular in the state.  Pennsylvania has a long history favoring Democrats. North Carolina has also seen demographic changes favoring Democrats. The Clinton campaign is focussing ads on these states as well as the swing states of Nevada, Iowa and New Hampshire, as well as Georgia, Arizona and Utah which are becoming competitive for Democrats. By keeping up the effort in Georgia, Arizona and Utah, Clinton hopes to make Trump divert resources there. Other two swing states are Ohio and Florida, but this WSJ report says Clinton has to win only one of the four swing states of Pennsylvania, Ohio, Florida, and North Carolina to go over 270 and Trump needs all four. Of the 20 media markets Clinton or her super PACs have focussed their ads on 16 are in these 4 states. The Clinton campaign is looking at several alternative routes to 270 Electoral College votes, which gives it more flexibility to plan the campaign.  ...