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Losses at Sachsen LB amounted to about 17 billion euros linked to conduits that invested in subprime securities.

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Questions raised in Germany about Goldman Sachs's deals with German banks, the city of Berlin and investments in retailer Arcandor.

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In an interview with the Wall Street Journal, Mark Carney, the head of Canada's central bank and the head of the Financial Stability Board, says China is falling behind in its earlier committments made at G-20 meetings to move towards rebalancing the world economy. He pointed to the fact that consumption in China has moved from about half of China's GDP to about a third, in the last ten years. China's investment has also declined from half of GDP to about one third. Carney also raised concerns about the strength of the Canadian dollar for Canada's competitiveness. The report "China: 2030" by the World Bank and China's Development Reform Commission also calls for changes in the way China's economy has increased its dependence on state run companies.

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The Bank for International Settlements, BIS, considers companies that have interest payments exceeding the earnings before interest and taxes as zombie companies. This report in WSJ cites BIS central bank data showing 10% of European companies, including companies in Italy, Spain, and France are zombie companies. Stefanel, clothing maker, is one of these companies in Italy. This is up from 5.5% in 2007, showing how the financial crisis of 2008 and the aftermath have affected European business.

OECD estimates in Jan. 2017 confirm this showing the figures have tripled since 2007 for Italy and Spain. This misallocation of capital is as much as 20% in Italy.

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Sweden stands as a success story with growth of 5.5% in 2010, and Citigroup estimates expected growth of 5% in 2011. Sweden has significant export growth to the rest of Europe and emerging markets. The Swedish currency has appreciated significantly to 8.76 krona to the euro and 6.52 against the US dollar. Compared to China Sweden has not limited the appreciation in the currency, as the prime minister Fredrik Reinfeldt believes that currencies should be "market valued." The central bank raised the interest rates three times in 2010 to 1.25 %, pushing the krona up by 14% against the euro. Sweden aims to double exports to $310 billion by 2015, according to Trade Minister Ewa Bjoerling. International sales of Swedish companies drive the growth in exports. Truck maker Volvo AB's Asia sales were up 50% in the first 9 months, and Electrolux AB's sales went up by 11% in the fourth quarter.

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The Rupee is moving close to 80 to the US dollar with increase in interest rates by the US Federal Reserve. The IMF expects the Rupee to go past 94 to the dollar in 2029. India's Reserve Bank is interested in carefully managing the steady decline so that business decisions can be made with some measure of stability. The weaker rupee will help increase exports at a time when India's is raising its logistics capabilities and creating the capabilities on the ground that will give India a key role in the new supply chain the US and the EU are building in Asia.

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The US central bank, the Fed, signals smaller rate increases in the future after another rate increase of 0.75% in November 2022. "It is very premature to be thinking of pausing. We have a ways to go," says Fed chairman Jerome Powell. He added that - "the question of when to moderate the pace of rate  increases is now less important than the question of how high to raise interest rates and how long to keep monetary policy restrictive." The move raises rates in the US to between 3.75% and 4.0%. Rates could go up to 5% in 2023.

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Germany's state development bank KfW has signed a memorandum of understanding with German energy company RWE AG to build a new LNG terminal at the northern port city of Brunsbuttel. Netherlands infrastructure group Gasunie will operate the new LNG terminal. The Nordstream 2 $11 billion project is now set aside and Germany plans to use the LNG terminals and other sources outside of Russia. Germany commissioned its gas market trading hub to buy LNG of 1.5 billion euros. 

Germany will now fast track another LNG terminal on the North Sea at Wilhelmshaven. That terminal would be operational in 3 years. 

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The US dollar is only 5% way from reaching parity with the euro. The euro was at $1.03 during the beginning of May. It is at $1.05 on May 21. With the US central bank raising rates, and the effects of energy shortages on the European economy, parity looks likely says this report in WSJ. Additionally weakening demand from China for European goods or the EU shifting its supply chains back to home countries and trading less with China could also have an impact from the ripple effects of China's support for the Russian position on Ukraine.

 

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New regulations from the European Union and an order from president Putin asking industry to cut emissions to below EU levels by 2050 are pushing companies to reduce emissions. Russian companies are pushing to be greener. Russia emitted 11.3 tons of carbon dioxide per capita in 2017, compared to 7 tons for the European Union, according to Oxford University. An EU plan that could come into effect in 2023 could affect 40% of Russian exports because of emissions, costing $5 billion, according to the Russian central bank. Companies in steel, aluminum, petrochemicals, are investing in new plants that reduce emissions or are carbon neutral.

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The federal government in India provides support for loans to farmers on the interest rates paid after the interest rate increase by the central bank RBI. An additional budgetary provision for Rs 34,856 crores has been made for this purpose for the period 2022-2023 to 2024-2025. It will keep interest rates below 7% for farmers. This will support agri-loans of upto 3 lakh rupees for farmers in India. This is to provide adequate agricultural credit for the rural economy of India. Short term agriculture credit would be at 4% interest per year when loan is repaid on time.

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The Russian central bank under Elvira Nabiullina raises interest rates by 3.5% to 12%. In the first 5 months of 2023 the Russian government spent 50% more in rubles than in the same period in 2022. The increase in spending meant increase in wages and more hiring for production of goods including production for the war effort. The policy was to carry on the war effort without the effects of the war being felt by ordinary Russian citizens. The result has been higher inflation at 7.6%. Nabiullina faces a unique set of challenges to control inflation, maintain the economy even as Russia continues the war effort in Ukraine. 

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The dollar remains the dominant force in capital markets. It is strengthening after US central bank raised interest rates 8 times in 2021-2022 to about 5.25%. China is cutting interest rates as its economy with debt at about 290% of GDP is slowing, the EU increasing rates as it faces inflation fueled by price increases and some price gouging. In the US inflation is cut in half by Fed policy to 4% in May 2023, Biden's policies to help with the cost of living and restrain price gouging, and by supply chains working better than in 2021. The US looks the strongest of the lot.

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Lee describes the problems the Russian economy faces with the depletion of the Reserve Fund following collapse of oil prices. Finance minister Siluanov says the Reserve Fund could run out by 2017. The National Wealth Fund hols $73 billion and is used for infrastructure projects and bank bailouts, and pensions. The defense budget is expected to decline by 5% in 2016 as the military buildup slows from a slower economy. The World Bank predicts a poverty rate of 14.2%. The 50% decline in the ruble has hurt imports. The lack of access to international capital markets has also hurt growth, even though Russia has only small debt.

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The potential default of Shanghai Chaori Solar Energy Science and Technology Company on a 2012 bond of one billion renminbi, as the company says it cannot make a payment of 89.9 million renminbi or $14.6 million. China's corporate bond market is now the third largest in the world after the U.S. and Japan, according to BIS. The Asian Development Bank figures are total corporate bonds outstanding of 500 billion renminbi in 2005 growing to 8.5 trillion renminbi in 2013 (or about $1.4 trillion).