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Germany's deputy finance minister, Jorg Asmussen, was nominated by the German government to the executive board of the ECB. This follows the resignation of Jurgen Stark. Asmussen was originally appointed by the previous finance minister, Peer Steinbruck, and is from the SPD party. He was retained by Finance Minister Schaeuble because he had experience with the global financial crisis of 2008. Both Asmussen and the new Bundesbank president, Jens Weidmann, are students of Axel Weber, who was a professor before becoming central banker.

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Jorg Asmusen, member of the executive board of the European Central Bank, and Jens Weidmann, president of Germany's central bank, the Bundesbank, argue on opposite sides before the German Constitutional Court in Karlsruhe. Weidmann says the bond buying of sovereign bonds of Italy and Greece by the ECB is unconstitutional, Asmussen defends the ECB's plan to lower the borrowing costs for Italy and Spain in 2012. Both Asmussen and Weidmann are students of Manfred Neumann, professor of Economics at Bonn University. Neumann says such action is unconstitutional. The Federal Constitutional Court takes public opinion into account in its rulings.

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Anne Applebaum of the Washington Post points out that after the faltering campaign of Republican Party nominee Fillon, the only serious candidates remaining in the presidential election in France are Marie LePen of the National Front, and the former Economy minister in the Hollande government, Emmanuel Macron. Macron is now the only person with enough popularity to win over LePen's nationalist movement. Macron launched his En Marche movement in 2016 and his strategy is to bring together the centre right and the centre left moderate voters, and voters who favor remaining in the European Union. Older voters in France unlike that in the U.S. and the UK are favoring candidates other than LePen because they fear the impact on the French economy and their pensions from leaving the European Union. LePen favors holding a referendum to decide whether France should remain in the EU. Macron takes an opposite view fully supporting France's role in the European Union. He has not advocated the huge cuts that Fillon has for job cuts in the public sector, and is able to draw moderate centre left voters to his side. A look at the French presidential election in another piece in the Economist magazine shows that further out one goes from major cities in France there is a surge in the support for the National Front. Moderate parties other than the National Front draw support in most of the major cities and urban areas. Another similarity with the UK and U.S> is that more educated voters support moderate parties other than the National Front. As polls have been proven wrong in other elections it is difficult to know what is likely to happen in this election. Unemployment is high in France at 10% with little change since the election of the Socialist Hollande government. Other issues such as terrorism have unsettled French voters, making this election difficult to predict. Voter dissatisfaction is especially high among younger voters who face a high unemployment rate and stagnant economy. Neither candidate Macron or LePen offers a way out of the low economic growth and lack of new jobs. A lot depends on whether French voters are willing to take the risks of a LePen administration and the further uncertainty from a referendum for leaving the EU which cannot enhance the economic prospects of France.     ...

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The head of Italy's statistics agency Istat, Enrico Giovannini, says Italy's manufacturing sector has performed quite well, and the problem is with the services sector, in lagging sectors such as transport, communications, tourism, retail and social services. The manufacturing sector is only one sixth of the economy. He says productivity is poor and there is lack of investment in human capital and information technology for the services sector. IT's contribution to growth in Italy's labor productivity is the lowest in Europe, according to the European Investment Bank. Italy's total efficiency gains declined one half percentage point from 1995-2005. Retail and tourism sectors lack the needed productivity gains. This means actions taken by prime minister Monti to change labor laws and related changes will not be enough to generate confidence in the economy and economic growth. Giovannini says investment in human capital and productivity is badly needed, and shifting education and training to where there are new job opportunities....

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Hugo Dixon says the deal made by eurozone leaders for Greece in July 2011 favors private creditors. The bondholder haircut was much smaller, eurozone governments and taxpayers will make up the difference. This he says is like a cat in the bag presented to the receiver as a pig as long as he does not look inside, called a "poke." Dixon says that if Greece cannot implement austerity measures under a new government and the deal has to be renegotiated bondholders may face a larger haircut than the 20% under the current arrangement. It would have been better he says to do this now but the ECB's threats may have led to the German and French governments treating private creditors with kids gloves.

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All sides had to make concessions to reach a new agreement on a restructuring of Greece's debt, and new terms for loans to Ireland and Portugal. The agreement was reached after negotiations between France, Germany, the ECB, and eurozone countries with a declaration issued on July 21, 2011. The powers and financing of the European Financial Stability Facility (EFSF) were expanded to be the main mechanism for channeling EU funding to reduce the burden of Greece's debt. Germany will provide new funding and be open to additional commitments, something German chancellor Angela Merkel had resisted since the beginning of the crisis in 2010. Earlier funding had come with high interest rates and only when the situation had reached a crisis, with Germany insisting on the punitive rates and conditions as a way to discourage countries from taking advantage of cheap borrowing. In exchange for commitment of German funds Ms Merkel had insisted that banks and private creditors share in the losses. Private bondholders resisted but finally agreed to take a loss of 20% of principal on a small portion of the bonds. Their larger concession was to take lower interest rates and extend the maturities to 15 years and 30 years on new bonds which are guaranteed by the EU. The specific terms of the agreement are as follows: The EFSF and the IMF will lend Greece 109 billion euros over 3 years at 3.5%. Private creditors including German and French banks will "voluntarily" turn in their old bonds for new ones that mature over 15-30 year periods. These new bonds include 15 and 30 year Greek bonds with varying coupons. Some of the bonds would have a 20% discount on principal. EU leaders say the private sector contribution amounts to 37 billion euros through 2014 and 106 billion euros through 2019. Another part of the program is for the EFSF to buy back some of the Greek bonds on the secondary markets, which would mean Greece would now owe a smaller amount to the EFSF on these bonds. The EFSF will now have additional financial support from Germany and other EU countries and be authorized to provide aid to countries before a crisis situation arises. It would also have power to buy Greek bonds at prices on secondary markets to reduce the Greek debt burden. Ireland and Portugal are also assisted in the agreement. The interest rate for EU aid to Ireland and Portugal is taken down to 3.5%. Ireland is paying about 6% on the EU portion of its 67.5 billon euros bailout and efforts to reduce the rate were resisted earlier. The main theme behind these concessions and provisions is to give Greece, (and Ireland and Portugal) a chance to grow. High interest rates came under strong criticism because it only increased the size of the debt burden of these countries with a shrinking economy and high unemployment. The failure to come together behind a broad and sensible agreement with all parties making serious concessions, the EU, the ECB and the political leadership in these countries especially Greece, was undermining confidence in the euro and the eurozone itself. By mid-July Italy and Spain were feeling the effects of contagion in the financial markets, U.S. debt ceiling negotiations were unsettling global financial markets, the pressure was intense to come up with the workable agreement achieved on July 21, 2011. ...

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IG Metall, the union representing 3 million workers in metals and engineering industries, negotiated a 4.3% wage increase over 13 months. The union had asked for a 6.5% increase. Unions won wage increases of more than 6% in the public and telecommunications sectors. Workers in chemical, agriculture and hotel industries are pushing for increases of over 6%. The union wage negotiations help set the pattern for wage increases for the 41 million employed workers in Germany. This will help France and other EU countries close the gap with Germany in wages and improve competitiveness.

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The ECB's annual report for 2012 and the role the ECB under Mario Draghi played in the eurozone crisis in 2011-2012. The gains made in eurozone financial architecture, especially the agreement for the ECB as financial supervisor for European banks. The ECB sees itself as the supervisor for all European banks- the French position in the discussions in Brussels. The agreement of Dec. 12, 2012 only says banks with assets over 30 billion euros, or 20% of GDP of countries, or operations in two or more countries will come under supervision by the ECB.

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Gao Xiqing, vice chairman, president of China Investment Corporation, told a panel discussion during meetings of the International Monetary Fund, on September 24, 2011, China cannot be expected to provide solutions to the eurozone debt crisis. Xiqing said: "We're not saviors. We have to save ourselves." He added that CIC would consider buying bonds of troubled eurozone countries -"if it has a risk profile that fits into our allocation, but don't expect us to buy more than our risk appetite would take." And the head of China's central bank, Zhou Xiaochuan, told the panel that China cannot raise its growth rate because of inflation and other problems from unsustainable growth.

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The WSJ's Latour, Browne, Tejada and Wei interview Lou Jiwei, chief executive of the China Investment Corporation (CIC), China's sovereign wealth fund. He says it is too early to talk about eurobonds as the financial arrangements necessary have still to be put in place. CIC is reducing its exposure to Europe. CIC is interested in infrastructure investments and sees infrastructure investment as the way out of the economic crisis for the U.S. and Europe. He has the most confidence in investing in China. Other locations are in emerging markets Brazil, S. Africa, Latin America. CIC's target is to have 50% of the assets in long term investments in infrastructure investments, commodities, real estate and direct investment and private equity, etc. and the other half in public securities. But this will pose challenges and CIC has not reached this level. It is learning from ATP, the Danish pension fund, Calpers, TRS, and CPP, the Canada pension fund. The portfolio is mark to market which creates pressures to reduce short term volatilities....

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Greece's economy is expected to shrink by 6% in 2012 by many private sector economists in Greece. This means Greece will have a deficit closer to 10% of GDP. Antonio Samaras, leader of the New Democracy Party, is expected to win the elections in Greece to be held by spring 2012. Opinion polls show his party getting 24% of the vote, and Papandreou's Socialists getting 15%, showing how little support any party can gather in Greece. Samaras told the Journal in an interview- the contagion is spreading rapidly, and what he fears is political and social contagion from high unemployment and austerity measures. Samaras says his government would continue with the spending cuts, but also reduce the tax burden on Greek households and businesses, which he views as having worsened the recession in Greece.

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Louis Gallois, CEO of EADS gives his views about reviving European industrial competitiveness.

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After intense efforts German Chancellor Merkel was able to pass legislation expanding the EU bailout fund with the support of members of her coalition in Parliament. The opposition Social Democrats and Greens supported the legislation. Merkel carried the vote with a 4 vote margin from her CDU-FDP coalition. Fifteen members of her coalition voted against the legislation. This increases the bailout fund's lending capacity from around 250 billion euros to 440 billion euros. There is considerable skepticism among members of the German parliament about whether this will work. German guarantees for the European Financial Stability Facility (EFSF) increase to 211 billion euros from 123 billion euros under the new legislation. German finance minister Schauble ruled out borrowing by the EFSF from the ECB and leveraging EFSF funds in the process. The fear for German policymakers is that this would lead to Germany losing its triple-A credit rating and create its own risks. Experts have cautioned against the use of leveraging because of the financial risks....

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Rachel Donadio and Liz Alderman of the New York Times interview Alexis Tsipras, leader of the Syriza party that is expected to win the June 2012 elections in Greece. He says his party calls for suspension of payments on loans for 3 years till Greece's economy recovers, and renegotiation of the agreements that require large layoffs in the public sector and other austerity measures.

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Steven Erlanger describes the mood in France as it faces problems of improving competitiveness in a rapidly moving global economy. A sense that the actions of the Hollande government will not be enough to tackle the need for deeper changes.