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Stress test performed by the consulting firms of Oliver Wyman and Roland Berger used data as of Dec 31, 2011, and a scenario of a 6.5% decline in GDP and a 26.4% fall in housing prices by 2014. An international panel of experts from the Bank of Spain, the Spanish government, the ECB, the IMF, the European Banking Authority and the EC was formed to oversee the consultancies report. A separate more detailed audit of 14 individual banks will be made by Deloitte Touche, Pricewaterhouse Coopers, Ernst & Young, and KPMG International with results by the end of July. The four banks that need capital injections are Bankia, CatalunyaCaixa, NovaCaixaGalicia and Banco de Valencia. The consultancies estimate was for 51-62 billion euros needed according to Oliver Wyman, and 51.8 billion euros needed according to Roland Berger, for recapitalization of Spanish banks by 2014. The issue now is about any remaining questions about additional losses, and whether rescue funds from the EU fund the EFSF should go directly to the banks as favored by the IMF and the government of Spain. This is because of the stress on yields of Spain's 10 year bonds with rescue money going to the Spanish government at the insistence of German chancellor Merkel....

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The 90 minute nationally televised debate in Germany between Angela Merkel and Peter Steinbruck before the September 22, 2013 national elections.

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Meltzer says the northern European countries France, Germany, Netherlands, and others should form a new currency union, and leave the euro currency to Portugal, Ireland, Italy, Spain, and Greece (the PIIGS countries). This way Greece can devalue its currency to bridge the gap of 20% between wages in Greece and the productivity of workers in Greece. The new currency union would follow fiscally binding rules. After the adjustments in currency were made by Greece, Portugal, Italy and Spain, these countries could be admitted to the new currency union of the northern countries. This would be conditional on acceptance of financial discipline and enforceable sanctions by these countries. Meltzer says clever agreements designed to protect the bankers are not the solution, as they only shift the responsibility and the burden for wasteful and reckless behaviour to taxpayers. Bondholders would take losses in a devaluation, and banks that are at risk should be either allowed to fail or given loans on strict repayment conditions. ...

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Thomas Kleine-Brockhoff, a senior transatlantic fellow at the German Marshall Fund of the United States, leads the EuroFuture Project. Here he offers his ideas of the dilemmas facing German leaders in agreeing to letting the European Central Bank take a larger role of supporting the bonds of Italy, Portugal and Spain. He says Germans are seeing a contradiction between European demands for German leadership and not wanting to be led by Germany or perceiving Germany as a hegemon. Brockhoff says Germans have never in the postwar period wanted to or learned to exercize continental leadership. He recounts the postwar period when Germans were content with the deutsche mark, and limited their expression of national pride to the deutsche mark. Giving up the deutsche mark was part of the deal for reunification of the two Germanys, a surrender of economic sovereignty for the sake of a larger integration into Europe. He says that even though the arguments are framed in terms of orthodox economics, economic nationalists who never really wanted to give up the deutsche mark are the core of the opposition to the common issue of eurozone bonds. The German position is to go back to the framework of principles for economic and monetary union and tighten the rules for spending and taxes, something that is good in the long run, but does not work in the short run with shrinking economies from austerity programs and nervous markets. The Merkel government's resolution of this crisis is to set new fiscal rules for the eurozone, and either move in the direction of letting the ECB play a larger role, or support such a move. What is not clear is whether the government will survive the next election taking on this leadership role in Europe, or a revolt in the Christian Democratic party....

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The Labour leader and prime minister of Britain met Donald Trump during a trip to speak at the UN General Assembly in New York on September 26, 2024 Starmer has misgivings that Trump may withhold support for the United Nations and its framework for maintaining peace in the world, and tackling issues of development and climate change. Britain's leader Starmer told the UN General Assembly- "People talk about an age of polarization, impunity, instability and an unraveling of the U.N. charter. And I feel a sense of fatalism has taken hold.” “But our task is to say no … This is the moment to reassert fundamental principles and our willingness to defend them. To recommit to the U.N., to internationalism, to the rule of law.” With Macron's shaky coalition government in France, and a coalition government in Germany with less popular Greens, FDP and Social Democrats, Russia engaged in a conflict with NATO in Ukraine, Starmer speaks for Europe at an important time to recommit to the UN Charter and uphold the principles of the UN for the betterment of mankind. ...

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In comments made to the editors of the New York Times, Mario Monti, the prime minister of Italy, says the European Union will endure because it was in the vital interests of Germany. Competitive devaluatations if a number of countries exited the eurozone would have an enormous harmful effect on Germany. Germany is an export dependent economy and sends two thirds of its exports to EU countries. In the unlikely event Greece leaves the eurozone, Monti says effective political policy responses can be expected to prevent this from affecting the rest of the eurozone. Monti is on a visit to the U.S. for talks with President Obama. He praised the effort by Greece's prime minister Papademos to meet the demands of international lenders in difficult conditions.

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German leader Angela Merkel's own past in East Gerrmany guides her in her relationship with Russia with ther keen interest in what the then German Democratic Republic lacked, oppposition, press freedoms and independent smaller states in Europe that could manage their own affairs free of foreign pressures.

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Chancellor Merkel of Germany proposed bilateral or trilateral deals between smaller groups of countries as a temporary solution till some agreement can be reached on immigration. She said "The European Council will not yet provide an overall solution to the migration problem." Hungary, Poland, Slovakia, Czech Republic which have opposed a quota system for asylum seekers did not attend.  Austria, Denmark, and Italy with the new government openly opposing immigration, attended the summit. Merkel said  a "lot of goodwill" was created, and leaders agreed that borders need to be better protected to prevent people from entering illegally, and reducing immigration at its source points in Africa. The migration problem has persisted as an issue long after the huge surge in immigration in 2015 has diminished to a trickle, and after chancellor Merkel has accomodated critics with new policies strictly limiting new immigration. New governments in Denmark, Austria and Italy, and the government in Hungary under Viktor Orban, have kept the issue alive by running on anti-immigration platforms. The European summit in 2018 was used by Merkel to reduce disagreement on this issue by allowing different countries to express their views and working in smaller groups for mutual benefit. It also reduces tension inside her CDP-CSU coalition after Bavaria based CSU decided to run in 2018 state elections on a platform calling for securing borders. ...

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The ECB and the Bank of England cut interest rates to near zero.

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China's GDP growth accelerated slightly to 6.9 percent in the 1st quarter of 2017, after five consecutive quarters of GDP growth at 6.7-6.8%, according to government data. This reflected larger use of steel in the construction industry and more mortgages issued by the state controlled banking sector. Government officials say productivity is improving helping GDP growth, with closing of less efficient manufacturing plants. Industrial production increased 7.6% in March 2017, according to the National Bureau of Statistics. The government is trying to control higher lending and reduce the backlog of bad loans at banks. Higher growth helps to reduce the bad loans at banks from the earlier period after 2008 financial crisis, improving financial stability.

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As German chancellor Merkel pointed out at the EU summit, all central European states and Eastern European staes are not doing the same. Czech Republic and Poland are doing relatively better, Hungary, Romania and the Baltic Countries are in serious crisis. And smaller Slovenia and Slovakia are part of the core countries in the EU which use the euro. The Baltic countries are looking to Sweden to help and the Swedish Finance Minister has said it is the political responsibility of Sweden to help the Baltic countries, which Sweden should consider as part of the home region. Romania is looking to a reluctant Germany for help. And voices in Europe are asking if it isn't the political responsiility of Western European countries like Germany to help, and if not what does it mean to be part of the European Union? The Eastern European countries caught up in this crisis with their currencies losing value and large loan repayments to western European banks, feel they embraced the liberal capitalist model without any knowledge or experience with its fluctuations and crisis prone nature, as part of the integration into a united Europe. Now they are left they feel, to drift on their own. The recent emergency European summit meeting in Brussels saw the Czech prime minister Topolanek, who holds the rotating presidency of the EU, say that no member would be left in the lurch, and the need to avoid a dividing line in Europe that North-South or East-West. The Hungarian prime minister insisted on a special European Union fund of upto $241 billion to protect the weakest members, and circulated a paper saying that Central Europe's refinancing needs for 2009 were $380 billion. So far the governments of the EU have already spent $380 billion in bank recapitalizations and put up $3.17 trillion to guarantee bank's loans and to get credit moving again. And the European Bank for Reconstruction and Development, the European Investment Bank and the World Bank have promised $31.1 billion to Eastern European countries....

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The Economist cautions that recovery is nowhere in sight, the hope points to only amoderating of the steep downturn. The 20% rise in the stock market for two thirds of the 42 stock markets that the Economist tracks in the past 6 weeks, can easily fizzle out as has happened before. Between 1929 and 1932 the Dow Jones Industrial Average went up more than 20% four times only to fall back to previous lows, and this crisis has seen 5 separate rallies of more than 10% only to fall back. But toxix assets have not been cleared up at Us and European banks, And consumption in the US, Germany, Japan and China shows no signs of coming back for years especially in the US where saving is increasing. And European banks have about $1 trillion in losses in central and Eastern Europe that have not been recognized, and the slide in the British and Spanish economies proceeds. And developing cpuntries have $1.8 trillion worth of borrowing to roll over this year, with less access to foreign investment. At one point the emerging countries imported capital worth 5% of their GDP, now cautious investors will keep that money at home. In America rising foreclosures and rising unemployment, combined with lower consumption, will keep economic growth down for years. Rising debt will limit future fiscal stimulus in countries like Japan and the US. Chinese growth will be constrained by its overdependence on infrastructure spending and lack of serious changes to its healthcare system which makes consumers save more for medical crises....

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The crisis in Eastern Europe where 13 countries have accumulated close to $1 trillion in collective debt to western European banks or in foreign currencies. The need for a fund like the one proposed by Hungary, with roughly $240 billion, to bailout the Eastern European countries.

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Germany is turning nationalistic in its approach to the debt crisis in Greece. This comes as Germans consider economic successes as Germany's, and failures in Europe, as the problems not of a united Europe but of these individual countries. The largest circulation German newspaper, Bild, suggested Greece sell the Acropolis to payoff creditors in the bond markets, and putting a estimate of $140 billion for this monument. A senior member of Merkel's party suggesting Greece sell off some of the Aegean islands. And a Bild poll showing a majority of Germans favor expelling Greece from the euro. There is not sufficient acknowledgement by German public opinion of the value to Germany of the export markets in Europe and the part they played in Germany's economic success.

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Demonstrations across France in cities like Paris, Lyon and Marseilles, by private and public trade unions drew an estimated 2.5 million people. They are protests that President Sarkozy's government is not doing enough to provide stimulus to the economy and protect jobs. THese are the largest nationwide demmonstrations in more than 20 years. France lost the most jobs in 40 years in the last quarter of 2008 and Sarkozy's government has only announced a$35 billion stimulus. Germany and France are also holding back on large stimulus spending , including significant help for Eastern European countries, and this will become an issue at the April 2, 2009 G-20 meeting. Ted Truman at Treasury is articulating aforceful response for the Obama administration calling on the EU countries to come up with astrong stimulus plan. See link.

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India is an attractive place for foreign investors with the country moving up 23 places in the ease of doing business rankings of the World Bank. Growth is faster than China since 2015, and GDP is expected to double to $5 trillion by 2030, according to government think tank NITI Aayog. Corporate deal making from foreign investors exceeds that in China. Mergers and acquisitions targeting Indian companies reaching a total of $93.7 billion in 2018, up 52% from last year, according to Dealogic. Overseas purchases were $39.5 billion for India in 2018 compared to $32.8 billion for China. In comparison to China where trade tensions are increasing, India under the Modi government has improved the ease of doing business- implementing a new bankruptcy code, easing foreign direct investment rules, introduced a nationwide goods and services tax to replace a hodge podge of taxes in different states. In the consumer sector Unilever NV made purchase of a malted drink brand Horlicks from GlaxoSmithKline PLC as part of a $3.75 billion deal. Softbank led a $1 billion investment in OYO Hotels. In infrastructure Tata Steel made a $8.3 billion acquisition of steelmaker Bhushan Steel. Reliance Jio's aggressive push in mobile with low prices is leaving the telecom industry ripe for mergers and consolidation- Bharti Infratel acquired Indus Towers for $6.5 billion. Closely held family companies are also selling out their controlling stakes. ...

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France's GDF Suez takes a $20.4 billion writedown. The European power generation industry is taking large losses as a result of the growth in wind and solar energy.

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Japan has coped with its long period of low growth by increasing the temp workforce. Loss of nontraditional workers jobs was 158,000 between October and mid February and accounted for much of the 220,000 jobs lost in the October to January period, according to the Japanese Labor Ministry. During the years that EU countries liberalized their labor markets allowing the hiring of temporary workers. During the 1990's Spain, Italy, Greece began allowing the hiring of temporary workers and workers on shortterm contracts. Germany allowed temporary workers and loosened labor laws earlier in this decade. By 2007 17% of the workers in the EU countries which share the euro were temporary workers. Many of these are young people or immigrants. But the labor laws in the EU for permanent employees remained the same and the worker protections were in place, including unemployment benefits and severance. This helped bring the EU unemployment rate down to 7.2% in 2007 during the upturn years. Now this whole process is going into reverse with the young and immigrants hit hardest. In Germany it costs 11,927 euros to layoff a permanent employee according to the Cologne Institure of Economic Research, and zero for laying off a shortterm employee. Now as the economy deteriorates the shortterm workers are being laid off first in large numbers. BMW has laid off 5000 shortterm workers. And short term contracts usually last only 4.7 months on average in Germany, about 12% of temp workers in Germany get hired as permanent workers. To get full unemployment benefits the workers have to have worked steadily for at least 1 year in Germany. ...

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France's union and business representatives reach agreement on improving competitiveness by providing new flexibility in labor rules. Unions agreed to cooperate with business in ways similiar to the German "kurzarbeit" program where workers work shorter hours but are guaranteed employment when demand is down. Workers on temporary contracts get health care benefits and incentives are given for businesses to take on more permanent employees.

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American manufacturers are importing more of the parts that go into each product. According to Susan Houseman, a senior economist at the W.E. Upjohn Institute in Kalamazoo, Michigan, the imported portion for these parts is up to 25% from 17%. Even the Bureau of Economic Analysis figure of the share of GDP coming from manufacturing is overstated, says Houseman. That figure was 11.2% for 2009, but is closer to 10.5% if all the imported components are included instead of being counted as domestically made. This is down from 14.2% ten years ago, and about 30% in the 1950's. There is deep concern that the manufacturing decline has weakened America. Houseman says that one cannot separate manufacturing from innovation, and she asks if America can continue to be strong in R&D with a shrunken manufacturing base. James Jordan of the Interstate Maglev project, says Maglev- which uses special magnets to levitate and propel high-speed trains- was invented in the United States. Today equipment for that technology is manufactured and used in Japan, and innovation in high speed trains is taking place in Japan and Germany. The decline in manufacturing is shockingly large. From 1979 employment in manufacturing went down by 8.1 million to 11.6 million, with the largest drop occurring in the last ten years. With it America is losing something significant- all the knowhow and skills that go into making things. Today the airplane wings for several Boeing airliners are made in Japan and shipped here. In a not too distant past these wings would have been built here, and workers with the knowhow and skills for these critical components were part of Boeing's workforce....

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German industrial output dropped 2.5% in September 2024. The collapse of the Scholz government coalition after firing of Lindner of FDP as finance minister adds more uncertainty to the outlook.

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Former finance minister Peer Steinbruck will be the SPD candidate for chancellor of Germany in the 2013 elections. He is is trusted in Germany for his economic experience and handling of the economy during 2008-2009, especially with the eurozone crisis worsening. Helmut Schmidt, a former chancellor has endorsed Steinbruck. He could draw some right wing support from Merkel. Merkel is personally popular in Germany but the CDU has lost elections in key states, and its partner the Free Democrats is considered weak.