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The IMF's managing director, Christine Lagarde, pointed to the urgent need to recapitalize European banks in September 2011. European banks face potential losses of 120 billion euros for Belgium, Spain and Italy, 60 billion euros for Greece, 20 billion euros for Ireland and Portugal, and 100 billion euros for other banking exposure, for a total of 300 billion euros, according to the International Monetary Fund. In the absence of recapitalization there could be further damage to EU economies from restricted lending by banks. IMF estimates show that deteriorating credit conditions could damage growth in the eurozone countries by 3.5 percentage points, and in the U.S. by 2.2 percentage points, creating another recession.

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Fitch ratings firm changed Turkey's credit rating for long term foreign currency debt to investment grade by upgrading it from double B plus to triple B minus. Turkey still has junk status from Moody's and Standard & Poor's ratings firms. At the same time Fitch says the situation in Turkey is volatile, saying a financial shock and recession are likely "at some point." Moody's described Turkey in October 2012 as having "substantial external vulnerabilities," and large short term financing needs. S&P's credit rating for Turkey is two notches below investment grade and Finansbank AS in Istanbul chief economist, Inan Demir, says it does not look like the other ratings firms support Fitch's asessment.

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A new generation of younger leaders takes over at the European Central Bank under Mario Draghi. Belgian economist Peter Praet succeeds Peter Stark of Germany in the Economics Department. Portugal's Vitor Constancio is vice president. Jorg Asmussen, 45, from Germany is on the ECB executive board, so is Benoit Coeure, 42, from France, and Klaas Knot, 44, from the Netherlands. Asmussen will head the ECB's International Division. Jens Weidmann,43, is the new head of the Bundesbank. The result experts say could be a reorientation of the ECB's outlook away from the rigid anti-inflation stance of Draghi's predecessor, Claude Trichet, and a willingness to try new approaches to help Europe tackle this recession.

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Sebastian Dullien of the University of Applied Sciences in Berlin says the economy is growing strongly at this time as export orders have rebounded and are up 20% over the low point last year and 40% for aut products, but risks loom for the second half of 2010 and 2011 by which time the reduction of the stimulus spending and lower global growth would pose risks. The failure of a bank or a return of the financial crisis in some form could even push the economy into a recession. And even in the first half of next year he sees more layoff as the rebound fall short of the high points of production reached earlier.

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See the piece on GE's Energy Gusher in Ahead of the Tape. As GE's financial services business led to earnings shortfall and 13% drop in its share price on April 11, investors may be overlooking the strong position of GE in energy businesses like turbines, nuclear energy, and in oil and gas. GE's overeseas sales went up by 23% in 2007 driven by 23% gain in its energy centric infrastructure business. Additional note is that GE is in the healthcare business and in green environmental business which should see growth even in a recession. And the financial services business may see further trimming after the earnings shortfall, so that GE is well positioned for the future.

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An oldtimer or longtimer Glickenhaus who started on the Street in 1929 describes the crisis he sees in credit markets and wall street in October 2008. He says "the economy is so weak and the financial system so damaged that a recession or even possible depression will last for at least five years." He says we have gotten soft in the USA politically, economically and in every way, e have had so much prosperity that we can't compete anymore. "In things like autos those days are gone "( he was once a big Chrysler investor). He says he is more pessimistic about the future of business, more than he is pessimistic even than in the future of the stock market.

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According to the Center of Automotive Research about 600,000 jobs in the midwestern states and about 3.6 million jobs counting industries that depend on the automotive industry are at stake in the failure of the Big Three auto companies. Even if one of the companies goes into bankruptcy Chapter 11 taxpayers will be on the hook for millions in retiree benefits from that company. Even with a merger of Chrysler and GM the auto companies in Detroit do not look like they can handle a deep recession and protracted dowturn. Which is why it looks increasingly likely that the federal government will have to keep the midwestern economies from sinking with the failure of any of the Detroit automakers.

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The election in Catalonia leaves the region as divided as before. The pro independence parties won 47.5% of the vote and the parties opposed to independence won 43.5% of the vote, so that only 4 percentage points separates the pro and anti independence parties. By seats in the Catalan parliament the vote showed pro independence parties with 70 seats, a loss of 2 seats from the previous parliament. The party of Mr. Puigdemont won most votes by a small margin within the pro- independence parties. On the other side the Ciudadanos party which is strongly opposed to independence won about 25% of the vote. About 80% of 5.3 million voters cast ballots. Prime minister Rajoy hoped for a better result to preserve Spanish unity. Most Spaniards support a unified Spain. Pro union Spaniards are strongly opposed because they see the efforts of Mr Puigdemont for independence coming at a time when Spain was just recovering from a deep recession with millions unemployed. This is affecting the economy of Barcelona and the Catalan region. Unemployment is higher and tourist flow has slowed. Because the pro independence parties are themselves divided on how to proceed, and with the anti independence parties also winning a significant share of the vote, the negotiations between the Catalan regional government and Madrid will be protracted. ...

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Increasingly complex political coalitions are away centrist parties of the establishment have maintained power in Europe. Traditional political parties on the right allied with business and working class parties allied with organized labour are replaced by a fragmented landscape with parties emerging at the far right and far left. This is also a result of the deep recession following the global financial crisis of 2009, changes in international trade and globalization that have increased inequality, and the migration crisis in Europe.  In Germany and Netherlands centrist parties have formed coalitions to remain in power. In France and Italy mainstream socialist parties suffered defeat, in France to a newly formed party by Mr. Macron, and in Italy to a party started by a comedian Beppe Grillo called the Five Star Movement which allied with the Northern League party at the far right. In Spain's general election in 2019 the Socialists showed a new trend of going back to their roots as working class parties. By addressing minimum wage and other issues relating to equality the Socialist party in Spain increased its share of the vote by 6% to 29% in 2019 elections. Previously in the last 2 decades the Socialist parties had moved away from their focus on equality towards economic efficiency. The tradeoff between equality and economic efficiency moved away from equality in Europe and the U.S. during the last 3 decades,leaving Socialist parties exposed to losing some of their working class base to new parties formed to address today's issues of fairness and social justice.   ...

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Hyundai has gone from being seen as cheap to being an excellent value in this recession like environment. About 30% of buyers consider Hyundai for a purchase- the numbers are from Hyundai research. Globally Hyundai is now fourth after Toyota, GM and VW, and has 8% of the USA market. People are asking is a premium brand worth $5000 or more dollars extra. And Hyundai projects a wise decision by buyers. Even Cadillac buyers are seen shifting to Hyundai. Hyundai sales in August 2009 were 47% above August 2008, and for 2009 Hyundai and Subaru are the only 2 companies expected to increase sales in the USA. An Accent sells for base package at 10,000, luxury car Genesis at $32,000, less than competitors.

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Subaru's new marketing campaign "True Love" tries to broaden the car's appeal to customers outside the northeast and Colorado. In the past the car's four wheel drive and performance in snow driving made it popular in states with winter snow conditions. Subaru is now making an effort to sell in southern and western states, appealing to customers who want higher fuel efficiency and improved safety. Subaru has 2.3% of the American market, but its sales are higher in a few states. with a 11% market share in Vermont. Subaru sales have grown rapidly and increased during the recession. Sales increased 41% between 2008-2010 with the popularity of a new version of the Outback wagon. In 2010 Subaru increased sales by 22% to 263,820 cars.

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Readers comments in the NYT to Tom Friedman's piece "Don't Build Up," October 28, 2009. Overwhelmingly readers expressed opposition to digging in deeper into the conflict, with one passionate comment by Cdr. John Newlin of Vista, California, drawing 410 reader recommend. He pointed to problems at home with military active duty suicides and domestic violence rates soaring, the economic misery from the recession, and the damage done by bankers and to the economy and lobbyists to a properly functioning democracy. Readers related to Friedman's idea that only the locals are best equiped to solve their problems, and that the day after the day after the Afghan warlords and the Taliban will still be fighting and the region never under anybody's control.

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Poland's Finance minister Rostowski, says that Poland will join a trading band pegged to the euro called the exchange rate mechanism 2, for the zloty by the middle of 2009. This should help support the zloty in this difficult period giving the backing of the ECB to its currency. The zloty has lost 35% of its value in the past year. Poland, he said, will keep its deficit below the 3% level of GDP, and will rely more on monetary policy to fight the recession. Rostowski is visiting European capitals to give the message that Poland is different from some other Eastern European countries like Hungary, and it has more trading links to the west. Poland expects to have some growth of 2% in 2009.

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Tough choices at OPEC meeting- increase supply and with a recession and fall in demand risk large fall in prices or dont increase supply and risk a jump in prices that pushes the USA into a recession.

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On the back of 18% growth in deliveries in Eastern Europe and 28% in Asia, VW increased operating profits for its core VW passenger car brand. This increased to 461 million euros even when sales declined in the US and Western Europe. Shows that German manufacturers can do well as long as the Asian, South American markets and Eastern European markets hold up well, as the US is entering a recession and exchange rates are unfavorable for manufacture in the euro region and export to the USA.

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The Labor Department reports that nonfarm payrolls increased by 200,000 in December 2011, based on its employer survey. Private sector jobs added were 212,000, while the government sector lost 12,000 jobs. A survey of U.S. households showed the unemployment rate declined to 8.5% in December 2011. Overall 1.6 million jobs were added in 2011, taking nonfarm payrolls to 131.9 million in Dec. 2011. This is 6.1 million lower than the figure in Jan. 2008, when the recession started. An estimated 125,000 jobs are needed each month to keep the unemployment rate stable because of the increasing population. The household survey shows 13.1 million people unemployed in December 2011. American workers hourly earnings went up by 4 cents in Dec. to $23.24. Wages are up 2.1% for 2011, lower than reported inflation of 3.4%.

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This editorial from the Times after the New Hampshire Republican primary- in which rival candidates attacked Bain Capital- says that leveraged buyouts by private equity firms like Bain Capital were only one of the causes of the growing income inequality, and by no means the principal cause. And they had little to do with the subprime mortgage crisis that led to the financial crisis and recession in 2008, which aggravated the income inequality. A serious factor was the lowering of wages in manufacturing in competition with lower wage countries in a globalized economy and the decline of good manufacturing jobs over three decades. The increase in low wage jobs in the retail and service sector with the decline in manufacturing did little to arrest the growing gap in wages.

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Jet Blue came to Boston in 2004. At the time it had one gate and 30 employees at Boston's Logan International Airport. The airline now has 2300 workers and 17 gates in Jan 2012. It now has 104 nonstop daily flights to 44 locations in the U.S. and Caribbean, with plans to reach 150 flights by 2015. As American and Delta pulled back to focus on their main hubs, Jet Blue expanded quickly. It started as an airline for vacation travellers, but soon attracted business passengers for the cheaper cost of flights, especially for cost conscious travellers after the recession hit in 2008. Jet Blue also offered better service and more leg room for business passengers. Jet Blue's CEO, Dave Barger, says 30% of traffic into and out of Logan now is for business travel.

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On the morning of Jan 15, 2015 the Swiss Franc jumped in value against the euro by 18%, and at one point up by 39%, following the Swiss National Bank's announcement of removal of the peg to the euro of 1.20 euros. Foreign exchange fluctuations of this scale are unprecedented. The peg to the euro was made in 2011 following the rise in the franc's value by about 44% in 2010-2011. The sudden rise in value in 2010-2011 hurt Swiss competitiveness and tourism, threatened to bring an onset of deflation, and recession. Part of the rise was due to external factors- the eurozone debt crisis led to decline in the value of the euro, and fears of a eurozone breakup led to money flowing into Switzerland as a safe haven.

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A Brookings Institution study of hiring trends and unemployment in the 100 largest metropolitan areas of the U.S. at the end of 2012, shows 78 metropolitan areas adding jobs in the 4th quarter 2012. 14 of these areas had more jobs at the end of 2012 compared to before the 2008-2009 recession. Six of these cities were in Texas. This included Knoxville, which gained from jobs added at a nearby VW plant. Other cities were Oklahoma City, Omaha, Salt Lake City, Charleston. Only three cities in the East and West are on the list- Pittsburgh, Washington and San Jose, and none in the midwest, showing the geographical divide in job gains. And Washington D.C. will lose government jobs after job cuts in the government. Charleston will lose jobs from cuts in military spending.

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The losses for investors from mortgage loans won't go down by much by Treasury's plan. Barclay's Capital Research estimates that losses could go down by 1% point from 13 to 15% losses that are expected on the subprime loans. And the economy would only be helped at the margins according to Roubini, a NYU economist who heads Roubini Global Economics, who doesn't see it doing much for the foeclosures and defaults leading to a housing recession for the next 3 years. Out of some 1.8 million borrowers, 600,000 not current on their payments will get no help, and of the remaining 1.2 million only 600,000 who are current on their mortgages but need help will qualify, those with better credit scores such as above 660 and having the means to pay will be excluded.

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The Fed reduced rates to 1% from 1.5% on October 29, 2008. If the Fed were to reduce rates down to zero that would put the USA in the situation that Japan found itself when Japan's central bank reduced rates to zero in the 1990's, and where it remained for years as its economy struggled. For the USA these low rates were last reached in 2003 and 2004 after the bursting of the internet bubbbe. The only surprise element in this is that this comes so early in the deep and prolonged recession that is expected. What if the rate is down to zero, then the Fed could use unconventional tools like buying longterm Treasury securities that would help to push down the terms for consumer credit that tracks those Treasury securities.

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Paul Krugman points out in the NYT that September 2022 high inflation numbers for core inflation excluding energy and food of 6.6% on annualized basis, is still not a good way to measure actual inflation. This is because housing costs as measured by the core inflation index used by the Labor Department are represented by housing rental costs. The rental costs have a time lag in this index and after a sharp spike are now cooling off. Add to this slowing economies and recessions in European economies and the situation suggests that the economy and inflation may be moderating more than expected. Additional factors are that the effects of sharp prior 2 increases in interest rates by the Fed of 0.75% and a third of 0.75% expected soon, are still not fully realized in the economy. This view was also expressed by experts in the WSJ. It was widely perceived that the high inflation that we are seeing is a result of temporary factors such as the war in Ukraine, food and oil supply constraints, supply chain bottlenecks, new adjustments to manufacturing at home after covid. As these factors ease and after the Fed's action to raise interest rates, slowing economies in Europe adjusting to climate change actions,  the moderating effects on the economy of the costs in switching to renewable energy also a factor, this high inflation has prospects of moderating. The successful switch to renewables particularly solar, and better agricultural practices, could set along term trajectory of moderate inflation in costs of energy and food supplies.  ...

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This opinion by Mr. Swain, editorial page writer at the Wall Street Journal says it is regrettable that the expert class in America has failed to acknowledge its errors or conduct self-criticism. A new generation of journalists, think tank authors, and experts, will soon replace the old. They, he says, will make a fair assessment of the Trump years and look at their forerunners as acting in crucial moments, as idiots. He offers an alternative view of lockdowns as hurting the economy and causing a sharp recession in which people had to go without income, and some even hungry. To support this he says many parts of the country did not lock down and managed to keep hospitals running fine. California and New York with Democratic governors and large numbers of Democratic voters have borne the brunt of the pandemic in America. He points out the changes in the Middle East with policy that has brought Israel and the Arab world closer. The wars in foreign lands that are no longer being fought wasting precious resources. Democrats and the news media acted to consider Mr. Trump's election as illegitimate and the result of collusion with a Russian president, says Swain, till the Mueller investigation proved this to be not true. The real reason for Trump's election being that the Clinton-Obama Democrats had neglected working class interests and sent jobs overseas, and the Democratic party had shifted far from its working class base. That there is much for reflection in both political parties is stated in this view as the Democrats rush to a second impeachment Feb. 9, after president Biden has setup his new administration, and in the middle of a national emergency pandemic.   ...

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Gregory White and Anton Troianovski provide this exceptional account of how Russian president Putin miscalculated all through 2013 and 2014 about the way Germany and the EU would respond to Russia's actions in Ukraine. Putin also according to other accounts miscalculated how Saudi Arabia and OPEC nations would act on maintaining oil production in the middle of a slowdown in the economies of Asia and Europe. A combination of events beyond his control such as the economic slowdown in the second half of 2014, with the miscalculations on OPEC price moves particularly following Russia's failed Syrian intervention disrupting Saudi-Russian relations, caused the damage. Major miscalculations were made about German cooperation in the face of Putin's moves- the changed convictions of German chancellor Merkel about Russian intentions following repeated Ukraine interventions, and changes in German public opinion following the downing of a Malaysian airliner flight in which many Dutch citizens lost their lives. Putin used subterfuge to coverup his actions making his story line less credible with Germans with each repetition. The result of these miscalculations and lost confidence in Russia's economy and policymaking is that the Ruble dropped to 62 to the dollar, losing nearly half its value in 2014, and a deep recession expected in 2015. Even though Russian takeover in Crimea enjoys support and Putin still has widespread support for nationalist policy with a tightly controlled media, many officials in the government and business leaders warned about the dangers for Russia's economy in 2014. Former finance minister Kudrin, and the head of Sberbank, who were principal architects for Russian finances and economic policy reforms, were clear about the dangers. Only by Nov- Dec 2014 were their voices being heard. ...