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A second round of talks in Baghdad concludes after the first round in Istanbul, Turkey. No agreement is reached. A third round of talks is planned in Moscow for June 18-19, 2012. The bloc of countries negotiating with Iran is composed of the five permanent members of the UN Security Council and Germany, known as the P5+1. Talks were led by the EU's foreign policy chief, Catherine Ashton, and by Saeed Jalili for the Iranians. Ashton said they had found common ground but significant difference remain.

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An internal IMF document that estimates Europe's banks are short of capital by $273 billion. IMF managing director, Christine Lagarde, tries to downplay the report by saying this is not from a stress test that the IMF conducts. In August, Lagarde, called for an "urgent recapitalization" of European banks. As France's finance minister, Lagarde, steadfastly insisted French banks were well capitalized. France worked hard to prevent requirements for significant capital reserves under the Basel III rules. The higher capital requirements were supported by the U.S.. Simon Johnson said in his blog, that as long as European banks had inadequate capital to act as a buffer against losses, European countries had no safe route for restructuring their debts.

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The devastating floods have increased the urgency of securing financing for Pakistan to avoid any risks of debt default. This report in WSJ says Pakistan has negotiated $4 billion for the current fiscal year that began in July 1, 2022 with the IMF Board meeting to approve it on Monday Oct. 29, 2022. The IMF required Pakistan to secure the remaining additional funding for the fiscal year. For this part of the deal China has rolled over $10 billion in debt, Saudi Arabia $3 billion and UAE $2.5 billion. Saudis will provide $1.2 billion for oil on deferred payments basis. Saudis will invest $1 billion in Pakistan, and Qatar will invest $3 billion in Pakistan.

Finance Minister Ismail says Pakistan is not in danger of default now but it depends on the viability of the IMF program. The heavy monsoon floods have put a reported half of the country under water, and the economic impact says Ismail is about $10 billion.

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Moritz Schuller of Tassspiegel writes a moving story in BBC News about Helmut Kohl, former chancellor of Germany, who died at the age of 87. Kohl helped bring chancellor Merkel to prominence by appointing her to positions in his government, first as Minister of Women and Youth in 1991, and then as Minister for the Environment in 1994. The two developed a bond that lasted. Merkel said on Kohl's 85th birthday -"Germany has much to thank him for."  Schuller presents a different side of Kohl in this article. There is this Kohl who had this tactical grasp of events as the Berlin Wall fell and German reunification was within reach. Who had this warm touch with other leaders, including a special relationship with French president Mitterand that advanced relations between the two countries. Yet he also describes the Kohl who was forgotten after being pushed out of office in a donations scandal. The rush to setup the eurozone currency and expanding it without the needed financial arrangements were seen by Germans as a weakness coming from the Kohl years in office. By 2008 Kohl had a debilitating fall and by this time was forgotten by Germans. Close to the end in 2014 at the Frankfurt Book Fair to present a book on his own view of the events of 1989-90, Kohl was seen as a frail figure, in a wheelchair and unable to speak much. ...

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The Economist magazine says the difficult process of Brexit is now being put by Theresa May into the hands of the pro-Brexit ministers, Liam Fox, David Davis and Boris Johnson. Just staffing the Department for Exiting the EU under Davis, and the Department for International Trade under Liam Fox is taking a lot of time. And the differences between Fox and Davis also figure into the time it will take to invoke Article 50. It says the points put forward by Brexiters that Britain could revert to WTO rules do not work so well in practice, and it takes years to negotiate new trade agreements with other countries. It sees many problems, and says it is no wonder that Theresa May has told the Brexiter ministers to come up with answers as they are the ones who have sold this idea to the country.

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The WSJ study reported by Carrick Mollenkamp and Mark Whitehouse in the Journal on May 29, 2008, set off the investigation into the lowballing of the London Interbank Offered Rate or LIBOR by the 16 bank panel reporting the rate daily to the British Bankers Association. The rate is critical in setting the interest rate on trillions of dollars in transactions worldwide for securities, home and auto loans, derivatives and swaps. The apparent motive being to prevent negative perceptions of a bank's health if one bank was borrowing at a higher rate than its peers during the financial crisis of 2008-2009. banks doing the most lowballing for the LIBOR rate such as Citigroup, HBOS, were already perceived in financial markets to have higher risk during the financial crisis, divergence in LIBOR rates would reinforce these perceptions. Investigations later showed other banks such as UBS manipulated the rate they reported and influenced other banks to do so to increase trading profits. UBS settled charges for $1.5 billion and Barlays for $450 million. UBS was seen as an egregious offender as the practice was in the words of the Financial Services Authority, the UK regulator, quite "routine and widespread" at UBS....

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A Whirlpool appliance factory in Amiens in the Somme region is slated for closure and relocation to Poland. Emmanual Macron made a surprise visit to the factory to talk to worker representatives. He says he cannot prevent the closure but can work to arrange for good terms for the closure. Marine Le Pen the far right candidate also visited the site at the factory gates where workers were on strike. Afterwards Macron said "I try to fix problems, not to exploit them."  Macron has come under criticism in the French press for taking too much for granted in the second round and not fighting for support the way he had earlier. Le Pen has appealed to workers facing factory closure and areas that have been neglected as factories closed in previous years. In the north and northeast smaller towns and areas neglected in the tech boom and facing deindustrialization have turned to Le Pen. Macron's effort to go into these areas is part of his style and his conviction that the problems have to be tackled in the deindustrialized areas, and to break the image that the National Front is striving to create of a candidate from investment banking that does not understand workers. ...

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Christoph Hasselbach of DW.com says the idea of European Union brings so much good for Europe that it should not be diminished by use of pressure or punishment. He refers to the firm opinion in Brussels, of Mr. Juncker and Merkel, that there can be no cherry picking when it comes to remaining in the EU. This led in Jan. 2017 to British prime minister May saying Britain would not go begging to Brussels, and would simply opt out of the European Union and the single market. Hasselbach offers an interesting and plausible explanation for the Brexit vote shifting by a small margin to the exit side. He says rightly that uncontrolled immigration fears were used by the politicians supporting exit. Interestingly he says the worries in the UK were not just for current people but for future citizens from the hundreds of thousands of refugees who would become German citizens in a few years. Would they try to settle in the UK- prime minister Cameron failed to provide a convincing answer, says Hasselbach. He is right to point out as we have at Lyrarc that it is healthy to have questions and even some skeptical views about Brussels, that the appeal of the EU must depend on not being dogmatic about it, but being open and willing to accept questions.   ...

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European banks have been slow to get rid of risky assets such as collateralized debt obligations, subprime mortgages and other risky assets after the 2007 financial crisis. As a result sixteen top European banks hold 386 billion euros of suspect credit-market and real estate assets, according to Credit Suisse analysts. The Royal Bank of Scotland has 79.6 billion of assets dating from the 2007 financial crisis. Over the three year period since the 2008 financial crisis, the top three U.S. banks shed 80% of this type of risky assets, compared to 50% for European banks. The four largest British banks have reduced these risky assets by more than 50%, and four French banks have reduced these assets by only 30%. At 29 billion euros, French bank Credit Agricole had the largest amount of such risky assets among the leading French banks. This adds to the difficulties facing French banks which also have large amount of loans to customers in Greece and Greece's sovereign bonds. Deutsche Bank has 20.2 billion euros in commercial mortgages and whole loans and 2.9 billion euros in U.S. residential assets including subprime loans. Mediobanca analysts estimate that Deutsche Bank's exposure to such assets is more than 150% of its tangible equity....

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Prime minister Theresa May of Britain announces her plan to spend an additional 20 billion pounds a year on the National Health Service. Over five years the commitment is for an additional 70 billion pounds. By 2023 this will bring the UK to the point where it is spending the same proportion on health care as France. This also fulfills a promise made by the pro Brexit campaign. May says some of this would come from higher taxes, and 9 billion pounds that the UK contributes to the European Union each year would go to pay for the additional funds to the NHS. The 2017 British election with Labor winning 40% of the vote has affirmed the shift in public sentiment to greater commitment of funds for health and education. Poorer communities in Britain that were left behind tended to vote for Brexit, with a large gap widening between London and the rest of the country. Higher commitment to NHS is part of the shift in perception that the needs of health, education and underserved communities are the new priorities. ...

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Forever chemicals such as PFAS that breakdown over long periods cause serious harm with contamination of drinking water. The Biden administration has $10 billion allocated under the $1 trillion Families and Workers Plan that was approved by the US Congress to prevention of PFAS contamination. Of this the EPA is using $1 billion for water testing, water treatment plants and to train contractors for corrective action.

Har Ghar Jal, or every home clean drinking water, is a slogan used in India to ensure clean drinking water from taps for everyone of 1.3 billion people. The US faces a similar challenge to get clean drinking water to its nearly 400 million people. The two largest democracies in the world are tackling the basic necessities of life together, with the Biden administration sharing the understanding of the Modi administration of what this means for the people of India and America.

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Saudi Arabia signed a series of agreements with India at the G20 Summit with $100 billion in investments planned including digital, rail, energy  and other connectivity for the IMEC corridor for India through Middle East to Europe. Saudi prince MBS announces the IMEC Corridor and talks about its significance at the G20 Summit.

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Brexit and Scotland's referendum both have similar consequences economically for Britain and Scotland. This hurts both countries in unwinding relationships built over many years, unwinding 44 year membership for Britain, and 310 year union for Scotland. Britain exports to EU are 45% of total exports, and for Scotland the number is 63% for exports to the rest of the UK.  Scots benefit about 1200 British pounds more for average citizen than a average citizen of UK, and pay 400 pounds less to the government. Scotland would start with a 90% debt to GDP ratio if it takes a proportionate share of UK government debt from the beginning of independence. Fidler correctly points out the economic risks to Britain and Scotland which are being ignored or not fully taken into account by politicians.

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Dirk Kurbjuweit of Spiegel says Merkel needs to show strong leadership to overcome the challenges with the rise of right wing populists in the U.S., Britain and France. He points to the leadership shown in the latter part of Kohl's term in office to promote German reunification after the fall of the Berlin Wall. The challenges include talking to the German people directly in a convincing way, and meeting the day to day challenges of life for the people with investments in education, health care, infrastructure so that people see real significant improvement. It is even necessary to reorder priorities such as the shift from nuclear energy so that this challenge is met. It is not enough to hope that more Christian Democrats turn out to vote than Social Democrats, that the fifth of Germans who feel the economy is not working for them and feel threatened by immigration see real changes being made to address their concerns.

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This account describes the events that preceded the raid on the compound in Abbottabad that housed Osam bin Laden. The first information came years earlier during interrogation of Al Quaeda suspects in Iraq, who referred to a courier carrying messages from senior leaders. One suspect Hasan Gul referred to an important courier in 1994, and tried to disclose as little as possible. Over several years the information was pieced together leading to the courier's location at the Abbotabad compound. There was another individual living there who rarely ventured out and a seven foot wall protected the terrace in that part of the compound, making it impossible for outsiders to see who he was. Garbage was burned at the compound, and the nature of the compound with high walls and security led the CIA to believe there was a high probability that senior Al Quaeda leaders were inside. In December the CIA asked Congressional lawmakers at a secret meeting for additional funds to finance the operation. Adm. McRaven was placed in charge of the operation. A mock compound was built in Afghanistan and the attack on the compound was practiced by Special Forces. In April, Leon Panetta, who had tracked the information about the compound as head of the CIA, held daily meetings. He told his team "we've got to find out what the hell is in that compound." On April 19, Panetta informed Mr Obama that the CIA believed Osama Bin Laden was there. The same day Obama gave the go ahead for a helicopter assault....

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Japan's central bank chief, Shirakawa, has come under criticism from both the governing Democratic Party of Japan and the LDP for not acting strongly enough to support Japan's economic growth in 2012. He diluted efforts of setting a 1% inflation target by showing a lack of determination, saying the Bank of Japan could only do so much to tackle deflation, with effort to tackle structural inefficiencies required from the government. The impact of this was to strengthen the yen which weakens Japanese exporters. The LDP candidate for prime minister, Shinzo Abe, in Dec. 2012 general elections, was particularly critical of Shirakawa. Abe is likely to appoint Takatoshi Ito, a Tokyo University economist as the new central bank chief. Ito says Shirakawa talked down each BOJ monetary easing move with cautious language, describing it as a cold shower following each move. This is very different from the talk of the U.S. central bank chief Ben Bernanke, who gave clear signals to financial markets in his statements following monetary easing efforts of QE 1-3. Abe prefers a 2% inflation target and an activist central bank policy comparable to the U.S. Federal Reserve under Ben Bernanke. Financial markets and exchange rates for yen have responded positively to Abe's policy goals....

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Fausset of the NYT looks at a rust belt city in the U.S. midwest that has suffered as U.S. manufacturing declined. Much of the decline happened in the 1980's in the steel industry in competition with Japanese imports. North of town there is a GM plant that makes the Chevy Cruze. The unemployment rate of 17% in 2010 has dropped to 7.6%. Fausset describes the life of a retired steel worker on state pension who works in law enforcement. He is Joe Marshall Jr. from the song by Bruce Springsteen about a steel worker who the singer read about in a book. Youngstown appears to be divided by people who support Trump and Clinton.

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Transcripts released for the U.S. Federal Reserve's Federal Open Market Committee (FOMC) 2006 meetings show Fed chairman Bernanke and then New York Fed president Geithner ignored the risks of a hard landing from the mortgage and housing bubble. Geithner even went so far as to say about retiring chairman Greenspan, who also ignored the risks from the bubble and set the tone during his long period as chairman at the Fed: "I'd like the record to show that I think you're pretty terrific, too...And thinking about the probabilities, I think the risk that we decide in the future that you're even better than we think is higher than the alternative." In evaluating the risks facing the U.S. economy in December 2006, at the height of the bubble, Geithner stated: "The current weakness in the economy still seems principally to stem from the direct effects of the slowdown in housing on construction activity... The softer than expected recent numbers don't argue in our view, for a substantial reassessment of the risks in the outlook." The Fed chairman, Ben Bernanke, said at the first meeting in March 2006: " Strong fundamentals support a relatively soft landing in housing... I think we are unlikely to see growth being derailed by the housing market." When a Fed economist gave a presentation in March 2006 on the risks in Iceland, Bernanke said- "We'd like a full report on the Icelandic," at which point the rest of the group erupted with laughter. Iceland defaulted on its debts in 2008. Warnings about housing by Fed Governor Susan Bies were ignored by Bernanke and Geithner. Two highly leveraged Wall Street investment banks collapsed in 2008- Bear Stearns in March and Lehman in September- from the impact of the bursting of the bubble in housing and mortgages. When they collapsed these banks were leveraged at about 30 to 1, as most of the warning signs had been ignored by regulators including the Federal Reserve....

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Italy's budget deficit was brought down to 3% of GDP in 2012 under Mario Monti's government. The cost of austerity measures is a expected economic contraction of 1.8% in 2013, according to OECD and Moody's forecasts. There is intense opposition in Italy to the 4 billion euro property tax. The right wing parties under Berlusconi have called for this tax to be cancelled and reimbursing of 2012 payments. Italy's 2013 budget also assumes a one percentage point increase in the value added tax rate, a 4 billion euro additional tax. The new prime minister of a technocratic government, Enrico Letta, faces a delicate balancing act to keep the coalition of the right and left parties together, and still keep the confidence of the EU that Italy will control its deficit. The OECD expects the deficit to grow by half a percentage point in 2013-2014 as steps are taken to promote economc growth.

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This Washington Post article by Henry Farrell explains the implications of the 2016 EU ruling on Apple asking it to pay 13 billion euros in back taxes. Other countries in the European Union are upset that Ireland is taking away business and siphoning away tax revenues from their country, and giving most of it back to Apple. Normally the European Union Commission does not have authority over taxes in the member states. However considering the social and political implications at a time of deep recession and political upheaval in the EU and the U.S., the European Union Commission under Margarethe Vestager has seen it proper to look at arrangements in which companies come up with tax arrangements that deprive member states unfairly of tax revenues- revenues that could support social welfare and basic education, healthcare services at a time of painful cuts. A tax rate of .005% in 2013 for Apple is cited by Vestager as she points out that Apple's taxable profit does not correspond to economic reality, as most operations are conducted outside Ireland. Ireland is just on paper the tax location for EU operations. Vestager has thus come up with a legal approach based on Ireland's tax arrangements being a form of illegal state subsidy, which is not allowed under EU rules, and gives the EU Commission authority to require that it be reversed by paying the back taxes of 13 billion euros. Farrell answers the question why the U.S. Treasury is saying that Apple should not have to pay these taxes, as the U.S. also hopes to get some of these taxes at some future date with Apple repatriating profits to the U.S. under a still to be set tax arrangement. ...

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In a Washington Post-ABC News poll conducted June 2-5, Republican presidential candidate Romney receives more support than President Obama. Among all Americans Romney and Obama receive 47% each, among registered voters Romney leads 49% to 46%. Independent voters gave Romney 50% to 43% for Obama. The poll shows Obama is being viewed with increasing skepticism because of the economy. By 2 to 1, Americans say the U.S. economy is on the wrong track, and 9 in 10 see the economy as doing poorly. The poll also show a significant shift to Republicans being seen favorably for running the economy, 45% now see Republicans as being better able to tackle the economy, a 11 point increase from a March poll.

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Mistakes to avoid in retirement, says Statman, are that after a lifetime of frugal habits to save for retirement, when one gets there he or she will spend so much less that they cannot enjoy life fully. He suggests taking a payout of 3%-4% from retirement accounts and dividends combined. Another mistake is to think one has more time to manage retirement accounts, and he warns that this is a bad idea as one cannot beat the market, and it is important not to take risks in retirement. Other mistakes are to ignore how important healthy living is at this point.