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The new government of prime minister Enrico Letta takes office in Italy in April 2013 following the reelection of president Giorgio Napolitano. Letta is 46 years old and represents a new generation in Italian politics. He is a former Christian Democrat and member of the European parliament. Letta studied at the University of Pisa, and did graduate work in international affairs. In the 1990's he was president of the European Young Christian Democrats. He was associated with Beniamino Andreatta, a Christian Democrat economist and founder of research group Arel. Letta was his chief of staff when he became foreign minister in 1993. In 1998 Letta was minister for European Affairs, and the following year Industry minister. In 2009 Letta became deputy secretary of the Democratic party. The firm European connections, a good sense of how Italians feel about the economic changes, a connection with young people, and his grasp of the needs of business and labor in improving Italian competitiveness, make him an excellent choice after the inconclusive parliamentary elections in Italy. ...

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About 400 million or one in 4 people people smoke in China. State ownership of the tobacco industry only makes this worse. Enforcement of bans on smoking is lax. Experts warn that this would become a major healthcare problem in China.

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Su Liping, professor at Tsinghua Unversity, says there were 180,000 protests, riots and other incidents, protesting economic injustice in 2010. Most of the incidents were against land grabs, corruption and abuses by local officials, and unpaid wages. Inflation has hit the poor, migrant workers and people with low incomes hardest. Food prices were up 13.4% in August over the same month prior year. Pork prices were up 52.3%. Other problems are now meshed in with inflation. Local government debt in China, according to the National Audit Office, was 10.7 trillion yuan in June 2011. The National Audit Office estimates 23% of this, or 2.5 trillion yuan, depends on land for repayment. Analysts say China's local government made repayment in 2010 using the 2.9 trillion yuan in revenue from land sales. The same amount of land has to be sold in 2010 to make repayment. At lower prices even more land may have to be sold. The danger say Orlik and Jie, is that inflation and the pressure to acquire more land- and consequently more land grabs- will pose severe risks to the social contract in China....

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This election is seen as a turning point for Britain. The Liberal-Conservative coalition has come up with a radical plan to cut spending and decentralize services in the areas of education, policing and health care. The plan is to cut the deficit quickly from 11% of GDP in 2009-10, to 2.1% in 2014-15. By comparison the outgoing Labor government's plan was to balance the budget by 2016-17. And the fiscal impact of Labor's budgets would have been 4% by 2014-15, compared to the Cameron government's looking at 6.3%, with larger and accelerated cuts in spending. It is something of a gamble by the Tory-Liberal government. If the severity of the cuts in spending stifle growth, then Plan B will be needed. The size of the cuts are not seen as feasible. With growing interest payments with the large borrowing by the government, and no real cuts in healthcare spending, departments delivering public services in Britain face cuts of 25% by 2014-15. With defense and schools limited to cuts of 10%- other departments would face cuts of 33%. According to the Institute of Fiscal Studies one way to reduce the severity of these cuts in department budgets, would be to find additional savings in the welfare budget. In June, Mr Osborne, the Chancellor of the Exchequer, announced 11 billion pounds in savings in this area (with half coming from using a different measure for inflation in calculating benefits). Additional savings of 14 billion pounds in welfare budgets, can reduce the size of the cuts needed in departmental budgets to 20%. One example cited is means-testing payments that go to the affluent as well as to poor people, such as child benefits, and cutting winter-fuel payments. Tories and Liberals agree on the need to decentralize government and services in the areas of schools, policing and the NHS. In schooling the idea is to give more choices to parents and children. Current schools can apply for academy status and new "free schools" will be run be non-profits, charities, churches, and parents. These schools will have freedom to set pay, select curriculum, and still receive state funding. In policing, the idea is to have directly elected police and crime commissioners for every constabulary in England and Wales. The elected commissioners would appoint constables and determine budgets and priorities. For the National Health Service the move is to give groups of general practitioners a significant role in the delivery of health care. ...

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An independent parliamentary panel in Japan described the Fukushima nuclear plant disaster as a "profoundly man-made disaster." It was sharply critical of TEPCO, the company running the plant, and the Japanese government's response. The investigation chairman Kiyoshi Kurokawa said in the report: "What must be admitted- very painfully- is that this was a disaster 'Made in Japan,' its fundamental causes are to be found in the ingrained conventions of Japanese culture: our reflexive obedience; our reluctance to question authority; our devotion to 'sticking with the program'; our groupism; and our insularity." This comes as a report by TEPCO shifted public attention to "a tsunami beyond our imagination," creating a large credibility gap with the Japanese people, because the public is skeptical about TEPCO's attention to safety during the period leading to the accident. The parliamentary report calls attention to safety factors that were ignored so that companies would be required to take further steps including costly modifications of plant equipment. A critical flaw was the lack of a independent safety agency that could enforce safety measures that TEPCO might be reluctant to make because of cost considerations. Astonishing as this may sound, the Nuclear and Industrial Safety Agency (NISA) in Japan is part of the same government ministry that promotes nuclear power, creating a sort of "nuclear bloc," which before the accident connected the safety agency to the bloc. Because of this the panel report says, NISA did not require TEPCO to prepare for a full station blackout- the loss of main and backup power- because the "probability was small." Other factors that need to be addressed are the breakdown in communication and cooperation between the people operating the plant and the people responsible for Japan's nuclear safety. The prime minister's office waited too long before declaring a state of emergency. To come up with the conclusions the panel made 1000 intervews and conducted 900 hours of hearings. The questions left behind by the nuclear accident in Japan are whether Japan should continue with the same level of dependence on nuclear power, whether it should shift out of nuclear power on a gradual basis as Germany is doing ironically after the Fukushima accident while Japan is reactivating its nuclear plants to meet energy needs. If Japan continues with a smaller reliance on nuclear power what changes have to take place for an effective safety agency completely outside the "nuclear bloc," and the series of other changes that have to take place in the nuclear power industry's handling of safety. Public opposition continues to focus on this because of distrust of the nuclear power industry after the accident....

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Russian president Putin tells the Italian newspaper Corriere Della Sera, before his visit to Italy, that the failure to carry out the agreement of Feb. 2015 called Minsk II- following the eruption in fighting at Debaltseve and Mariupol in eastern Ukraine- is because of the Poroshenko government in Kiev. He called on the U.S. and Europe to pressure the government in Kiev. The Ukrainian position is that the local elections cannot move forward until pro-Russian fighters and weapons are withdrawn, and the control of the border with Russia is given back to Ukraine. As western sanctions on Russia over intervention in Ukraine are coming up for renewal at a meeting of the G-7, Putin said he was committed to the Minsk II agreement for autonomy to be given to the region of the Luhatsk and Donetsk republics, which were established in the east with Russian assistance. Putin told the newspaper in an interview: "The document we agreed upon in Minsk, called Minsk II, is the best agreement and perhaps the only unequivocal solution to this problem. We would never have agreed upon it if we had not considered it to be right, just and feasible. On our part, we take every effort, and will continue to do so, in order to influence the authorites of the unrecognized, self-proclaimed Donetsk and Luhansk republics. But not everything depends on us. Our European and U.S. partners should exert influence on the current Kiev administration, We do not have the power, as Europe and the U.S. do, to convince Kiev to carry out everything that was agreed on in Minsk." That the two sides are far apart on issues is shown by Ukraine president Poroshenko's position that for an election to take place for implementing decentralization in the eastern region of Donetsk and Luhansk - "It is impossible to provide the election when the bandits and terrorists with guns are on the street. This is not free and not fair." Putin's position is that " Specifically there needs to be a constitutional reform to ensure the autonomous rights of the unrecognized republics. The Kiev authorites do not want to call it autonomy- they prefer different terms, such as decentralization. Our European partners, those very partners who wrote the corresponding clause in the Minsk agreements, explained what should be understood as decentralization. It gives them the right to speak their language, to have their own cultural identity and engage in cross-border trade- nothing special beyond the civilized understanding of ethnic minorities' rights in any European country." ...

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Car sales in Germany are up 40% from ayear ago. This is not about to happen in the USA. The cash for clunkers program in Germany is broad and less complicated.In Germany eligible cars have to 9 years old and the subsidy covered the purchase of any new car, regardless of size and fuel efficiency. In the US the program just signed by President Obama covers a narrow profile of customers. In the US customers who benefitare economically challenged and in the midst of adeep recession. Cars can't be over 25 years old, and can't have a combined highway and city fuel economy rating of more than 18 miles per gallon as calculated by EPA. To get the full $4500 credit customers must buy either a new truck or sport utility rated 5mpg higher than the clunker or scrapped vehicle, or a passenger car rated at least 10 mpg higher.And the credit is given instead of the trade in value, so if the trade in value is higher it doesn't help. The German government is giving away upto $4500 but it started out with 1.5 billion euros to get 600,000 clunkers off the road, but because of the popularity of the program has expanded it to 5 billion euros for 2 million cars and extended it to end of 2009. The US program only has $1 billion for 250,000 cars or one eight of what the Germans are doing for amuch larger car market. Because of the dire shape Detroit and much of the midwest is in, because of the slump in the auto industry, this may be a mistake and a missed opportunity to do what the Europeans are doing, and get an even bigger impact. The American car market and industry is taking a severe blow from the deep recession. Because of the depressed region the impact of a real clunkers for cash program that targets a broader profile, with bigger financing and designed to give a boost to the market, could make a real difference. At this point it is more of a program designed to help people turn in their gas guzzling trucks for passenger cars, and those driving a $200 car are not likely to be the kind of customer who goes out and buys a new car say dealers. See the link to Alan Blinder's stimulus proposal in July 29, 2008, that suggested a $20 billion program even before the current crisis. The present program has only $1 billion....

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Why polluting industries and colluding local government officials who are judged on the rate of economic growth achieved have come together and become entrenched to thepoint where its hard for the central government to implement pollution control measures. Deng's response to a sluggish socialist bureaucracy was to give power to local government officals to promote growth and to be judged on that basis. The environmental ministry and the environmental protection departments are very small and lack the resources to control these industries. And NGO's and the informed public and citizens are powerless to demand change as they are seen by the government as risking social stability by risking growth. After the East Asian crisis China anticipating a slowing down in competition with recovering Asian economies pushed harder for more economic growth. As a result production of steel set new records and the addition of power generating capacity each year surpassed the total power generation of countries like Britain and France.But this power generation does not use the modern technology available as it is costlier and takes longer to build. So a lot of short run decisions are being made in the interests of growth. An effort to introduce Green GDP backed by President Hu Jintao was dropped after it ran into a lot of resistance. Using this about 3 points of GDP were deducted from the 10% growth as environmental cost. This was based on modest environmental costs estimates and did not take into account the entire cost of pollution to health and the environment. China's own environmental experts think that Western estimates of environmental costs are if anything on the conservative side as they are based on models used in the west and conditions in China have little precedent in the scale and range of environmental degradation. Coal is burned to produce two thirds of the energy and uses older technology for power generation, it is a big polluter of the environment. And the modest energy efficiency goals set by the central government are not being met as a result China is already expected to be consuming as much energy in 2010 as it was expected by its own planners to be consuming in 2020. To informed outsiders it appears that the polutting process is systemic in its nature and only political change that allows people who are suffering the worst effects of this pollution to make their voice heard, can lead to reversing the trends that have been set in place from the Deng period of economic change that started in the 80's. ...

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Interesting and quite useful from a sociological and psychological point of view, that people believe what they want to believe. Even today writes Slackman, the Arabs and Muslims from Dubai malls to people one meets in a park in Algiers, cafes in Riyadh, and in shops and places all over Cairo, say the USA organized 9/11 so that they could attack 2 Muslim states, Iraq and Afghanistan. If we changed it a bit and said Rumsfeld and Cheney got the perfect excuse to attack Afghanistan's Taliban government from 9/11. It created the kind of fears in the US public about terrorists, individual, or state sponsored terrorism like Iraq's against the Marsh Shiites after the Kuwait war (which was a personal affront to both Rumsfeld and Cheney as they let it happen right under their eyes), then one can extend that to say Rumsfeld and Cheney felt they now had the opportunity to get Saddam out. So once you have the US even for good moral reason eager to intervene, this eagerness may not require too much of a stretch to be seen as the US administration engineering this atmosphere by organizing 9/11, or by letting it happen. This is true for an Arab public that feels humiliated and sees a loss of respect from all the setbacks they have suffered, including in Egypt where a President has maintained himself in power for thirty long years and has American support. And most of these people haven't left their surroundings, so they haven't seen the world outside. What they beleieve is only what is possible from what they can see possible from their immediate surroundings. From a -sociological and psychological perspective this is certainly possible and even realistic. When Friedman in the New York Times says its shameless that the 2 Republican candidates can speak of being change agents when Republicans have been in power for 8 years, and still the Republican faithful and some independents believe this, they have not lost their wits but may see this in terms of their gut feel and in terms of their own personal experiences and surroundings. Even when Paul Gigot of the Wall Street Journal sees little hope from either candidate when it comes to lobbyists influencing them and proof of this from lobbyists for Fannie and Freddie as their senior advisors. Then its still possible for Republican faithful, however weird it may appear to an informed observer,to see McCain and Palin as agents of change. Same is true for Obama. ...

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Plans to let borrowers who would not be able to keep their home once the Alt A oans reset at a higher rate but who would be able to pay the interest at the initial teaser rate if allowed to do so is the group that is targeted for help. Treasury Department and a coaltion of lenders that Treasury has helped organize that would represent lenders and securitization interests are working out the details. The freeze could be for as long as 7 years. Those who can pay regardless of the increase in rates and those who should never have accepted the loan terms because of their finances would be excluded in this plan. About $352 billion of mortgage loans are due to reset in 2008. This should help the economy and homeowners and also the lenders as they also lose because foreclosures can be costly for lenders. The securitization interests who hold the mortgage securities are also represented and they benefit also because its better to get some interest than no interest at all.

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Ed Thorp and Bill Gross of PIMCO on risk management techniques they use which build on one basic fact avoid overleveraging. If you have a 5% edge from an information standpoint or over your opponent bet only 5% of your wealth on each toss of a coin. What do they think of today's markets? In the hedge fund world they say there has been a large flow of capital into it in the last 15 years from $100 billion in the early 1990's to $2 trillion now. But the amount of available investing opportunities have not gone up by much. So you have a large number of bets in a pool of assets that are of declining quality and the overbetting phenomenon that leads to gambler's ruin. And as the edge available diminishes one needs more leveraging to generate same returns which leads to the overleveraging that got Carlyle Capital and Bear Stearns collapse. The puts a big dent into the perceived stable situation creating huge crises in confidence and declining spiral.

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Talk like this of home buyers getting rebates and so on to stimulate home buying on the oped page of the NYTimes shows how little the debate is focussed on the problem of existing homebuyers and foreclosure. How much can rebates change things when unemployment, company retrenchment and credit tightening is taking place? On the same page editorial on Foreclosure Politics, April 14, 2008 NYT, shows that Congress is engaging in the politics and no one has the courage and foresight to face up to the tough questions posed by the crisis before a downward spiral in prices begins and foreclosures go into large numbers.

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Spain's bond auction on April 3, 2012 for 2.59 billion euros showed yields up by one percentage point to 5.7% on its 10 year bonds. Spain's banks are using funds borrowed from the ECB under its Long Term Financing Operation to buy Spain's government bonds. Spanish banks bought 39 billion of government bonds in Jan and Feb 2012. Spain has raised so far 47% of the planned funding for 2012.

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Francois Hollande becomes the first Socialist candidate to be elected president of France since Francois Mitterand 17 years ago.

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A sense that the policies of Hollande in France are better aligned with the Obama administration's position on economc issues.

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Mead points out that the world with an effective U.S. leadership based on democracy and the values we cherish is needed now more than ever, after the failures of the Bush and Obama administrations to provide the kind of balanced leadership all Americans can stand behind. A world without an effective and enlightened leadership from the U.S, is one in which the world could fall apart in regional rivalry, one in which the hundreds of millions of people in the poorer parts of India, China, Russia, Brazil, and other developing countries of the world, will have less opportunity to meet their aspirations for a better life. This is because a focus on development requires less regional rivalry and because serious missteps can reverse in a few years decades of economic progress as shown in the 2008 global financial crisis. More so because we live in an increasingly interdependent global economy. It is also the kind of world where suppression of freedoms and suppression of the opposition as in China and Russia, provides a wrong kind of message, a world in which we or our children would not want to live in. Russia, India and China, are too driven by rivalry and lack the deep experience to go it alone, multipolar is more likely to end up being multipolar rivalry leading to a race to the bottom, which would be bad for all, especially for the poor in Asia and the developing world. The 2008 crisis showed what some serious economic mistakes could do to employment and incomes in the world with output dropping by a third in most places. Political missteps could lead to a slippery slope of this magnitude but more difficult to correct. Greater participation in the political process and more enlightened leadership is needed in all countries to allow many voices and greater interaction across boundaries, focussing on the dangers of such multipolar rivalries. The world of the G-7 is already moving to the G-20 where many voices are heard and serious discussion of differences takes place, but participatory is different from multipolar....

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Antonis Samaras visits Bavaria and meets with Christian Social Union leader Horst Seehofer, who offers his support to Greece's recovery efforts and plans a return visit to Greece. After the meeting, Seehofer said "today, we've turned over a new leaf," and Samaras said "I've received a lot of appreciation for our efforts."

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Krugman points to the connection between the failure to achieve debt reduction through debt forgiveness and the sluggish economic growth in the eurozone and U.S., five years after the global banking and financial crisis of 2009 and four years after the beginning of the eurozone debt crisis in 2010. In the U.S. debt reduction for homeowners was delayed with a wave of foreclosures, and in Europe austerity budgets were the norm as Germany pushed hard for austerity policies. In 2014 small relaxation of austerity to give relief to voters took place in Greece, France, Italy and Spain, with austerity budgets still in place. Growth also slowed in Germany to slight contraction in the third quarter and no growth in the fourth quarter of 2014. This is leading to the formulation of new policy to address growth challenges in the eurozone. Debt to GDP is growing in eurozone countries and Britain because of lack of growth, even though spending cuts have been made, showing the need for rethinking policy. ...

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Strong criticism from Attorney General Luisa Ortega, and dissension inside the government, led to the Supreme Court retracting parts of its decision to nullify the powers of the legislature. Ortega called the move "a rupture of the constitutional order." Most of the judges are appointed on the court by the Maduro government. Strong criticism by the OAS calling it a "self inflicted coup", by other governments in Latin America, also led to retracting parts of the decision by the Supreme Court. Nicholas Maduro succeeded Mr. Chavez who was the democratically elected president of Venezuela from 1999 to 2013. Maduro narrowly won the election in 2013 by a margin of about 1.5% over Henrique Capriles. In 2015 in National Assembly elections the opposition parties won a majority in the National Assembly. Protests against the Maduro government were followed by a recall attempt in 2016 which was suppressed. Inflation and economic conditions in Venezuela worsened under Maduro with the collapse of oil prices. The devaluation of the currency, high inflation and shortages of basic goods have led to widespread protests. As the situation worsened the Supreme Court in support of the government gradually chipped away at the powers of the National Assembly since 2016, leading to the situation in April 2016 with  the effort to strip the Assembly of all powers and remove the immunity from prosecution of legislators. Maduro is a former bus driver for the city of Caracas bus system, and a trade unionist. He was part of the movement supporting Chavez release after a coup attempt, foreign minister 2006-2013, and appointed Chavez successor in 2012.  Max Fisher and Amanda Taub of the NYT go on to discuss the writings of political scientists, including Dutch expert Cas Mudde, who pointed out that populism often starts its climb because established institutions and elites have become unresponsive to pubic needs. Yet the replacement is with what starts out as an effort to bring fairness- yet ends up creating another elite, suppressing opposition, and creating a new set of problems, even threatening the institutional framework of democracy such as elected assembly as happened last week in Venezuela.  In Venezuela the Chavez populist movement was initially intended to reduce corruption in the court system, the established parties control over media, and ensure oil revenues were used to provide services to poor regions and neighborhoods.  In the process over two decades it introduced a system that set up a Bolivarist class of its own based on socialist goals, failed to integrate the economy into the global economy for modernization, and created an overdependence on oil revenues that hurt the country when prices dropped sharply. High inflation, corruption, shortages of basic goods, and an economy slipping behind neighboring countries in Latin America, are the result by 2017. Seeing the situation in Venezuela in the context of current populist trends in the U.S. and Europe may be a stretch because the situation in Venezuela is unique to Latin America in some ways and is from an earlier period. High inflation, collapsing economy, debt problems and mismanagement of the economy, devaluation of currency, are problems faced by Brazil, Argentina, and other countries in Latin America, happening under conservative as well as populist governments since the 1960's. It is different in two respects, the disconnect with the global economy that prevents modernization, and the trend towards authoritarianism, as seen in Venezuela.     ...