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Key aspects of the new tax plan of the Trump administration are a 35% top tax rate for individuals, instead of the current 39.6% top rate, and lower brackets at 10% and 25%. Standard deductions are to be doubled, other deductions except for mortgage interest and charitable giving, are to be eliminated. The deduction for state and local taxes will be eliminated, with this hurting residents of high local tax states such as New Jersey, New York, and California. Gary Cohn, head of the National Economic Council and Treasury Secretary, Steven Mnuchin,  have helped formulate the plan. Cohn sees a big opportunity here for a huge tax cut and simplifying the tax system. The corporate tax rate would drop from 35% to 15%, and future foreign profits would owe little or no taxes. Corporate tax rates are lower in the UK, Germany and Japan- closer to 20%, and France has a similar 35% corporate tax rate. The hope of the Trump administration is that this will generate 3% GDP growth rate and spur creation of jobs. Still to be decided at what level tax brackets for individuals will be set, and what level earlier foreign profits will be taxed, and the child care break. ...

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China's COSCO taking an ownership stake in Hamburg port was opposed by the Greens and Free Democrats parties in the three party coalition government with the SPD in Germany. Scholz of the SPD went ahead over their opposition saying this will preserve jobs in Hamburg port. In the compromise reached the ownership is capped at 24.99% so that no foreign country owns a majority stake. At one point Germany's cyber security agency BSI classified the Hamburg port as critical infrastructure.

China is Germany's largest trading partner  for 7 years with trade reaching a record $320 billion.

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One of the Russia's goals was to form a rival economic bloc of former soviet republics. Instead the Ukraine invasion has led to disastrous results for the economies of this region which are interconnected. Research from the World Bank shows the Russian economy declining by 11% and with further economic impact upto 25%, Ukraine's economy by 45%, former soviet republics like Tajikistan, Uzbekistan, Kyrgyz Republic, by 30% because of loss of remittances and the fallout from the economic effects on Russia. Belarus would see its economy shrink by 30%, Moldova by 30%, according to the World Bank. 

The miscalculations of all sides from leadership in Russia to that of Merkel in Germany, and the invasion itself, is putting severe economic losses on this part of Europe. Many of these economies will have to take loans from the IMF and the World Bank to remain solvent. 

 

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Lessons can be learned about careful reopening in fighting the coronavirus from other countries. Here the Netherlands experienced a rise of cases by 500% within two weeks of reopening after some poor decisions. The Mark Rutte government decided to open all bars and nightclubs resulting in a twelve fold surge in these locations in one week. Most of the new coronavirus cases were in people 18-29. Data from Dutch public health institute shows 4 out of 10 new cases linked to bars and nightclubs with 262% surge in cases for young people 18-24 years. This goes to show that with the vaccination drive what we see is the cases shifting to younger people, the unvaccinated, and to activities like nightlife. People going to work, or doing hybrid remote work with trips to the office, workers in factories, people doing essential shopping, are not causing the rise in cases. Much can be learned from these examples in working out reopening that does not lead to new crises with surging cases in new waves of coronavirus. Earlier in 2020 summer tourists who ignored mask and social distancing restrictions in Croatia brought on a post summer coronavirus wave to Germany and Austria. This time Greece and Portugal are introducing restrictions. Greece plans to make vaccine health pass required effective July 21 to go into restaurants. Another lesson from Netherlands this week is that a 20,000 person music event of 2 days in Utrecht where QR codes were required showing vaccination or PCR tests failed. About 1000 cases were attributed to the Utrecht event alone. Reasons given are that people faked the QR codes, or that the covid testing system produced too many false results as much as 20%. The same QR code system was followed at nightclubs resulting in big problems. One can never be sure that things work as expected and the risks are great as this adds up. Even vaccines offer limited protection and only if fully vaccinated depending on the type of vaccine. One dose of the vaccine is simply inadequate, and obesity, other morbidities can lead to problems. Withdrawing the mandatory use of face masks in most situations is also a risky decision of the Dutch government. Face masks offer the added protection at a time of variants that spread quckly, and when large parts of the population have only one dose of the vaccine, some elderly are still not vaccinated, and young people have not been vaccinated in large numbers. ...

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A report by international inspectors says Greece's funding requirements can be met only if bondholders such as French and German banks take writedowns of 60%, or if more loans are made to Greece more than planned. This reinforces Germany's position that Greece's debt be reduced to less than 50% for a long term sustainable solution. Volker Kauder, conservative leader in Germany's parliament, told the German weekly Der Spiegel, "the governments in Europe are going to have to get used to this," (the German position). Germany opposes using the ECB to print more euros to make loans to the eurozone bailout fund, the EFSF, which would relax prudent financial practice. After warnings from Kauder and other German parliament members, Merkel is staying firm about the German position. German law requires Merkel to get approval from a parliamentary budget committee for any additional loans.

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A Kyodo News poll shows about 60% of Japanese want the Olympic games cancelled. Japan faces another wave of the pandemic with a surge in Osaka and other cities. The government's handling of the pandemic is disapproved by 71% of Japanese in a Kyodo News poll. Over 80% are unhappy with the slow vaccine rollout.   India faces a surge in cases public dissatisfaction that is similar to Japan and other countries in Europe. France and Germany have a slow vaccine rollout. In India vaccination drive is affected by a lack of supplies as in France and Germany with shortages of vaccine. The European Union in April signed contracts for over a billion doses with Pfizer and India has plans for ramped up supply of its Covishield and Covaxin vaccines to 2 billion doses by December 2021. This shows how difficult it is for advanced countries and major pharmaceutical producing countries such as as India to vaccinate their populations quickly in the initial stages of the vaccination effort. In July the vaccine effort would be in its 7th month and vaccine supply constraints are expected to ease as a result of aggressive action by governments in EU, France, Germany and India. This will also enable addressing needs in Latin America, Africa and South East Asia. ...

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Awareness is growing in the US, Germany and other countries that a 4th Covid Booster shot will be needed. The plan is to start with people over 60 years.

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Hamburg is the key city in Germany's trade with China. About half of $200 billion in trade between Germany and China passes through the port of Hamburg. The South China Morning Post looks at the dilemma in Hamburg over relations with China in the post Merkel era. Merkel maintained strong and close ties with China signing an agreement with China her last year in office. This was when Mr. Trump was US president. Since then president Biden has changed US policy towards Europe. The South China Morning Post points out that The Greens and the FDP key partners of Scholz in a new coalition government, are critical of Merkel's policy towards China in its overall relationship with the US and the rest of the world. Scholz was mayor of Hamburg, and a partner in Merkel's coalition government in which he was vice chancellor. Scholz has talked very little on what the new German policy would be. China seeks to maintain its economic ties in the next few years with Germany while reducing its dependence on other countries under Xi Jinping's new vision for China that seeks to depend less on trade and real estate for its economy and growth. Yet the pace of change has accelerated during the pandemic with a new global supply chain emerging from the chaotic years of 2020-2021. US policy under president Biden is similar to policies under Franklin Roosevelt in the 1930's during the economic and political crises, and look to be setting a new path to the future for the rest of the world. ...

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In May 2023 Germany's Scholz overruled Habeck to let sale of 24.9% of Hamburg port to COSCO go through. Here is how over 2000-2016 China build its world class network of containerized shipping ports while the second Bush added the war in Afghanistan to the wars in Iraq started by Reagan/Bush. Without defense costs China built this world ports network. Piraeus in Greece, south of Athens, a port concession acquired in 2004 Antwerp in Belgium (Austrian Netherlands), a minority stake in a container port acquired in 2008. In 2013 with sale of Terminal Link ports in a Cosco 49% stake deal by CMA of France CMA holding 51%, China has stakes in Zeerbrugge and Antwerp, Busan South Korea, and Le Havre, Montoir and Fos in France, Xiamen in China, Miami and Houston in US. Rotterdam, Netherlands- Cosco acquired in 2016 a 35% stake in Euromax Terminal in Rotterdam from Hong Kong's Hutchison's Holdings for $125 million. Valencia and Bilbao majority  51% stake for $270 million, when JP Morgan paid as much as $950 million to ACS of Spain for these ports after the 2009 crisis led to Spanish divestments. Today measured in TEU shipping containers China sends goods to Europe 10 times what it takes in through Spanish ports. ...

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German Heath Minister Karl Lauterbach says vaccine mandates are the only way out of this pandemic. Speaking to German daily Welt he said, gaining immunity through infection was a "dirty vaccination" that made little sense as it would not protect one against a more harmful variant. He saiid that it "would be naive to think that omicron is the end of the pandemic." Omicron would not make one immune to the next viral variant. "No one can guarantee that a variant will not develop soon that is much more dangerous."

Lauterbach says 25 million doses of the Moderna vaccine have been procured that would be enough for 50 million booster shots to be done in the first quarter of 2022.

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President Macron calls it "the moment of truth" for Europe. The European Recovery Fund includes $500 billion in nonrepayable money to be handed out to countries hit hardest by the pandemic as a show of solidarity and support for the European community. Only one lone holdout are the Dutch, who have not earlier and today show little solidarity with the European community. It is supported by Merkel and the CDU, Macron, EU president Leyen, the head of the European Central Bank's Lagarde. This report in BBNC shows how the funds would be distributed- Italy 81 billion euros Spain  77 billion euros France   39 billion euros Poland 38 billion euros Greece  32 billion euros Germany 30 billion euros Portugal 17 billion euros France plans to put the 39 billion euros towards its own 100 billion euros recovery plan. 20 billion euros of this will go to insulating buildings and for bicycle lanes in cities in France.   ...

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Argentine soccer star Diego Maradona who died at 60 after health problems. Many controversies surround Maradona, unlike Messi and Reynaldo, two of the prominent players at this time from Argentina and Portugal. Unlike the period when Pele and Maradona dominated, today there are many good players and many good coaches such as the coaches of Liverpool and Manchester City teams from Germany and Spain, each having made soccer the single largest worldwide sport in history. New younger players are also taking the place of older players as seen in the Spanish and German teams in the Nations League soccer games. Coaches and team owners shun the publicity that drives the cost of players up and prefer to give younger unknown players a chance, which is itself a good thing for the game.

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Mark your calendar for May 29 when You Tube will host screenings  of the virtual film festival from multiple locations- Cannes France, Venice Italy, Berlin Germany, Toronto Canada, and New York. This is the "We Are One- Global Film Festival," with virtual cinema program for 10 days with feature films, documentaries, shorts and round tables. Films can can inspire and bring people in different countries together in a useful virtual format combining many of the best film festivals worldwide.

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After years of decline in Germany's rail system Deutsche Bahn this infrastructure suffering from old technology, broken bridges, lack of drivers, and train delays for 1 in 4 trains, is now up for revitalization. In 2017 about 2 million passengers claimed compensation for delays and were given average of 19 euros. 

ICE 4 is the new generation of high speed trains holding 830 people and 350 metres long. speed is 250 kilometres an hour and costs 22% less for energy.

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Most of the reporting on Ukraine follows the war. Questions are asked how will this conflict end? This report in Der Spiegel is one of the rare reports that looks at the Ukrainian economy with images and reporting from the ground that answer that question. If the Ukrainian economy is surviving in 2023 then Ukraine will continue long after a peace settlement is reached. It shows for instance that supermarket shelves are well stocked. It shows energy from half a million generators keeps the lights on and companies working in Ukraine. The steel industry is mostly destroyed yet the software industry continues to grow. Unemployment is 30% even after hundreds of thousands of younger Ukrainians are at the war front. Of about $62 billion promised by US and European countries about $31 billion has actually been transferred to Ukraine. The IMF has created an exception for aid to Ukraine with offices in Kviv and Brussels. All defense needs are covered from the Ukraine budget. Before the invasion in Feb 2021 defense took up 9% of the budget, now it takes up 42% of the budget. Another 16% for public security. For social benefits 16%, and another 26% for other expenditures. By having an economy that is functioning and life even in light from generators and solar energy, with supermarkets well stocked and providing office space for workers, with aid mechanisms working. Ukraine has already emerged as part of Europe, tried, tested and come through adversity of the worst sort. It is supposed to join the European Union, yet Der Spiegel says it is already tightly integrated into the EU. Its power grid was integrated with the EU power grid before the war, and nuclear power was sent to the EU from Ukraine before Russian attacks on the nuclear plant. Then transmission lines brought energy to Ukraine from the EU. The EU takes in 80% of Ukraine agricultural exports compared to 20% before the war. Even at the risk of lower prices and hurting farmers in Poland, the Polish government has allowed large imports of agricultural products into Poland. The close links with countries of the EU that share a border with Russia have increased. The problems now are that Ukraine after this war will have severe shortage of manpower. Already with the fall of the Soviet Union Ukraine lost about 8 million people and population was 44 million before the war. About 8 million people moved to Ukraine in the one year following Russian invasion. Of this 1.5 million stayed in Poland, the rest went on to other countries in the EU or returned. The countries such as Germany, Finland, Czech Republic have labor shortages of their own and encourage refugees to stay. Rebuilding is estimated to cost $131 billion. Yet as is evident in Poland after most of the damage from the second world war in Poland it was rebuilt using modern technology. Ukraine survives, its life goes on, is the message from Der Spiegel. In this way the war's outcome is already evident. Much of it comes from the European Union having sensed that attacks made with impunity would endanger all of the European countries when made by any dominant power. This is also what Cambridge historian Brendan Simms has shown about European history for the past 500 years in History of Europe- The struggle for Supremacy 1452 to the present. No one country says Simms was able to act with impunity and pose athreat to its neighbors as all other countries in Europe rallied to prevent this. This war is no exception.   ...

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A long overdue wage agreement gives pay raises to teachers and state employees in public sector. State employees will get 8% pay raise implemented over 33 months. By end of 2021 state employees would make at least additional 240 euros per month. The deal impacts 3.3 million people in Germany- 1 million state workers and 2.3 million civil servants and pensioners. Extra money was allocated for health care workers who receive additional 120 euros per month. Child care workers at daycares and teachers also get upto 105 euros additional per month on top of the raise.

There are severe shortages in schools, daycare centers, hospitals, and this helps to make the public sector more attractive for people to join. Making these professions more attractive was a dire need in Germany not tackled earlier.

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Emmerentze and Germano provide this exceptional look with wide ranging interviews at a brand which has failed to make headway in the U.S. market for 2 decades, after being a prominent brand in the 70's and slipping ever since. Adidas share price declined by 38% in 2014, declining to 57 euros, recovering to 70 euros by March 2015. The economic crisis in Russia affected Adidas sales. A major problem area is the U.S. market where Nike has made major progress, and other competitors such as Under Armour and Skechers are rapidly increasing market share. Adidas is now No. 3 behind Under Armour in retail sports apparel and footwear sales, according to Stern Agee and SportsScanInfo. The U.S. operation has been tightly controlled from headquarters in Herzogenaurach, in a rural part of Germany. During CEO Herbert Hainer's leadership since 2001 share price quadrupled but the U.S. operation has languished, because say retail experts the operation does not reflect the culture savvy management style of Nike and other U.S. competitors. U.S. sales are 43% of the global athletic apparel and footwear market, and the global market of $51.6 billion moves in relation to fashion trends set in the U.S. market. CEO Hainer and managers in Germany are seen as very focussed on spreadsheets and analytical approach to sales in over 100 countries. The only design studio outside headquarters in Portland, Oregon, was setup in Brooklyn, N.Y. recently, and the 4th CEO during Hainer's leadership since 2001 is the first to be given some degree of autonomy in making design and marketing decisions. Nike's market share in athletic footwear has increased from 35% in 2005 to 47% in 2014, as Adidas remains stuck at about 10%. The Reebok acquisition for $3.8 billion in 2005 is seen by U.S. Adidas managers as a distraction. Retail store executives visiting Germany say Adidas product cycle from design to product introduction of 18 months was just too long to meet the rapidly changing preferences in the U.S. This is now being cut to 6 months. In recent years Adidas has expanded rapidly in emerging markets but management has failed to grasp the fact that trends in growing markets such as China, India, Brazil and Mexico are set by pop culture trends in the U.S. ...

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China surpassed Germany as the world's No. 1 exporter in the first 10 months of 2009, with $957 billion in exports compared to Germany's $917 billion, according to customs data compiled by Global Trade Information Services, a Geneva based firm. With the global financial crisis China's exports fell 20.4% in the first 10 months of 2009 compared to 27.4% for Germany and 21% for the USA. Global consumer spending has fallen more than the capital goods and machinery exported by Germany. Yet these numbers suggest that there has been no significant change to the export models of the two countries even after the global economc crisis revealed cracks in the export model.

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Germany's central bank, the Bundesbank, has 495 billion euros in claims on the European Central Bank through the interbank payment system known as Target2. Hans-Werner Sinn, president of the Ifo Institute in Munich, says the breakup of the Euro zone would mean that this claim would be put at risk. Data compiled by Tornel of the University of California, Los Angeles, and Westermann of the University of Osnabruck, Germany, show Target claims going from 7% of Bundesbank assets in the beginning of 2006 to 64% by October 2011. Collateral on these loans held by the ECB is mainly sovereign debt of the financially weakest ECB countries such as Greece, Ireland, Portugal and Spain. Losses on these loans are to be distributed among 17 eurozone central banks according to the proportion of their share in ECB capital, with Germany's being 28%. However with dire finances in some countries Germany could end up with a much larger share of losses. This gives Germany one more reason for the statement that the breakup of the eurozone is unthinkable....

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How European countries Germany, Poland, Britain, France, and Italy are increasing their defense forces and defense budgets to counter Russia's invasion of Ukraine and its military preparations is shown here in DW.com. Under chancellor Merz Germany plans to invest 5% of its GDP in defense for the first time and build Bundeswehr defense forces as the best in Europe. A key factor says DW.com was the speech of chancellor Scholz three days after the invasion of Ukraine, a speech that changed minds in Germany about the needs for defense in the 21st century. It is called the Zeitenwende or turning point speech on Feb 27, 2022.

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Antonis Samaras continues his efforts to get the EU to agree to a two year extension for deficit targets agreed to in the March 202 bailout. He meets Merkel in Berlin, Aug. 24 and Hollande in Paris, Aug. 25. Merkel's coalition partners the Free Democrats oppose an extension. The opposition Social Democrats leader Steinmeier tells the Frankfurter Rundschau newspaper "its not very smart to abandon all conditions for aid over an extension of 12 months." Samaras tells the Sueddeutsche Zeitung newspaper: "our economy shrank 27%. Greece is bleeding, It is really bleeding." And German finance minister Schauble tells Germany's SWR2 radio that its too early for Greece to come back and say the agreed aid is insufficient considering that its ony 6 months since the March 2012 agreement. Merkel and other leaders in the Christian Democrats say they will wait till a report from the troika (the EU, ECB and the IMF) in October 2012 before responding.

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The terms of the Greece bond deal with private bondholders of March 2012, in which Greece's bondholders (mostly French and German banks) took about 53.5% loss from the face value of exisiting bonds. The deal was accomplished through a swap of new bonds with extended maturities of 10-30 years for bonds with shorter maturities and by reducing the face value of the new bonds.

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Economy Minister Habeck says- "Our energy system will be structured differently: we will have 80% renewable energies by 2030."  Germany will close its last 3 nuclear plants this week. Germany is shutting down all nuclear energy when other countries are increasing reliance on nuclear energy. Westinghouse is building Poland's first nuclear plant. Britain, France and Finland are increasing nuclear energy with its very low carbon emissions. Biden administration in the US is backing the building of a new generation of smaller nuclear reactors. Mr. Habeck the Economy minister says for the short term Germany has its natural gas storage tanks half full with the winter heating season over. New LNG terminals and imports help replace Russian supplies. In the long term Germany is way ahead in renewable energy than other countries and will craft its own solution in its own way.

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France plans to increase military spending from 295 billion euros to 400 billion euros for 2024 to 2030. Some of this will come from reform of the pension system that takes up 13.1% of economic output by raising the retirement age from 62 to 64 years. A million people protest in Paris on Jan 20. One of the problems in implementing this is that in France there is significant age discrimination for jobs compared to Germany and other countries. This means workers would have to wait longer for pensions even workers with good qualifications looking for work. Efforts to tackle this cultural issue with companies biased against older workers are lacking.