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Ignazio Angeloni heads the financial supervisory authority setup by EU leaders in 2013 inside the European Central Bank. The NYT's Danny Hakim's interview with Angeloni on the task facing Angeloni and the ECB as it takes on supervision of all EU banks.

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France and Germany remained far apart on approach to banking regulation in Dec. 2012. Germany does not support regulatory powers of the ECB over Germany's small and midsized savings banks which lend to small businesses and consumers. France supports regulation of all 6000 banks in the eurozone by the ECB. Germany also raises concerns about how the regulatory powers of the ECB can affect its powers in setting interest rates. Germany does not support the British position for regulatory powers over London based banks to remain in Britain. Coming up with a new banking supervisor for European banks with regulatory powers of supervision is needed for Spain to get access to additional EU financing. This is also part of the new financial architecture for the eurozone, including deposit guarantees, which needs to be set up.

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Alexis Tsipras, leader of Syriza, Greece's second largest party, is interviewed by WSJ's Bret Stephens. Tsipras describes the problems inside Greece. He describes the bribery in healthcare, tax evasion, burden of taxes on the middle class and honest citizens, a large and inefficient bureaucracy. In its current state Greece would build up debt and deficits all over again if the debts were forgiven tomorrow, says Tsipras. He is for Greece remaining in the eurozone. Tsipras understands the problems Germans have with putting money into Greece with the current state of economic management and lack of conscience of its elite, and why they see this as not fair. He suggests as a model for solving the Greece debt crisis, the London Conference of 1953 forgiving half of Germany's debts and putting the rest on a 30 year scheduled repayment. This would have to come with results in cutting bureaucracy, reducing corruption, and efficient tax collection for Greece democracy to work.

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Hassett and Baker suggest learning from the German experience of the last decade in reducing unemployment, including "kurzarbeit" programs, work sharing, and cooperation between industry, unions and government to reduce unemployment. France is already taking action to learn from the German experience.

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Angela Merkel's call to the Greek president calling for a referendum vote on Greece's wishes to remain in the eurozone. This is denounced by Syriza and the centre left parties. Merkel denies she made the call, but Greece's president says the call was made.

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Compared to precrisis peak in GDP for 2006 the economies of Germany and France are up about 3%, and 1% respectively, with Italy down by close to 10%, and the eurozone down about 2%. Inadequate demand is the largest problem for eurozone companies as the GDP for eurozone increased barely in the 3rd quarter 2014, increase of 0.6%.

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Britain's Tax Service reports the number of taxpayers reporting incomes of 1 million pounds a year declined by over 60% in fiscal 2010-2011 from the prior year. In 2010 the Labor government of Gordon Brown introduced a 50% income tax rate for this income group, up from 40%. The number of million dollar incomes filed declined to 6000 from 16000 in 2009-2010, and revenues declined from 13.4 billion pounds or 9% of total taxes from taxpayers to 6.5 billion pounds or 4.4% or about half. The Labor government had hoped for additional 2.5 billion pounds in revenue, showig unintended consequences and surprises in economic policies.

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Laurent Berger, head of the French Confederation of Labor, C.F.D.T., is a moderating force in France as president Macron leads an effort to make a revision to France's labor code. With a large parliamentary majority president Macron is expected to push for a shift to a Scandinavian version of "flexible security," that allows companies and the economy to adjust the work force, introduce retraining and create flexibility so that new jobs can be created. His union is now the largest, after surpassing the militant General Confederation of Labor. Issues in labor changes proposed by president Macron are- direct negotiations between management and employees bypassing unions, and a cap to compensation in unfair dismissal cases. Berger's view is that though the interests of labor and management conflict, there has to be dialogue instead of constant confrontation. He is willing to see some jobs lost if business creates new jobs with improvement in the economy. Macron has summoned labor leaders for marathon talks. ...

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Kessler says the assumption that pension systems such as Calpers (California Public Employees Retirement System), can make returns of 7.5% is fantasy considering that U.S. Treasury bonds are yielding 1.74%. Calpers reduced its expected rate of return on its portfolio to 7.5% fom 7.75% in June 2012. Public pension funds in Illinois use 8.18% for expected returns. U.S. public companies with defined benefit pension plan assets of $1.3 trillion use an expected rate of return of 7.5%, even though these assets have return of 5.6% since 2000. Kessler's estimate for expected rate of return is about 3%- fixed income yielding negative real rates of return and pulling returns down. For equities he estimates return at the total of inflation component at +2%, productivity component at +2%, and multiple expansion at -1% because interest rates are at zero.

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A call from German chancellor Angela Merkel to the Greek president to hold a referendum on Greece's participation in the eurozone. Political parties in Greece denounced it as considering Greece a "protectorate" coming from the Syriza party, to calling it "unacceptable from the New Democracy party. Karel De Gucht, trade commissioner of the EU, and Olli Rehn commissioner of economic affairs, issue conflicting statements. Gucht says the EU and ECB are working on preparations for Greece's exit, and Rehn says that this in not the case, that Greece is staying in.

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The June 2012 referendum in Ireland on the EU Fiscal Treaty.

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The basic architecture to support the euro currency is being proposed in a seven page report prepared by presidents of the EU Council, the ECB, the EC and the Eurogroup. This includes deposit insurance to protect against a run on banks, a European bank supervisor with possibly the ECB in that role, and the European Financial Stability Facility, the eurozone rescue fund, acting as a backup if deposit and resolution funds need support. Currently the European Banking Authority setup after the 2008 crisis works with central banks of the individual countries to regulate the banks. In contrast to sanctions imposed for overspending under prior EU agreements the report says new powers would be transferred to a European Authority on the fiscal side so that overspending can be controlled at the European level and budget deficits are set at the European level.

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European Union leaders including European Council president, Herman Van Rompuy, European Commission president, Jose Manuel Barroso, ECB president Mario Draghi, and Eurogroup finance ministers head, Jean-Claude Juncker, draw up a 10 year road map for "a genuine economic and monetary union." The prime ministers of Italy, France and Spain push jointly for deposit insurance to cover European bank deposits, Europe wide banking supervision, and bailout funds to directly purchase sovereign debt of Italy and Spain without conditions. This takes place June 22-27, 2012, with the EU leaders increasing pressure on Germany for the first time in concerted fashion. Ms. Merkel and her coalition partners the Free Democrats see this as an effort at mutualizing debt. Merkel says Europe will not have total sharing of debt "as long as I live," in her talks with Free Democrats.

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The agreement reached Dec. 12, 2012 to setup a single supervisory authority for large banks in the eurozone is a major and historic step. The ECB takes up this role after parliaments in the eurozone countries ratify the agreement by March 2013.

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The IMF's changing views on the value of fiscal austerity. In the current debate about the value of fiscal austerity, there is the IMF view, a German view based on its own experience, and the views of other countries in Europe. The IMF's view has shifted over time. The IMF World Economic Outlook 2010, describes its view of the effects of austerity measures in the form of spending cuts and tax increases- "Fiscal consolidation typically has a contractionary effect on output. A fiscal consolidation equal to 1% of GDP typically reduces GDP by about 0.5% within 2 years and raises the unemployment rate by about 0.3% percentage points." Over the longer term there are benefits as the private sector is not crowded out in the search for captal funding by the excessive government borrowing. The IMF's economic models suggest that it would take 5 years before reaching the breakeven point when the benefits of austerity measures exceed the effects of austerity. The German view held by German central bankers is that the actions stimulate growth in the short term. Manfred Neumann, professor emeritus at the Institute for Economic Policy at the University of Bonn, says this is called the "German hypothesis" as it reflects the experience of Germany from austerity actions taken by Germany. Laurence Ball, professor of Economics at John Hopkins University, is critical of the "German hypothesis" and its application across Europe in different situations. Germany is a large exporting nation and exports helped counterbalance the effects of austerity measures. Within the eurozone with fixed exchange rates the exports of less competitive countries cannot be boosted through devaluing the currency to gain price competitiveness. The other problem is that with interest rates close to zero in the euro zone the central banks cannot cut rates aggressively to counteract the effects of spending cuts. The problem gets compounded when a number of countries are taking austerity measures at the same time accentuating the downturn....

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Jim Yardley points out the controversial nature of the referendum in Greece on July 5, 2015. It is flawed in 3 respects- it makes no mention of Europe, the details of the agreement are not clear to voters, and the "No" vote is framed in terms of the "Oxi" or "No" vote of 1940 in Greece to Mussolini for annexation of Greece. No sane minded person can confirm that this has anything to do with the annexation of Greece by foreign powers. It had one additional flaw- the government and Tsipras simply went ahead and campaigned for a "No" without talking to its European partners. Landon Thomas Jr shows how the difficult dynamic and confrontation between the eurozone negotiator Dijsselbloem and the Greece negotiator led to the collapse of talks on June 25, 2015, playing right into the paranoia of an inexperienced Greece administration about the EU's intentions. Only over a week later July 7, 2015 the new Britain trained Greece negotiator Tsakalotos from St Pauls School and Oxford was able to change the very tone of negotiations leading to the Third Bailout Program. ...