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Analysts fear an oil shock in 2012 similiar to that in 2008. There is similiarity in the situation now and in 2008- as in 2008, the surge in oil prices comes at a time of higher tensions with Iran and shrinking spare capacity. Spare capacity is at 2.5 million barrels a day on average for January and February 2012, according to the Energy Information Administration. This compares with 3.7 millon barrels a day for the same period in 2011. Part of the reason is that global oil demand is increasing in 2012 by 1 million barrels a day, to 89 million barrels a day. Technical and political problems have shutdown another 750,000 barrels a day. The problems begin to kick in during the second half of 2012. The U.S. ban on dealing with the Iranian central bank for oil trades starts in June 2012. According to the International Energy Agency, the EU embargo and U.S. sanctions will take 1 million barrels a day of Iranian crude out of the market. The result will be that demand exceeds supply by the third quarter by 1.1 million barrels a day, according to the U.S. Energy Information Administration. Use of existing reserves in Europe, the U.S. and other countries will make up the gap. The effect will be to put pressure on oil prices. May Brent crude on the ICE Futures Europe exchange was up to $125.81 a barrel, on March 16, 2012, and prices for April delivery were at $107.06 a barrel on the New York Mercantile Exchange....

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Von Mark Schieritz of Germany's Zeit Online describes the changes underway following the election campaigns in the U.S., and France, and the Brexit vote in Britain, all signalling the discontent of people left behind by the tech, capitalism, trade and globalization changes of the last two decades. The appeal of one time fringe politicians using racist slogans and divisive rhetoric to appeal to those left behind, appealing to people lacking intergenerational mobility, and without much hope for a better future, is a serious concern. People who are gullible enough, lack college education, or racially isolated so that they are not likely to look carefully at what is being offered in terms of programs and change of competing parties, and likely to overlook the hard and difficult road for corrective course of action, because of anger and pentup fears. Schieritz cites as part of this change the unanimously approved conclusion in its final declaration at the G-20 meeting in Chengdu, China- "The benefits of growth need to be shared more broadly within and among countries to promote inclusiveness." Yet this can be a sort of "too little, too late."  Bankers who are cited in an email going around Wall Street lack credibility with groups on Main Street, to people adversely affected by tech, trade and globalization changes that have been persistently ignored for over a decade, close to two decades. More convincing is the tone of Theresa May, the British prime minister's first statement outside 10 Downing Street- who spoke of the "burning injustices" and her determination to make this a top priority of her government. Still more convincing are the programs to invest $275 billion over 10 years in infrastructure put forward by the leading candidate in the U.S. presidential election of 2016, to provide easier access to public universities and colleges to those left behind, as a sure way to create new jobs and address intergenerational mobility. In fact every leading candidate had made the loss of upward mobility their central plank already in 2015, long before Trump and Sanders started their campaign. The real hope lies in western leaders Merkel, May, and Clinton, all keenly aware students of changes, all women by the way who have sensed the injustice and have the ability to come up with something new and promising for the future, after learning the lessons of the past. ...

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Rattner looks with alarm at recent figures showing that of 2.65 million jobs created in the U.S. in 2015, only 30,000 were in manufacturing. He reflects on growth in manufacturing with the recovery in automobile manufacturing between 2009- 2013 - during this period employment in the U.S. auto industry went up by 23 percent to 690,000, and employment in Mexico's auto industry went up by 60 percent to 589,000, showing much faster growth overseas. Manufacturing has also experienced decline in private sector wages of 0.8% since 2009, with auto industry wages down 12.7 percent, says Rattner.

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Izzo looks at the diverging picture presented by two Labor Department surveys of unemployment in the U.S. for July 2012- an increase of 163,000 jobs or 195,000 fewer people working. One, the Household Survey is based on survey of individual households counts people and the other the Establishment Survey based on a survey of employers counts jobs. If one person holds two jobs he would be counted twice in the Establishment Survey and once in the Household Survey. If a person is a unincorporated self employed person, a family employee who isn't paid, a farm worker who is employed but not paid he is counted in the Household Survey, but left out in the Establishment Survey. The Labor Department prepares a third measure of the number of people working by adjusting for multple jobholders and for workers not counted in the survey of businesses. By this third measure the U.S. economy added 108,000 jobs in July, which is far less than the 163,000 jobs shown added in the Establishment Survey. Because of the increase in parttime work it is likely that more people are doing multiple jobs which may explain some of this difference. Another reason could be the severe drought in the U.S. that may be reducing the opportunities for work for freelance construction maintenance and day laborers because of restrictions on water use. This shows that it takes several months of data to get some sense of where unemployment is headed, adjusting the numbers for unusual events or weather, and looking behind the numbers to the sectors generating jobs. In the first quarter of 2012 more jobs were generated in the U.S. because of a mild winter, followed by fewer jobs in the second quarter, which required looking at the two quarters together to get a better picture. Adjusting for the long term unemployed who have quit looking is also necessary to get a correct reading of U.S. unemployment levels....

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Italy raised 18 billion euros in a record auction on Oct. 18, 2012, meeting its needs for the rest of the year. Italy's yield dropped to 4.64% on Oct 18. Spain raised 4.6 billion euros at 5.32%. Italy sold most of the BTP Italia bonds to Italian citizens with a 4 year bond linked to Italian inflation and designed for Italian retail investors with a new eBay type internet platform, including a loyalty premium of extra 40 basis points. Italian retail investors have 8 trillion euros in net private wealth and household wealth in Italy is more than 4 times the sovereign debt, according to the Bank of Italy. This is a big difference compared to Spain, because the interest on the bonds remains in Italy for consumption and investment. Spanish households are highly indebted after the housing bubble.

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Mario Draghi, President of the ECB, turned down proposals to let European central banks send money to troubled European governments through the IMF. Draghi said- "we should't try to circumvent the spirit of the treaty, no matter what the legal trick is." The ECB also opposes large government bond buying to bring down yields on Italian and Spanish government bonds. The ECB by majority vote reduced interest rates in the eurozone by 0.25%, bringing interest rates down to 1%, and reversing rate increases under the previous president Trichet. It also made medium term funding available to European banks on better terms. According to a person in the room, German Chancellor Merkel opened the summit saying Germany opposes a plan to let the European Stability Mechanism (ESM) borrow from the ECB. The ESM is the bailout mechanism for future bailouts.

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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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The historical allusions in the media in Greece, Italy and Germany, and cultural perceptions which have increased differences in the European Union. This comes at a time of austerity programs in the Southern tier of EU countries and pressure on Germany to fund the debt reduction in some EU countries.

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Faiola points to public opinion in Ireland that shows the recovery in Ireland looks better on paper than it really is. Opinion polls show a large gap between the views of the government and of people in Ireland. EU estimates of growth in GDP of about 1% is inflated by profits of multinational companies such as eBay, Facebook and Google, a large part of which is repatriated. The multinational companies employ only 7% of the workforce. In reality consumer spending, retail sales and bank lending have suffered, and unemployment is at 14%. The feeling in Ireland is that the austerity cuts alone- spending cuts, higher sales and property taxes- with no effort to support growth, will leave the country in this situation for many years. A ruling by Ireland's attorney general that a referendum is required for approval of the new EU agreement on fiscal discipline, means that a referendum wll be held in June 2012. In 2001 and 2008 Ireland rejected EU treaties, only to obtain concessions and approve the treaty in second referendums. This time the referendum is expected to be seen as a vote on the three year agreement reached by Ireland with the EU, the IMF, and ECB in 2010, as its banks were on the verge of collapse in a property bubble. That agreement imposed strict austerity measures. Under the treaty terms only 12 of 17 EU countries have to ratify the treaty. The Socialist candidate in upcoming French presidential elections, Mr. Hollande, has called for renegotiation of the fiscal treaty to include measures to promote growth. For young people in particular, immigration- to Australia, New Zealand, Canada- is looking like an attractive option. For new graduates jobs are scarce, and cuts in university subsidies mean additional out of pocket costs of over $8000 a year with no student loan options....

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David Kostin, Goldman Sach's U.S. equity strategist and his prediction of the S&P 500 at 1250 at the end of 2012. The S&P was at 1421 on April 1, 2012, the highest it has been since May 20, 2008. In his research note Kostin says that over the longer term the stock market will offer opportunities after a more normal growth environment is reestablished. This is similiar to the view held by John Bogle, founder of Vanguard. For the short term- the 2012-2013 time frame Kostin sees tactical risks, and results below average. The reason he gives is low economic growth and the large degree of uncertainty. The situation in Europe shows slowing to no growth and more deficit problems, and the sanctions on Iran pose risks for oil prices.

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Greek leader Alexis Tsipras of the Syriza party, the Coalition of the Radical Left, talks to Angelos and Granitsas of the Journal. He says it is in the interests of the European Union to continue funding to Greece, but if the EU stops the funding Greece will stop paying its debt. It will then use the funds going to the debt burden for paying retirees and workers. And it will also tear up the loan agreements signed earlier, and scrap plans for layoff of 150,000 workers in the government services by 2015. He would also reverse measures to lower private sector wages. He also looks favorably on nationalizing banks to better channel lending to where its needed. In his view it will be difficult for Greece either way. Even with funding Greece's GDP is expected to fall 5-7% in 2012, following several years of declining GDP.

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Commodities prices hit a low in June before the second Greece election on June 16, with lower unemployment numbers in the U.S. and growth of 6-7% in India and China. Still average prices of oil in 2012 of $115 a barrel are higher than the level in 2011. And corn prices dropping to $5.25 a bushel are still high compared with prices earler. Corn farmers in the U.S. are adding to acreage. The relatively lower prices also give more room for smaller stimulus by central banks to stimulate growth. Freeport-Mining CEO, Richard Atkinson said in a presentation that the growth is coming on top of a bigger baseline for China, India and Brazil. China's copper consumption went up by about 6 million tons a year, averaging 13% growth a year in the period 1995-2010. Now even with slower growth at 6% a year, by 2025 he estimates China's copper consumption at 9 million tons per year. This is a structural change that is supporting commodity prices, says Amrita Sen, analyst at Barclays Capital.

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Palaiologos of the Kathimerini newspaper in Athens, Greece, says the early euphoria of support for Tsipras is fading, as the negotiations with the EU require Tsipras to go back on his election pledges and require difficult choices. He points to a poll from the University of Macedonia putting government support of its negotiating strategy in April 2015 at 45.5%, down from 72% in February 2015. He says the Syriza government has conveyed different and contradictory messages, wasting a lot of the goodwill in Europe for Greece's position, and by backtracking on agreements put Greece back into recession. Greece needs to take responsibility for how deep the crisis is compared to a country like Ireland or Portugal, because of dysfunctional public administration and political systems, says Palaiologos. The EU and Greece need to make a fresh start after all the false starts of the early part of 2015.

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WIth India's oil imports at four fifths of the country's oil needs, the depreciation of the Indian currency, the rupee, is especially painful. The rupee exchange rate has declined from 55 per dollar at the end of May 2013 to 64 per dollar in August 2013, a 14% decline. India provides full subsidies and this accounts for a large part of the current account deficit. Government cuts in fuel subsidies to reduce the current account deficit are diluted by the depreciation of the rupee, with a fall of one rupee in the exchange rate equal to 4 months of cuts in subsidies, according to Moody's analyst Vikas Halan.

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Dow Chemical CEO, Anthony Liveris, is co-chair of the Advanced Manufacturing Partnership, an effort to bring together federal government, industry, universities and other groups to invest in new technologies that would generate good-quality jobs and increase U.S. competitiveness. He writes this letter in the Wall Street Journal to correct two misperceptions. The first, is that government has no significant role in nurturing an environment that is good for business and manufacturing industry. Because other countries, including China, are now operating like companies, it is important not to let the U.S. be in a disadvantageous position. Government has always been involved in its writing of tax and incentive policies, regulations, trade agreements, and creating a climate of certainty. The second, is that the loss of manufacturing capacity and job losses in the last 10 years are different from the job losses in the 1980's. These are not the low tech and less efficient manufacturing job losses of the 1980's, but job losses as a result of moving advanced manufacturing capacity and research and development centers to outside of the U.S. Of the 8 million jobs lost in the last recession, he says two million manufacturing jobs of higher pay and supporting employment in other sectors were lost. His point: its time to focus on expanding manufacturing in the U.S. because manufacturing is the sector with the highest multiplier effect on other sectors. Public-private partnerships are critical to this effort for increasing technology development and increasing investment. This view is supported by other experts....

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The Italian government sold 5 billion euros of three year bonds in Jan 2013 at an interest rate of 1.85%, the lowest since 2010. This is a remarkable change from 2012.

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Wang Xiaofang is a former bureaucrat and writer who documents real life stories of corruption in China's bureaucracy by using fictional characters. A similiar approach by another Chinese writer Mo Yan in literary novels led to him being awarded the 2012 Nobel Prize for Literature. Censorship in China has not affected writings using fictional characters and literary novels of this kind. It may be seen by the government as a way to let the public ventilate some of its frustrations with corrupt bureaucrats and communist party officials in China. It also shows how widespread the problem has become and is a serious matter for the future of the Communist Party. Wang tells the Beijing Bookworm Literary Festival after he entered the official bureaucracy he felt the desire "not to be spiritually crippled." Wang is the author of the Civil Servant's Notebook, which is described as a guide for the 1.4 million people taking the civil service exams in China each year. This suggests that China's new leadership sees this as one of the ways to give right direction to young people joining the civil service, and comes with a new focus on corruption. Wang is also part philosopher in his musings when he says China has lost its traditional culture and cannot adopt western culture, and so it remains confused at a crossroad. This leads to his idea of operators in China's official circles as people who have lost their faith and spiritual home. ...

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ECB study put out in April 2013 shows household wealth and income in eurozone countries based on 2009-2010 data for 60,000 households throughout the eurozone. The household wealth in southern European countries is higher than that in Germany. The study shows why ordinary Germans oppose bailouts for banks, Greece, and eurozone countries that experienced a boom in the 2000-2010 period, a period in which German workers took small pay raises to improve German competitiveness. Germans also see Portugal and Ireland in a different light compared to Greece, Cyprus, Italy and Spain where real estate speculation, lax accounting, tax evasion and favored treatment of certain groups, has created or aggravated the debt problems. Wealth is defined as total assets, including real estate, vehicles, bank deposits, investments and pensions, minus liabilities for mortgages, credit card debt and loans. By this measure German households had an average of 200,000 euros in wealth, and lower than this in Finland and Netherlands. At the median or midpoint German households had 50,000 euros, the lowest in the eurozone, for Greece the median was 102,000 euros. The impact of home ownership is significant in the report, as home ownership is lower in Germany than in Southern European countries, and mortgage interest is not considered favorably in German tax laws. The decline in value of homes after 2010 is also not reflected. Another indicator for comparitive wellbeing is income, and this is shown in figures released in March 2013 from the European Statistics Agency for GDP per capita. For Germany per capita GDP was 29,000 euros in 2010. The average GDP per capita for the eurozone is about 24,000 euros. By this measure Greece is at 21,000 euros, 24,000 euros for Italy and for Spain. Germany being 18-19% above Spain and Italy. If Germans, Dutch, Finns and Austrians are less well off then the argument favors having the banks, creditors, and including depositors, in a burdensharing arrangement for bailout of troubled eurozone economies. ...

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Fuel efficiency rules require average fuel efficiency in the U.S. of 35 mpg by 2016. The debate is now on what to do for 2017 to 2025. New technology such as the P2 systems for hybrids already used in VW, Nissan and Hyundai vehicles makes a 20% increase in fuel efficiency possible. Large investments are being made to bring new technology to bear on increasing fuel efficiency significantly. Government agencies are looking at different scenarios by which the new fuel economy standards beyond 2017-2025 could be set between 47 mpg and 62 mpg. An additional factor is the reduction in greenhouse gas emissions- at 47 mpg the reduction would be 3%, at 62 mpg the reduction would be 6%. Another factor is how much the impact is on the cost of vehicles and reduced cost on gasoline. Here there is a wide range in the numbers for average mpg rules at 62 mpg- with EPA estimates at $2800-$3500 increase in vehicle cost and $5000 savings in fuel cost, Centre for Automotive Research estimates at $9790 increase in vehicle cost. The 62 mpg translates into "real world" actual efficiency of 45 mpg. In April 2011, 17 senators put out a letter of support for the 62 mpg proposal. There is a public value involved in this that is also significant- the reduced dependence on foreign oil means savings in defense expenditures in parts of the Middle East, and an economy that is less impacted by volatility in the price of oil. As this aspect of public value or benefits cannot be quantified easily even though they are significant, this may tend to be lost in the debate and the politics of fuel efficiency. For automakers there is significant marketing value in having a visible and strong presence in fuel efficient vehicles because of perception as forward looking- something that hurt Detroit carmakers in the last decade. During periods of gasoline prices at $5 a gallon this provides carmakers with an extra cushion of safety in securing car sales. Carmakers in one country such as the U.S. also have to worry about what carmakers in other countries such as Japan and Germany are doing- if the standards in the U.S. develop a gap compared to other countries developing advanced fuel efficiency technologies this poses significant risks because of the global nature of the automobile marketplace. See the group "Asleep at the Spigot" for more details on this. Many of these less quantifiable factors do not get the attention they deserve because they are significant from experience but not easily quantified. Throw into this the large unknown of what new technologies not yet developed lie ahead with a burst of effort by one country or another, which bring cost reductions at the same time - and the debate requires as much a good sense of what is the path offering the greatest advantages in years ahead than a pure exercize in numbers. ...

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U.S. auto sales including cars and light trucks reached 17.5 million in 2015, a 5.7% increase over 2014. Larger vehicles including pickup tucks and SUV's account for about half of all auto sales in 2015, with gas prices below $2.00 a gallon in Jan 2016 in most parts of the U.S. The average transaction price was up to $34,428, according to Kelley Blue Book. Auto incentives were up to $3063 per vehicle compared to $2809 ten years earlier, according to Kelley Blue Book. Analysts say automakers will reduce margins to subsidize zero interest loans in 2016 to increase sales. Lower sales are forecast after 2017 as the market will have caught up with much of the pent up demand by then. A plus for the automakers is the lower cost of steel and other material costs, and the better cost structures after bankruptcy, and renegotiated lower union pay scales. Additional plus is new management at U.S. automakers and at Toyota, and the technological advances this management is pushing, including fuel efficiency. Ride sharing, and other services developed by Google, are seen as disrupting the traditional car model to a limited extent. Countering this new development are millenials who are accounting for a quarter of Toyota sales in the last quarter of 2015, according to a Toyota executive....