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The October 2012 meeting of EU leaders ends with agreement for setting up the EU banking supervisor in the course of 2013. German chancellor Merkel turned down Spain's push for direct aid to its troubled banks and not aid from the ESM bailout fund to Spain which would increase Spain's sovereign debt. The Spanish government has indicated that it might take 40 billion euros out of the 100 billion euros approved by the EU for Spain. Merkel's view is that any direct aid will only go for future recapitalization not to clean up the mess at Bankia and other banks that stems from the failure of Spain's banking regulators and the housing bubble. Merkel said at a news conference: "If recapitalization is possible, it will only be possible for the future." Merkel also said preparations to set up the single banking supervisor would probably go into 2014, and by then "we won't have any more problems with the Spanish banks- at least, I hope not." Germany sees the need to have a carefully developed banking supervision system setup rather than a hurried approach. Merkel is aware that this might be seen as action taken to avoid committing German taxpayer money before elections for chancellor in Sept 2013- "No matter what I'm going to say, it will probably not be the right answer by your standards." ...

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Carlos Tavares runs Stellantis the company that combined the operations of France's Peugeot, Italy's Fiat and America's Chrysler right out of his living room in his Lisbon, Portugal home one week every month. He is a believer in the advantages of hybrid work model and says most of the 75,000 workers at the company can work remotely most of the time.The quality time that is generated in this new work model that allows life balance and getting fresh air walks outside is needed when you consider that auto companies such as his are embracing world of electric cars- Stellantis will have 75 models of electric cars by 2030 In this interview with the WSJ shown here he says the fact that one is giving back high quality time that otherwise goes to commuting means you get more time during the day. Carlos Tavares says remote work is an opportunity to recreate a better life balance. He doesn't see any risk in it at all. He sees how hard people are working, harder than they did before, and says giving back one half hour or two hours of quality time actually helps the process of getting good work. Look he says after a long day of remote work people need that time to go out and have a walk for an hour just to refresh one's mind, because the work was so intense. Tavares asks why shouldn't we trust each other? He believes it is the only way to go. Asked about his own work routine for remote work.He says it is the Portuguese routine of  7 am to 4 pm or 5 pm and then an hour out for a walk. He has a small desk in his living room, and he is sitting there with his iPad, grandkids are going by but nobody sees them. Does he miss the face to face contact? He does says Tavares. He still sees other employees as he does go to the office. What about mentoring for junior  employees? This does not have to be five days a week, you may want coaching one day a week, what you don't want is someone on your back five days a week. For Tavares it is all about the quality of time that is used. On company culture the much abused word Tavares makes some good points. If you say this is the culture and hand it to somebody then how do you get that creative mind to exercize his own judgement, how do you get diversity of thinking. Tavares is forthright and honest here- he says if I give you a culture and put you in that box I will get it wrong, and by killing the valuable diversity of thinking I will make it counterproductive. Actually with French, Italian and American operations under one roof and employees of 170 nationalities there is a value in appreciating the value each employee can bring. Practices at Stellantis- Tavares says if you want your people to be in game shape or in great shape mentally don't call them or email them on weekends, so that they can use the weekend to recharge themselves. He even apologizes for calling on a weekend. Or if you email your people tell them to not respond till Monday. ...

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An account by Journal reporters based on over 25 interviews with eurozone policymakers shows how the central players in the eurozone drama acted to defend their national interests during the period April to July 2011. On one side France's president Sarkozy, Frenchman Claude Trichet at the European Central Bank, arguing in favor of the banks not to take bondholder losses or haircuts on loans made to Greece. On the other side the Bundesbanks Axel Weber, and Jens Weidman, Jurgen Stark and German Finance Minister Schauble. The Germans argued strongly for bondholder losses to take responsibility for bad loan decisions by French and German banks. French banks had committed more loans to Greece than German banks and had more at stake. German public opinion was strongly against German taxpayers paying for the losses, making German politicians insistent that European banks take losses on their bad loan decisions, or Germany would not support additional loans to Greece. Throughout April to July the two sides were locked in an impasse. The French feared losses for their banks and a Lehman Brothers bankruptcy style situation. The Germans at the Bundesbank and the Finance Ministry were equally insistent. A July 2011 summit meeting did not settle the issue. The events not covered here from the July to the December summit of eurozone leaders resulted in bondholders taking 50% haircut on loans to Greece, reducing the debt burden in Greece after austerity measures led to popular protests. The French pushed hard for the ECB or the EFSF to be allowed to make large purchases of bonds of troubled eurozone countries in an effort to protect Spain and Italy from contagion through higher bond yields. The Netherlands and Finland supported Germany's position. German bankers Weber, Weidman at the Bundesbank and Finance Minister Schauble opposed large scale buying by the ECB of Italy's and Spain's bonds and Chancellor Merkel said about a common eurobond that "this is not going to happen." Governments changed in Greece, Italy, and Spain by Dec. 2011, which committed to austerity programs and spending cuts. Italian Mario Draghi was appointed with German support as new head of the ECB. In late December 2011 Draghi launched the Long Term Financing Operation for lending unlimited amounts at 1% for three year loans to European banks and relaxing the terms to accept government bonds and other debt as collateral for loans. The effect of this was to provide a large infusion of liquidity into the banking system in Europe and drastically bring down the yields on bonds issued by Italy and Spain....

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A 3 year old lawsuit by Viacom against Google's You Tube, was decided in favor of Google. Google was granted a summary judgement in this case. Viacom claimed that You Tube tried to exploit Viacom's copyrighted works and make a profit on them. Google's argument was that it was protected by the Digital Millenium Copyright Act. Viacom had sought more than $1 billion in damages. Judge Stanton said that general copyright infringement was not the same as knowledge of specific and identifiable infringements of individual items. In this case once Google received specific notice that a particular item infringed a copyrighted work, it quickly took that item out. And none of the aleged video clips are on the site.

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This editorial in the NYT praises the effort to bring peace to Colombia after years of conflict. President Santos of Colombia met U.S. president Obama at the White House in Feb 2016, following successful peace talks in Havana between the Santos government and the FARC guerilla group. The U.S. will provide $450 million in assistance for legal institutions, education and the economy. A new approach will have to be developed for the anti-drug effort.

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Winfried Vahland, the VW executive chosen to head the U.S. and Mexico operations by new VW CEO Muller, turns down the position. Vahland is one of the most experienced executives at VW, heading the China operations, and since 2010 in charge of the Skoda operations based in the Czech Republic. This is a setback for VW as it looks for ways to improve the management at all of its operations and make organizational changes.

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Tata's new water filtration device called "Swach," for pure, sells for 999 rupees ($22.50), and is expected to sell 1 million units a year. The head of Tata Chemical's water-purifier business, Sabeel Nandy, says the demand in India is huge, about 250 million households. The goal is to put a purifier in these households to save them from water-borne diseases. The device has similiar potential in Africa, Southeast Asia, and Latin America.

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Caixabank based in Barcelona, Spain's third largest bank, says it has set aside 960 million euros as provision for expected real estate loan losses in 2012, up from 373 million euros in 2011. This was required under new rules set by the Spanish government. Most of the earnings in this quarter were set aside as provisioning for losses, with net profit down to 48 million euros from 300 million euros the prior year quarter.

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New car sales are increasing rapidly in the EU market in 2015. For the 1st quarter 2015 sales were up 8.6% to 3.5 million units, and 11% in March 2015, over the prior year, according to the European Automobile Manufacturers Association. Sales up significantly in Spain by 41%, in Portugal by 42% and Italy 15%, Greece and Ireland by double digits, France 9.3%, Germany 9%, for March 2015 over the prior year.

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Fiat-Chrysler's plan to become a Netherlands based holding company with easier board requirements, UK domicile for lower tax rates , and a New York listing for access to deep capital markets. With the change comes financial reporting to U.S. generally accepted accounting principles which does not allow capitalizing research and development. Lahart cites ISI Group analysts that show 2013 R&D capitalization boosted earnings before interest and taxes at Chrysler by 60%.

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The first significant action to help homeowners threatened with foreclosure comes from Sheila Bair, Chairman of the Federal Deposit insurance Corporation, one of the few people after Bernanke and Paulson who have shown initiative and foresight in the current crisis. Bernanke and Paulson had the foresight to open the Fed lending window to investment firms like Lehman Brothers and others but little has been done for homeowners to have significant impact. When interviewed on television in the days surrounding the Bear Stearns crisis Sheila has shown a good grasp of the issues and courage to take the initiative. This action is similiar in line to what Martin Feldstein has suggested on the pages of the WSJ for some time now. Martin wanted the Federal government to step in to loan homeowners the 20% of their outstanding loan and work towards bringing the homeowners payment to an affordable sum. According to Feldstein's calculation this would be about the right amount as a percentage of their loan so that homeowners rationally would not be better off walking away from the loan as the best possible decision under the circumstances. If the rational option was taken under a scenario that homeowners would get no direct help here is what would happen even though it may be intuitively read in one's mind. Homeowners would walk away in increasing numbers, it would become the popular option, one that has happened in prior housing crises in Colorado for example but this time it would be spread out across America, making it dangerous. This would launch a downward spiral or cycle in which the more homeowners walk way, or default the more house prices drop, and the more house prices drop a new group of homeowners who previously had enough equity in the house now because of the last price drop enter the category of homeowners who would be better off just walking away as a rational option. During the next wave this gorup would default and set the spiral or cycle moving again to lead to further price declines and another group of homeowners finding not enough equity in their homes to justify making payments and this group would walk away. At each turn of this spiral another cycle would be set in motion which is why it is so dangerous once it gets started, and the need for timely but also well thought out plan and good execution. This cycle is that of the economic system as a whole. As house prices drop at each turn of this cycle, it would have a serious impact on consumption for an already indebted American consumer. A drop in consumption means fewer product purchases by consumers, and the falling demand means factories would close as companies consolidate operations around the remaining factories to keep capacity utilization at reasonable levels, and this would mean layoffs and cuts in investment and other spending. The layoffs in turn would add another layer of homeowners leaving their homes through foreclosures adding to the pool of homeowners who have left their homes, and adding to the downward pressure on house prices. The pickup in inflation would bite at exactly the worst time as this would mean consumers would have to spend even more carefully. The price of oil which normally would respond to changes such as a fleet of cars with higher mileage on American roads would take a longer time to respond as this fleet change would take a few years to occur. It would respond to lower demand for oil in American factories but the considerable demand in Asia and other countries where the economies are likely to slow down but still be growing at rates to accomodate the large number of people who have not benefited from the market economy, would make the price decline in oil a gradual affair. The weaker dollar would add to the price of imports adding to the inflation. This bite from inflation would lower consumption even further in the economic cycle. And this would mean lower production in factories and even more layoffs at the next turn of the economic cycle. The Federal Reserve would find itself having difficult choices between maintaining confidence in the dollar, for which Capman and McKinnon argue on the pages of the WSJ recently and lowering rates but not achieving much in terms of stimulating either consumption or investment as this would take time to work itself out and all the Fed could achieve by its interest rate making tool is to buy time to weather these adjustments in an orderly manner. There is almost a consensus among experts that interest rate reductions in the current climate of inflationary movements in prices and the current currency exchange rates moving towards a loss of confidence in the dollar is something to be done very carefully and each action taken only with careful understanding of the possible consequences. A look at the proposal itsel shows that it gets around the whole issue of moral hazard by having the cost paid for in this manner. The mortgage investors will pay for the 5 years of interest on the 20% of the loan the government provides. The homeowner takes over after that. The mortgage investors cannot add deferred interest, prepayment penalties or other ways to make the homeowner pay some of the interest charges. And the homeowners payment has to be afforadable so mortgage investors have to show that the payment is not more than 35% of income of the homeownercalled the debt to income ratio (DTI). And only homeowners with mortgage payments above 40% DTI are eligible. And the government would raise the money needed through a $50 billion offering. To show there is no moral hazard that is the government bailing out any of the parties involved, the government will get back all of its money or intends to do so, the government will have the first rights to the money should a home foreclose and before anybody else is paid. ...

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China's leaders including president Xi Jinping, and China's financial regulators have frowned on the lack of regulation of the financial businesses of Alibaba. They see the state banks which are highly regulated with capital requirements as supplying the capital on which Alibaba makes a profit on transactions, yet having to take on the risks if something was to fail. Alibaba itself has avoided the financial regulation needed for stability in its rush for growth. At one point says the WSJ, Xi and other leaders were infuriated and decided to halt the Ant initial public offering that would provide accumulation of wealth and a pay day while increasing risks in the financial system for China.

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Upward mobility in China was weak and income growth for average workers sluggish during the years before the coronavirus outbreak. In this sense China is similar to the U.S. and Europe where upward mobility gains after the second world war were lost in the last 30 years partly from the loss of manufacturing to China. It is much worse now as the effects of the coronavirus lead to drops of as much as a third in income for ordinary workers. Lower income workers, the vast majority of Chinese numbering hundreds of millions now suffer from lost work or diminished wages. Small businesses cannot afford to pay the salaries paid before and as workers dip into savings or increase borrowing the retail spending is taking a hit. As a result economists see a vicious cycle of lower spending and lower incomes for the hundreds of millions of ordinary workers in construction and smaller businesses. Some small businesses could just close down because of weak demand affecting the economy over the long term. Before the coronavirus China went over three decades from being a Communist country with relatively equal distribution of wealth but lack of growth and technological development to a capitalist country with the structure of state control of the economy from the Communist period. The result is that 1% of the people control 33% of the wealth and the bottom 25% having 1% of the wealth, according to a 2015 Peking University study. China's president Xi Jinping, head of the Communist party, tried to reverse some of these trends by attacking corruption and making changes that began the task of reversing decades of unequal distribution of wealth under state sponsored capitalist growth. Investments were made in rural medical care, infrastructure and basic services. This did not have much impact because much of the pattern of growth over three decades continues including the housing bubble.  With coronavirus the trend is set for even more unequal distribution of wealth as many workers at the bottom half of the population in incomes either lose work, or see drop in incomes as businesses that hire them struggle from shoe factories to other retail business. Reports of informal economy and street markets in Chengdu in western China and bringing this part of the economy back by the state are effort to get people work in other ways. Researchers estimate that China's bottom 60% of household in incomes lost about $200 billion in income in the first half of 2020. In May premier Li Keqiang said 600 million people in China earn only about $140 a month. Many who lost income or jobs do not have support from the government as China lacks a program of comprehensive unemployment insurance as in Europe and the U.S. to help people get over bad times. 300 million migrant workers are particularly vulnerable to loss of income and dipping into savings.   ...

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China's effort under president Xi to expand the state run sector by providing more credit to state run enterprises and expecting private companies to pursue goals of the state's planned economy. Tackling the coronavirus economic impact required state planning and that experience has further renewed the effort to build the state run companies as a reliable partner for the government. There is also a conviction that private companies are unreliable in a large and complex economy as China's.

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China is moving to shift its economy in a new direction of self-reliance on domestic consumers and local investors. Mr. Xi calls it "domestic circulation." This also means less dependence on imported technologies and inward looking policies. As the pandemic has reduced demand in other countries and as the U.S. and West tighten controls on imports and introduce new restrictions, there is the sense that the entire policy has to shift quickly to dependence on domestic consumers and investors.

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A car the early postwar Fiat model 500 which sold 4 million cars for this one mode alone, sold 57000 cars in its new version 50 years later motly on national sentiment in Italy. This is happening in the backdrop of new small cars that are coming up at really low prices in countries like India where the Tata model is expected soon. However this Fiat is being marketed in mature markets like Europe and soon in North America. Is Fiat overlooking the huge Asian market? Interestingly costs are lowered by sharing a Polish factory that makes this car and the Fiat Panda to also make Ford's Ka model.

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China's strategy for climate change action makes allowance for the need for coal as base energy, and insurance to prevent factory shutdowns from shortfalls of hydroelectric energy in drought seasons. It planned 80GW in 2024 for new coal powered plant construction. 

What should the US do? DJT and Republicans including North Dakota Governor Borghum say the US should also make some room for this in transition policy. DJT calls it "drill baby drill." Yet it is more nuanced than that, it means US will produce natural gas to supply Europe and keep gas and electricity prices down as a cost of living action. DJT knows industry has already put in plans for renewable energy production, it just won't be accelerated in ways that won't let the US economy grow. This is the rational for Alaska oil and gas and rare minerals policies shown alongside this article.

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This is a watershed event for Argentina after it returns to international capital markets after decades of being shut out because of the 2001 financial debt crisis and protracted legal settlement. This was possible after a new administration of Mauricio Macri replaced the administration of Peronist party's Christina Kirchner, and U.S. president Obama's confidence boosting visit to Argentina.

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Nobuyuki Hirano, a banker with international experience and a former director at Morgan Stanley, becomes the new president of Japan's largest bank. Hirano has 13 years overseas experience and this is expected to be an asset as Mitsubishi UFJ increases its global business. The European debt crisis has opened up opportunites for asset sales to Japanese companies.

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For Americans who are worried that the new NYSE Euronext-Deutsche Bourse merger will put the stock exchange into German hands, here's a surprising fact. According to the data on the exchange's website US investors own 41% of Deutsche Bourse. Germans own only 17% of Deutsche Bourse. And US investors own the large majority of NYSE shares.

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CreditSights, a New York research firm says about $33 billion in losses from home equity loans will hit the five largest banks in the latter part of 2010, an amount equal to what they expect in earnings for 2010. This would have an adverse effect on the banks and has the potential to stall the economic recovery.

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With the effects of the government tax credit fading, Commerce Department numbers show a 33% drop in sales of new single-family homes from 446,000 units in April to 300,000 annual rate in May 2010. The supply of homes for sale went up by 47% to 8.5 months in May from 5.8 months supply in Aprill 2010.

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New York Yimes editorial calls the Conservative party coalition government's austerity budget (the plan to cut 500,000 public sector jobs and terminate unemployment benefits after 12 months), as a gamble on an improbable theory that the private sector can make up for $130 billion in cuts. The editorial says these budget cuts could suffocate a feeble recovery.

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The failure of the new administration of Pena Nieto to implement public spending programs during the transition period added to other problems leading to a decline in growth in Mexico. GDP growth was 1.1% for 2013. Construction spending and exports to the U.S. were also weak. Lack of natural gas supplies in some regions also played a part.

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Apple provides about 40% of Taiwanese company Pegatron revenues. Starting with older iPhone models, the company now supplies the new model iPhone 5C. Revenue in the 4th quarter 2013 for iPhones and tablets increased 20%, as sales from televisions and PC's declined. Operating margins increased slightly to 1.9% in the 4th quarter 2014 from the prior year quarter 1.6%.