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Brinksmanship on both sides as Greece's Syriza government continues negotiations with the EU in June 2015. Syriza's Tsipras attends the St. Petersburg Economic Forum as the IMF's Lagarde calls for restoring dialogue "with some adults in the room." The German media describes Greece's finance minister Yannis Varoufakis as "amateurish." Germany says a Greek exit from the eurozone is an option. Creditors are pushing for changes to the pension system before releasing $7 billion, including $1.6 billion owed to the IMF on June 30, 2015.

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ECB president Draghi tells a Brookings Institution audience on Oct. 9, 2014 "for governments that have fiscal space, then of course it makes sense to use it," referring to Germany. IMF's Christine Lagarde is also calling on Germany to increase spending. The German statistics office says exports declined 5.8% in August from prior month. Mr. Draghi also emphasized that the survival of European governments depended on getting economic changes right- "if they don't do the right things, they will disappear forever because they will not be re-elected." Germany's respected economic institutes said in a joint statement that GDP growth in 2014 will be down from earlier forecast of 1.9% to 1.3%. In 2015 growth is forecast at 1.2%. For the 3rd quarter 2014 growth is zero and for the 4th quarter 2014 it is estimated at 0.1%. Economic contraction is not ruled out.

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Christine Lagarde on the need to complete the planned reforms giving more voting power to emerging market countries China, S. Korea, Brazil, Mexico, India and others. This woud not change the U.S. voting power of of over 16%. The reforms would also increase contributions from these countries. This issue is likely to come up in meetings of finance ministers in Australia in 2014.

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John Lipsky, a deputy managing director of the IMF from the U.S., gives reasons why the U.S. should support IMF reforms that increase representation of emerging market countries in the G-20. Lipsky was at the IMF 2006-2011.

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The Social Democrats leader Sigmar Gabriel is Economics Minister in the coalition government of Angela Merkel in Germany. He is sympathetic to French premier Manuel Valls effort to reduce austerity in the 2015 French budget now being reviewed by Brussels. Here he takes the initiative to call for discussion on the issue of growth and austerity facing the European Union, by joining French Economics minister Emmanuel Macron in asking two economists Pisani-Ferry and Enderlein at the Berlin Institute of Governance for advice on generating growth. The process started in late summer with the defeat of the centre right government in Sweden which supported Merkel's strict austerity policies for balanced budgets. The elections to the European parliament showed the dire situation facing Cameron in Britain and Hollande in France with the unpopularity of austerity policies, higher taxes and cutbacks. The Socialist Hollande government has the lowest public opinion ratings of any postwar government in France, at 18%, and it is unwilling to go further down the road with austerity. At the same time Valls has found a partner in Italy with the growing popularity of Matteo Renzi in Italy who won 40% of the vote in Italy for the EU parliamentary elections of 2014. ECB president Mario Draghi, has generated the debate by saying at a October 2014 Brookings Institution conference in Washington D.C. that countries that have fiscal space (referring to Germany) should use it. He added that governments that did not take action in the economic crisis facing the eurozone of no growth will be swept away by public opinion. IMF president Lagarde, a former French Finance Minister under Sarkozy, has also questioned policy of strict austerity. For the first time since the start of the eurozone crisis in 2010 there is an opportunity for open discussion on future policies for renewal in the eurozone....

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In this interview with Varoufakis, the Greece finance minister in the negotiations with the European Union and the IMF in 2015, Suzy Hansen provides a detailed account of Varoufakis's view on the Greece bailouts and a sense of looming failure in the negotiations. Varoufakis says he was willing to make concessions by holding off on action on the minimum wage, but cannot make concessions on paying out pensions to the elderly. Varoufakis concedes he is not a good negotiator or a politician, and negotiating skills were critical for Greece to tap into the goodwill in the eurozone's southern region to win a package that would give the Greek economy a chance to grow. Additional handicaps may be his outlook which was shaped in his younger years by the "junta years" when Greece was ruled by a military dictatorship, and a family history relating to Greece's civil war between royalists and communists. In this interview he compares himself to Margaret Thatcher, who he says should not be held responsible for the state corporatism following the war, remarks that may show a finance minister out of touch with the present situation. There is no lack of criticism of the way some of the bailout actions took place to protect French and German banks in 2011 and 2012- in fact some of the strongest criticism, well formulated, was on the editorial pages of the Wall Street Journal. Yet Varoufakis had a special responsibility to build on the goodwill generated after years of austerity, and the efforts of the Samaras administration to work with the EU. On both counts he appears to have failed as he realizes that the 4 months of uncertainty ending in a total lack of communication between both sides, has cost Greece by worsening the economy. Posturing and personality, compounded by inexperience, may have distracted from the real work of serious negotiations. The IMF chief Christine Lagarde had emphasized at the outset the need for Greece to fix its tax system with high degree of tax evasion, an issue on which Syriza could have acted quickly. Some of the period before the elections was used to prepare the EU for negotiations with Syriza, and Syriza needed to be prepared on this issue. Yet no action was taken on a plan to tackle this issue- on the grounds, says Varoufakis, of lack of time. He only rationalizes this when he says it is only a short term cost for the long term future of young people. ...

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The legacy of extremely low interest rates near zero left by Italian banker Mario Draghi has he leaves the European Central Bank to be succeeded by French head of the IMF Christine Lagarde. There is considerable division in the ECB as Draghi launches yet one more program of bond buying called QE for quantitative easing- in effect reducing the interest rate of the ECB to minus 0.5%. All this is being done to address problems of economic growth in the eurozone which originate from other causes such as poor banking practices, overborrowing by member states and lack of transparency in countries such as Greece, the lack of investment in infrastructure, increase in part time workers in economic uncertainty generated from poor banking, essentially a lost decade. The ECB's monetary policy committee staff oppose the move and so do 7 of 25 members in the governing council.  Instead of tackling root causes this had the adverse effect of hurting savers in Europe and the U.S. leading to higher inequality and wearing out of social safety nets.   ...

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After 16 months of talks political leaders from Dutch language Flanders, French speaking Wallonia, and multilingual Brussels, historically at odds with each other, come up with a new arrangement for running the country in 2011. Belgium will move closer to being a confederation like Switzerland, with powers and funds shifted to the regions. Of particular significance is the resentment by the Flemish people in the north of an administrative arrangement that was setup along French lines. The new devolution of powers gives autonomy to the Flemish region. In the past frequent coalition governments have added to the political instability.

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Of the 10 parties expected to win seats in the Greek parliamentary elections, 7 oppose the IMF program for Greece and 2 call for exit from the euro. A Pasok-New Democracy coalition government is by no means certain. Pasok and New Democracy largely supported the IMF program before the elections. Greece has to make 3 billion euros of spending cuts right after the elections and 12 billion euros in 2013-2014 under the IMF program. Poor showing by Pasok and New Democracy could lead to calls for changes to the IMF program. About 73% of Greece's debt is now in official hands- 23% with the European Financial Stability Facility (EFSF), 21% bilateral government loans, 21% ECB, 8% IMF. Only 27% is now in the hands of private investors after the debt restructuring. The election of Socialist candidate Hollande in France who has declared the handling of Greece by the EU deplorable and a failure of governance not only in Greece but in Europe, would also add support to calls for changes in the IMF program to include growth measures. Hollande predicts a large public contribution by governments, the EFSF and the ECB, the IMF, to match the 70% contribution of private investors. The IMF appears to have anticipated this by recently enlarging its rescue fund....

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Calls at the BRICS leaders New Delhi summit for a change in quotas for the World Bank and the IMF, and a more open merit based selection process for heads of the two financial institutions. According to the Economist Belgium has a larger quota than Brazil at the IMF.

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On the surface Turkey's implementation of an IMF program to reduce its deficit in 2001 has lessons for Greece, but looked at closely the situation has some serious differences. Turkish tax collection was weak and this was corrected by the incoming Erdogan administration, salaries were capped and spending was reduced, taxes raised and state assets sold to improve the deficit. But as Tim Ash an economist at RBS bank points out, achieving GDP growth will be very difficult for Greece. For one thing Turkey's lira fell 54% against the dollar in 2001, spurring exports and increasing growth. Greece is part of the euro currency system and this won't be part of the solution. Also Turkey's debt approached 80% of GDP in 2001 (down to 46% of GDP now), compared to 115% for Greece in 2010, so Greece is in a much worse position than Turkey in 2001. Ash sees a restructuring of debt as the best way to restore growth in Greece.

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The Bank of Italy, is conducting central bank examinations of Italian banks in July 2013. The loan portfolios of the 8 largest banks are being examined, and on-site inspections are being conducted for 20 other banks. This could lead to Italian banks having to sell assets or take other steps to improve capital positions. During the last central bank examinations in the fall of 2012 Italian banks were required to set aside 3.4 billion euros to protect against bad loan losses. Bad loan losses are increasing at Italian banks as businesses and individuals fall behind on payments with the worsening economy in 2013, and into 2014. Non-performing loans are up to 249 billion euros, or 14.2% of the banking industry's total loans, according to the Bank of Italy. This is up from 157 billion euros, or 8.9% of total loans in 2010.

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Bank of Spain Gov. Miguel Angel Fernandez Ordonez said Spain finds itself in an "exceptional situation," as it goes "back into recession," and only exports acting to contribute to gains in GDP.