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The Ifo Institute monthly business confidence survey shows a reading of 104.7 for November, up from 103.2 in October 2014.

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The European Central Bank left all its interest rates unchanged on September 7, 2016. No changes were made to asset purchase program, which will run until March 2017 or beyond as needed. The ECB left interest rates at 0% for its lending operations, and for overnight deposits at 0.4%.  Inflation is a special concern, as inflation was at 0.2% for August. Business activity and investment in the EU and in the U.S. is weak, and Brexit is still a concern.

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The steep decline in popularity of French president Emmanuel Macron in the period of one year. With the yellow vest protests on the economic insecurity of struggling families, Macron's efforts to bring in business friendly policies as a change agent are itself out of step with the times and with France in the provinces and small towns, as pointed out in the New York Times and Times of London analysis of the situation in France today.

As pointed out in the analysis Macron's base itself is small and its anti-institutional posture rejecting conventional politics itself has given momentum to the current yellow vest protests about economic insecurity of struggling families. The support for this comes from all parts of society and single political party, without nationalism, race or migration as factors at all, and comes so soon in one year from the time that Macron emerged with his own movement rejecting the institutional structure.  

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The declining prospects for the power generation industry in Germany.

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Macron is a close advisor to president Hollande since 2008. With the resignation of Montebourg as Economy Minister, Hollande offered the position to Emmanuel Macron to help improve conditions for business and increase investment in France. Macron pushed measures for changes through parliament by resorting to constitutional provisions because of opposition from the president;s own Socialist party members. Prime minister Valls was able to win the no-confidence vote that followed. In the 4th quarter of 2014 GDP growth in France was only 0.1%, lagging behind Germany at 0.7%. The economic stagnation has pushed Macron and the president to take more risks in overcoming resistance within the Socialist Party to relax labor restrictions and increase business investment. Macron says he agrees with investors that the 2 year tax of 75% on salaries of more than 1 million euros

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Germany generated 45% of its energy from coal and 25% from renewable energy sources in 2013, according to AG Energiebilanzen. Chancellor Merkel, who as environment minister supported the Kyoto agreement in 1997, announced a plan to cut carbon dioxide emissions by an additional 62 to 78 million tons by 2020. The cuts will rest largely on improving energy efficiency, and with a third of the cuts in the power industry. With the drive to close 17 nuclear plants in Germany, the power industry has increasingly relied on coal generated energy. This is an effort to change this situation. It is supported by German public opinion.

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Yields on Greece's 10 year bonds rise to nearly 9% in October 2014, as growth slows to near zero in the eurozone, including Germany, in the second half of 2014.

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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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This essay in the Economist magazine describes the voter rejection of ruling parties and their candidates in France. Two presidents and two former prime ministers from the Socialist party and the Republican Party, Hollande and Sarkozy, Valls and Fillon face rejection. And another candidate from the Republican party Juppe also has fared poorly. This leaves two outsiders LePen of the National Front, and Macron a former Economy minister in the Hollande government who launched En Marche as his own movement for moderate change alternative in 2016. The rural-urban and less educated-more educated divide which was evident in voting in the U.S. election and the Brexit referendum is now seen in France, says this essay. Research from the Economist shows National Front support highest in outlying areas of major cities. The fears of immigration, terrorism, and globalization leaving parts of the working class behind are factors in this election. Support for the European Union is also a factor as it has suffered in recent years.     ...

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Ian Talley provides this excellent account of how this drop in oil prices is likely to add to economic growth in major world economies, removing any ambiguity about the positive effect on the global economy. West Texas Intermediate crude dropped to about $65 from $105 between June and December 2014. The IMF estimates growth in 2015 will increase from 3.1% to 3.5% largely because of the lowering in energy costs. JP Morgan Chase economists see an addition of 0.7% points in global growth in the first half of 2015. ECB president Draghi sees the lower oil prices as an unambiguous positive. Estimates from Rhodium Group show major oil importing countries seeing import bills cut by $500 billion if prices remain low for 6-8 months, with $90 billion going into the U.S. economy. IMF estimate is that only 20% of the drop in oil prices is from lower demand, about 80% from higher fuel efficiency, increased supply using new technologies, decisions by OPEC to lower oil price, increases in supply. Based on estimates by the Rhodium Group, IEA and the IMF, the extra money flowing into the economies of the U.S., Asia and Western Europe from reduced oil import bills, as measured in percentage of GDP is: the U.S. 0.5%, Germany 0.8%, Japan 1.2%, China 0.8%, India 1.8%, South Korea 2.4%. Italy and France and other oil importing countries benefit. The impact comes at a time when Japan, China, India and eurozone economies badly needed a boost after significant slowdown in growth in 2014. It could not have come at a better time and because it is technologically driven as in the case of highly fuel efficient automobiles and new oil exploration technologies, a self sustaining process. The corresponding impact for oil exporters is: Russia -4.7%, Nigeria -5.4%, Venezuela -10.2%....

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Krugman says France is getting a lot of attention, but it is Germany where attention needs to be focussed. German long term bonds are yielding 0.7%, a yield level associated with Japanese deflation. He says Greece's problem was a fiscal mess limited to a small country, and Italy has a problem of low productivity that is unique to Italy over several decades. Loss of French competitiveness is overstated, as France has only a small trade deficit, and some of that lack of competitiveness comes not from excessive growth in cost and prices but from policies pursued in Germany. He points to France's GDP deflator (the average price of French goods and services) since 1999 when the euro started, as rising 1.7% a year, and labor costs rising 1.9% annually. By comparison German price growth was 1% and labor cost growth was 0.5%. France is close to the ECB target of 2% inflation. Germany falls way short of the 2% inflation target.

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The ECB's executive board's proposal is for 50 billion euros ($58 billion) in bond buying each month for the next 12 months. The ECB's executive board meets on Jan 20, 2015, to discuss the proposal.