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This editorial in the Economist says Spain's economy has recovered to pre crisis levels by 2018 with growth at 3 percent. It says Spain had a bigger crisis than Italy and took stronger measures under prime minister Rajoy to fix problems in its banking system, address the housing crisis, and unemployment. Italy's steps by comparison were timid and faltering. Mr. Rajoy had his problems including corruption scandals in his party and a poor handling of the Catalan drive for independence. Yet Spain owes muchas gracias to Rajoy for his leadership in bringing Spain out of the housing and economic crisis, and for running the country for two and a half years after losing his majority in parliament.  Another difference with Italy is the generally favorable attitude to immigration for all parties. Of the newer parties Ciudadanos remains at the centre and the Podemos party remains to the left in politics, as part of the populist changes in Spain during the economic crisis. The new government of Pedro Sanchez has a positive attitude to immigrants and to women, with the largest number of women in the cabinet of any European country. ...

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A 850 megawatt solar project, the largest in the US outside of Las Vegas runs into opposition from environmentalists concerned about the effect on views and on tortoises other endangered species. The planned project on top of Mormon Mesa would put over 1 million solar panels 10 to 20 feet tall in the Nevada desert. Across the US 800 utility scale solar projects are under contract for generation of 70,000 megawatts of electricity, enough for 11 million homes, for more than Texas. Over half of this solar capacity is going into the southwestern US, with its sunshine and open land. For the first time the ardent advocates of renewable energy such as the Sierra Club are now opposing such projects. Solar made up one tenth of one percent of US energy in 2010, in 2020 it made up 4.5%. It is growing very rapidly because costs are going way down. Even before government subsidies solar is now below the cost of natural gas. Projects near Martha's Vineyard on the Massachusetts coast took 12 years to get sate and federal approval for wind energy. These battles are similar to ones being fought in Europe. The US is better positioned for solar because of vast desert spaces in the American southwest. President Joe Biden plans to use this advantage of solar and wind to get to 100% renewable energy by 2035. ...

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This NYT editorial brings up the 14-19% tax proposed by U.S. president Obama for overseas profits of U.S. companies. The 5.25% tax in 2005 under the Bush administration for repatriation of about $300 billion did not result in a positive experience says NYT, as most of the money went into dividend payments, share buybacks, and severance for laid off employees. It led to a new surge in unrepatriated profits in the expectation of another tax holiday of this type. A Senate investigation in 2013 showed Apple has $100 billion in Ireland with no tax paid on much of this amount, as cited here. The NYT says Apple shows arrogance in thinking the EU Commission which has taken up cases on tax avoidance of Fiat, Starbucks, Amazon, BASF, would not look at Apple in Ireland. It calls tax deferral on overseas profits as the root of the problem, as it allowed companies initially to look at investment opportunities, but now simply to stash the money abroad till some better tax arrangement can be achieved with U.S. Treasury. The Obama administration proposal was to immediately tax existing profits at 14%, whether repatriated or not, and thereafter at 19% on profits moved offshore. The NYT is in favor of ending corporate tax deferral altogether, and applying taxes on profits in the same year they are made.  ...

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The Volcker Rule goes into effect in July 2012. Under the rule proprietary trading operations of banks must be divested by 2012, with banks getting an additional three years to comply for specific situations. The financial industry is pushing back against the rule with comment letters from industry firms. Mr. Volcker outlined his response in his letter of comments to the objections raised by financial firms. To the objection that this would reduce liquidity in the market and raise corporate borrowing rates, Vocker says that too much liquidity is a problem because firms tend to bid up asset prices in the hope that they can always find buyers.

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U.S. Secretary of State Clinton and Turkey's foreign minister Davutoglu met in early August 2012 and agreed to set up intensive operational planning and coordination of the two countries efforts on Syria to end the Assad regime. The two foreign ministers said a unified task force with intelligence, military and political leaders would be set up immediately and will look at all options including direct assistance to the democracy movement and forces fighting the Assad regime.

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In his plain talk on Syria Trump said the primary message to Russia was: "You should have peace in Syria; its enough." This is the message foreign minister Tillerson is delivering in Moscow. He described the Russian support for the Syrian government as: "I think it's very bad for Russia, I think it's very bad for mankind, it's very bad for this world." He also described Chinese president Xi Jinping's response at a state dinner during dessert when Trump told him about the U.S. missile attack on Syrian airfield, as expressing the sentiment that it was OK considering the chemical attacks by the Syrian government on civilians and children. The closest any president gets to the plain talk given by Trump is during the period of the Cold War when Truman also had this kind of plain talking style to deliver the message that needed to be heard.

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This WSJ editorial in September 2014 says many of president Obama's statements and decisions on Obama healthcare legislation and implementation, Syria, NSA and privacy, the Middle East, Russia, showed poor judgement. It refers to a piece by Peter Baker in NYT where it is said that Obama mocked how people see him as too professorial, diffident, in a sarcastic statement. The problem says WSJ is that president Obama has poor judgement. Being academically credentialed and quick grasp of subject matter is not the same as having the ability to discern things, instinct and grasp of the essence of the matter. George Bush senior had a long resume and was academically credentialed. By comparison Truman had a short resume and was not academically credentialed or quick with data and analysis. He had something more essential and important- a discerning mind and grasp of the larger picture, as well as listening abilities for exceptional advisors such as General Marshall and Acheson he gathered around him....

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As Keith Bradsher of the NYT points out in this report too much may be made of the tariffs of 25% imposed by president Trump on steel imports. The effect Bradsher says on China is trivial because China imports make up a fraction of 1% or 0.1% of China's production, and only 2% of American steel imports. Most of China's aluminium is made into products such as auto parts and solar panel frames, and little of it is imported as raw metal. On the day the tariffs were announced, China's top economic official Liu He met with economic officials of the Trump administration and China's reaction was cautious and reflected the fact mentioned b.y Trump about its huge trade surplus with the U.S. of $375 billion in 2017. China's officials stated "that its dialogue with the U.S. was very useful, constructive, and helpful."  China's principal goals are first to preserve its broader trading relationship with the U.S. which gives it th $375 billion trade surplus for 2017 and creates millions of jobs in China, and to preserve its ability to invest in the U.S.  This has given China access to American technology and manufacturing expertise that would be difficult to develop independently. The Trump administration is meanwhile working with senior members of Congress to come up with new rules for tighter scrutiny of Chinese investments in the U.S. as a new phase of competition in technology takes place between China and the U.S.  ...

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The first presidential debate in Denver, Oct 3, 2012. For the first time Romney came out as a recent Republican governor of Massachusetts, the most liberal leaning state in the U.S. For a reason that remains a mystery, except that Romney had to shore up support with the conservative base of the Republican party, Romney did not aggressively adopt positions that would appeal to the vast majority of Americans- from people on foodstamps which he said in this debate had increased by millions under the Obama administration, working class Americans, ordinary Americans about to lose insurance with higher premium costs from the unending increase in the cost of healthcare, seniors on Social Security, workers insecure or losing jobs as the economy fails to recover, and young people who cannot find work. As governor of Massachusetts Romney had to be able to address the needs of different income groups, the middle class and working Americans, and his own father who is his role model was a governor of Michigan, a liberal leaning midwestern state with the largest number of autoworkers in the U.S. He asked Obama directly how he could have focussed on Obama care and passed it without a single Republican vote when 23 million Americans were out of work and the first priority should have been high unemployment. Obama responded by saying he would defend the middle class but did not say what he would do in the next 4 years that was different from the economic policies between 2004-2008. Romney made clear that he was not going to reduce taxes if it would increase the deficit even though Obama said Romney planned to increase taxes by $5 trillion and worsen the deficit. At one point Romney said looking at Obama that he could own a house, a plane, but could not own the facts....

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Renewed warnings about the bubble in housing prices in China. Earlier warnings came from Krugman, Lardy, John Taylor. This one comes from Nomura economists Zhiwei Zhang and Wendy Chen. Could the government's action to curb rising housing prices not be adequate leading to a financial crisis as early as 2014, is the question posed by Zhang and Chen. They cite the rise of housing prices by 84% from 2001 to 2006, before the financial crisis of 2008 in the U.S., using the Case-Shiller housing price index. One problem- the government statistics may have underestimated the extent of the bubble. China's official index shows housing prices rising 113% in major cities from 2004 to 2012. Zhang and Chen say this is much smaller than the actual rise because it includes older, lower quality housing property. They cite an academic paper that adjusts for this and finds prices jumping by 250% in the period 2004 to 2009. Another problem is that China's housing prices growth slows after government action but then resumes the growth, leaving the risk exposure at the high level as before. Because the local governments are tied up in the housing bubble the problem would hit the banking system. About 14.1% of the outstanding bank loans are to local government financing vehicles, and 6.2% to property developers, according to Nomura economists. The declining potential growth rate in China means there is less room for bad loans to be absorbed by hyper growth levels than in the past. Errors in policy can magnify the risk including loosening monetary policy and exacerbating the bubble at the wrong time. In the absence of errors the risks still remain requiring the sale of public assets to bail out local governments and banks. The argument made by Krugman and other economists has been that China is not immune to the risks of a housing bubble going bad, in any way less than Sweden, the U.S., Spain and other countries, requiring bailouts of banks....

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An intimate biographical account of new Chinese leader Xi Jinping and his connections with Muscatine Iowa, where he visited as a head of a Chinese farm delegation in 1985. Xi Jinping remembers the trip vivdly and plans to spend time with friends from that visit during a visit to the U.S. in 2012. He spent two nights during that visit in the bedroom of two college age boys of the Dvorchak family. This revealing account of Jinping's life shows that the actual story of his life is quite different from the title of "princelings" or privileged sons of former communist leaders that is suggested by this reference in the media. Because of the volatile nature of Chinese politics, his father Xi Zhongxun, who led communist partisans in the struggle of the pre World War II years, was rehabilitated twice after falling out of favor. The first period was in 1962 and it was not till 1979 when he was fully rehabilitated. During this period which coincides with the growing up period of Xi from 9-26 years of age, Xi experienced many hardships. During the years of the Cultural revoultion Xi was sent at age 15 to Shanxi province where his father had led partisans. He lived there for 7 years in a traditional cave dwelling in the village of Liangjahe doing farm work. He was denied admission to Tsinghua University twice before being accepted in 1974. There he graduated with a degree in organic chemistry. This was followed by three years working as an assistant to Geng Biao, defense minister and a partisan who was a colleague of his father. The next job was deputy Communist party chief of Zhengding county in Hebei province. Iowa Governor Branstad visited Hebei in 1984, and Branstad played host to a animal-feed delegation led by Jinping in 1985- the visit to Muscatine was part of this trip and which Jinping has told others he enjoyed more than his visits to Oregon or California that year. The second time Xinping's father went out of favor was after his criticism of the crackdown of protests at Tienanmen Square. These experiences have given Xinping a confidence and experience in different situations that other Chinese leaders including the current leaders lacked. If Jinping has inherited some characteristics from his father he may also have the courage to take China in a new direction, and make the kind of changes China needs as it shifts away from an export based economy. At the same time rule in China is by consensus of leaders on the communist party's standing committee. His father helped initiate the special economic zone in Guangdong province in 1978, and Xi Xinping held senior posts in the provinces of Fujian and Zhejiang and in Shanghai, giving him close ties with industry and local government in areas that led the export based economy. Prime Minister Lee Kuan Yew of Singapore puts Jinping in the" class of Nelson Mandela type leaders, who has great emotional stability to not let his personal misfortunes and sufferings cloud his personal judgement." Of political positions Jinping has a certain wariness. He once responded to mention of him as the potential leader with the words: "Are you trying to give me a fright."...

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Hernandez and Qin provide this exceptional account of the thoughts and feelings of the 150 million young people in China who are single children of parents, through intervews and description of this generation in Chinese media. Local media calls this generation very lonely because of the lack of a brother or sister, without cousins, uncles and aunts. These children were doted on by their parents and have grown up in an unususal way because of the extraordinary attention they received- unlike what is happening throughout the rest of the world. Were they lucky? Not really, because they now have to face the burden of supporting aging parents alone, without the help of siblings. And for the policymakers there is another shock of realizing that such a precipitate action of a one-child policy from 1990 onwards may have undermined other goals by creating a rapidly aging population and shrinking workforce to support them, especially when Latin America and other poor countries with high birth rates have seen these birth rates plummet over time as living standards and education improved. A 2013 study by Australian researchers shows these children having tendency to show selfishness, pessimism and risk aversion. The other shock for policymakers is that the cost of getting a good education and the scarce number of places in good schools, is leading parents to not have that second child. ...

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In this Agenda column Simon Nixon takes on the U.S. Treasury's criticism of Germany for its current account surplus of 7% of GDP in 2012, and not doing enough for the economies of southern Europe. The German government called it "incomprehensible." Nixon says it is better for the German economy to remain strong and to boost competitiveness and consumer spending in Spain, Portugal, Italy and Greece. He says the low eurozone inflation of annualized 0.7% for September 2013, which prompted the ECB to cut rates by 0.25%, is healthy to the extent that consumer prices are declining to adjust to a decline in wages. The reduction in labor costs is a way to restore lost competitiveness, just as Germany did in the last decade. The criticism is considered by many economists to be misdirected, and seen as "incomprehensible" by Germans, as Germans ask what would the U.S. have them do- provide stimulus when the government debt to GDP ratio is currently 82%, increase wages and how would this help Southern Europeans. Focussing on Germany's current account surplus says Nixon, is obscuring the larger issues of increasing consumer and business confidence and spending in the eurozone, and increasing bank lending. The new ECB bank resolution arrangements and other changes including deposit insurance if done right should help the recapitalization and restructuring needed for restoring bank lending to support recovery. Spain is furthest along in regaining competitiveness, with changes in Portugal, Italy and Greece also supporting a gradual return to growth....

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Martin Feldstein supports cutting "tax expenditures," -the special purpose deductions such as the deductions for mortgage interest, charitable deductions, state and local government taxes and other such exemptions- as Bowles-Simpson Deficit proposals have recommended. Bowles-Simpson would use this money to reduce tax rates and only $80 billion of this to reduce the deficit. Here Feldstein suggests capping the individual's benefits from such deductions at 2% of adjusted gross income. Research by Feenberg and Feldstein on the use of such a cap shows that this would reduce the federal deficit in 2011 by $262 billion or 1.7% of gross domestic product. The list of deductions used by Feenberg and Feldstein for these figures are: deductions for mortgage interest, state and local income and property taxes, charitable contributions, credits for dependent care, children and certain education costs, and the exclusion of employer payments for health insurance. Sunc a cap would not affect the 46% of taxpayers who use the standard deduction and would induce others to shift to the standard deduction. By doing so this will simplify the tax system and reduce economic inefficiency. Feldstein advises that Congress should include and individual cap on total benefits from tax expenditures in any program to tackle the deficit....

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Fears that the conflict in Syria might spill over and lead to a conflict with Iran pushed up oil prices. At the same time the new forecast by the International Energy Agency in early August 2012 showing a 20% decrease in demand growth in 2013, as a result of the economic slowdown in the U.S., Europe and China, acted to put a lid on oil price increases. Light sweet crude for September delivery was at $92.87 a barrel on the New York Mercantile Exchange on August 10, 2012, and Brent crude was at $112.95 a barrel on the Intercontinental Exchange.

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The New York Times editorial page on the day following the passage of the second bailout or rescue plan of $700 billion in the Senate after it was voted down in the House of Representatives. It points out that the bailout bill does little to prevent a wave of foreclosures which the NYT estimates at six million people expected to default in the rest of this year and 2009. It faults lenders unwillingness to reduce the loan balances amount. At a Congressional hearing for the Hope for Homeowners program in which the governmet wold insure upto $300 bilonin new affordable loans for troubled borrowers if the lenders voluntarily refinance delinquent mortgages by reducing loan balances to 90% of the homes' current market value, lending banks were lukewarm about taking these losses in exchange for bigger losses in foreclosures. These lenders include Wels Fargo, Chase, Bank of America and Citigroup. The FDIC's Sheila Barr has also advocated reducing loan balances in her proposal for tackling the housing crisis presented after the Bear Stearns crisis. She is taking this approach to banks that like IndyMac were taken over by FDIC. But the numbers are not large letters were sent to 28,000 delinquent borrowers of IndyMac recently to reduce loan balances. This is a serious problem and either Congress and Treasury are leaving this problem to the next administration taking office 3 months from now as there is no real consensus on this issue even today or they are missing the impact this has in dropping home price values even further in neigborhoods across the nation as foreclosures drive prices down even further compounding the problem. For the financial institutions it would appear that they are letting this drag out because their capital is at frighteningly low levels and taking losses at one time is harder than taking the foreclosure losses dragged out over 1-3 years and they are also looking for a way in which they can let the government bear the burden of losses as the crisis intensifies which can make sense from the point of view of each institution. According to a report in the Wall Street Journal on September 29, 2008, Sheila Barr told Congress this month that in recent years troubled loan portfolios have yielded about 32% of book value, compared with more than 87% for loans in which the borrower is current. These are strong statistics in favor of lenders taking an informed decision to lower loan balances voluntarily with some government help along the way but the fact that this is not happening leads one to think that something is falling between the cracks, initial lender reluctance to take losses through voluntary balance reduction at the time of Bear Stearns crisis given taxpayer reluctance and lack of government initiative to help lenders in doing this, sort of what Martin Feldstein suggested in a series of articles during the time before and after the Bear Steans crisis. And then as the credit crisis worsened with collapse of Lehman, WaMu, Freddie, Fannie and Wachovia in September 2008 fear gripping the markets and LIBOR interbank lending rate at close to 8%, banks gripped by the fear prevailing in the market, frozen practically about any steps other than preserving their hammered capital, and reluctant to take losses which would further impair their capital. Also in the WSJ Sept 8, on help for homeowners, Deutsche Bank estimates 40% of homeowners or about 20 million households will owe more than their home is worth by the time the housing market stabilizes. This will lead to some homeowners making the rational decision as Martin Feldstein argued to walk away from their homes, leading to more foreclosure losses for th banks. This article Rescue Includes Steps to Help Borrowers Keep Homes by Ruth Simon also has some information that confirms the NYT editorial. An analysis it says of 144 mortgage modifications by the Massachusetts Attorney General's office found that none reduced mortgage balances and onoly a handful reduced monthly payments. Even with interest rate reductions, the study showed borrrowers wound up paying more because of missed paymmets penalties and fees. Another study by Credit Suisse mentioned in the same article points out that the percentage of borrowers who were behind 6 months after loan modifications dropped to 17% when lenders reduced the loan balances and 13% when mortgage companies froze the interest rate of adjustable rate mortgages. A bigger problem is the effect on consumption, if 40% of homeowners end up owing more to the bank than their home is worth as Deutsche Bank estimates, combined with higher unemployment and higher parttime employment, by the time things stabilize. And this is the big looming problem for a new administration in January even if the bailout plan passes Congress this week after revisions and eases the crisis in the credit markets. ...

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The 3 week old government in Italy, led by former EU commissioner, Mario Monti, announced a three year plan of 30 billion euros in tax increases, spending cuts, reform of pension plans, and efforts to boost growth. Monti said at a news conference that "Italians are to blame for our public debt, and we risk compormising everything we've accomplished in the past 60 years." Under the new plan retirement age for women in the private sector would be increased from 60 to 66 years by 2018, bringing it in line with retirement ages for men. Italy's Labor minister, Elsa Fornero, broke down in tears as she described the change, saying it was necessary to avoid "collective impoverishment." Italy faces the difficult task of refinancing $400 billion in short term debt coming up for renewal in 2012, just as bond yields for Italy have spiked to over 7%. Because Italy lacks an extensive day care system, women helped raise grandchildren after early retirement at age 60. Other changes were to impose a 1.5% one time tax on money repatriated back to Italy under a tax amnesty scheme setup by former premier Berlusconi. Action was taken against widespread tax evasion by banning cash payments above 1000 euros. Stimulus measures of 10 billion euros are designed to boost small business and reduce high youth unemployment running at 29%. Companies get tax breaks of 2 billion euros if they hire young people....

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Achieving net zero emissions by 2050 will require huge amounts of capital. One estimate is $131 trillion. Where will it come from. The UN Glasgow Financial Alliance for Net Zero says financial groups with assets of $130 trillion have committed to its program to cut emissions. This WSJ report says that is enough scale to generate $100 trillion through 2050 to fund the investments needed for new technologies and provide the finance for companies to restructure themselves in a new world.  The question is how much of this is real as banks, insurers, pension funds and private investor groups are only now taking on the task of restructuring the finance industry. It was not even addressed during the 2015 Paris Agreement on Climate Change talks. For this to be truly transformative and the transformative changes to take place governments have a critical role in requiring a common standard for reporting and measuring climate change progress. Government regulatory action and oversight is essential for timely and rapid action to take place. Financial regulators, including the US Federal Reserve and the Bank of England have agreed to add their own oversight through reviews and disclosure standards. The problem is that private sector plans are not concrete. Data is non existent or inconsistent and measurement is not taking place across all of the financial sector on key parameters. The UN has limited power to enforce rules. Who will act to ensure decisions are taken, progress measured after standards are set, transparency set, and how can governments deliver on each step through 2030 ensuring the transformation of the financial sector so that the decisions are taken according to a master plan for climate change in the US, UK, European Union, and India.   ...

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The NYT editorial says the negative feedback loop of foreclosures begetting falling house prices, which beget more foreclosures, and further weaken banks, is well under way. One way to have broken this, was to enable good types of loan modifications, which reduce the principal for homeowners and reduce payments significantly. Sheila Bair at FDIC says 32% of prior payments is about the right amount. The bad types of loan modifications that lead to no reduction in principal, and put homeowners back in redefault because of large payments that homeowners "under water" or a lost job cannot afford, have so far been the dominant kind of loan modification. At present 14 million homeowners are "under water," in that their homes are worth less than what is owed on the mortgage. One of the crucial measures which would have enabled this, has not been pushed by the Obama administration through Congress. This was to pass an amendment that allowed bankruptcy judges to modify troubled mortgages. Banks which have taken billions of dollars in loans from the federal government were allowed to lobby aggressively to kill this amendment, and the Obama administration did little to push this amendment in Congress. 12 Senate Democrats joined 39 Senate Republicans to block a vote on the amendment. Says the NYT editorial "when the time came to stand up to the banking lobbies and cajole yes votes from reluctant senators-the White House did'nt. When the measure failed there wasn't even a statement of regret." This could turn out to be a major mistake, because as the NYT points out voluntary loan modifications have shown poor results. The administration's plan to provide incentives for loan modification is untried and tested, and may not produce significant results. With 14 million homeowners under water, and spiralling foreclosures, the situation may get out of control and seriously damage the economy. After the moratorium in home foreclosures ended there is expected to be a big surge in foreclosures, with estimates of 290,000 to 341,000 foreclosures in March, 2009. If this is allowed to continue it will undo all the good work in other areas, the stimulus spending, rebuilding the auto industry and other steps. It will also be more difficult to reverse as valuable time passes and the cost of the crisis escalates. A consensus among many experts was that stronger action in connection with the banks was required, and Martin Feldstein has warned about the danger posed by foreclosures since early 2008, see links....

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Sabine Kinkartz of the DW.com looks at the way in which Olaf Scholz achieved what was seen as impossible through patience, grit, and hard work in the face of adversity. SPD was seeing poll numbers of as low as 15% in the spring of 2021, just months before the election. Scholz believed in his party's ideas for the renewal of Germany, remained undeterred even after losing an election to lead the SPD to Esken and Walter-Borjans in 2019, when Esken and Walter-Borjans reinforced the idea that the SPD should stand for workers and families, what it always stood for. Scholz was put forward as candidate by Esken and Walter-Borjans in 2021 with conviction. By Spring 2021 it was clear that Scholz had achieved the impossible, getting the conservative Merkel and the CDU, with instincts against borrowing in all situations, to agree to a huge aid package for Germany to fight the pandemic, and a huge aid package for the European Union to fight the pandemic.  That Scholz remained undeterred in his campaign by low poll numbers and went on campaigning on the basis of convictions about what is right for Germans and Germany, comes from deeper convictions from his days growing up in the Hamburg youth wing of Social Democrats in the years following SPD's Wily Brandt and the post war recovery. Germany's most remembered leader after Adenauer, Willy Brandt was leader of the SPD Social Democrats from 1964 to 1987, and chancellor 1969-74. Both Adenauer and Brandt are respected some 50 years later in the world and in Germany. That Germany is going back to this tradition of leadership after the period of the Merkel years when Germany was held back, brings new hope to Europe and the world. In allying with the Greens under a younger generation leaders Scholz saw the promise of an opportunity to tackle problems of climate change and investment in infrastructure together. Both parties see borrowing as essential to invest big in the future. Scholz message to Germans, Europeans and the world is - "Big jobs, but our country is capable of doing them." A message sent out from the US by president Biden, and from Asia by the Indian prime minister. ...

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The IMF promised to increase the aid package to Greece from $45 billion to $120 billion. Together with aid from the EU and Germany the total would come to $160 billion. This after the markets responded negatively to efforts by Greece to obtain funds. With the junk rating for Greek bonds Greece is effectively cut off from the markets and it makes it increasingly difficullt to roll over debt including $8 billion euros due May 19, 2010. Equally significant are the rumblings being heard about Spain, which is a much larger country than Greece, and an economy 5 times as large. An IMF loan to Spain would have to be significantly larger.

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Important year end reveiw of the oil price forecasting work of so many anlaysts and where they failed . The IEA and the US Enery Dpt forecast have year after year underestimated this pirce by over 20%. Analysts change the price forecasts within a couple of weeks based on changing information and assumptions. Of all this the Saudi Arabian forecasts have ben within 12 % of what has actually ocurred according to a study by Ronald Berger Strategy Consultants of Muich, Germany. And whats their forecast for 2008. By extrapolating from the Saudi budget and the assumptions, used such as giving a wide margin to avoid a deficit in the budget if oil prices undershot by a wide margin, one gets $75 for US benchmark crude. Forecast by experts are in the neighborhood of $80 average for the whole year 2008. Goldman recently revised theirs upwards from $85 average for 2008 to $95 within a 4 week period. How good is the Goldman forecast. No one really knows. Lehman has a forecast of $84 average for 2008 and bases it on the opacity of the market because no one knows what OPEC will do with supply and China does not provide good information on demand. So basically anlysts are adding an uncertainty premium to the price of oil. And this is especially so because as the Chief Economist at IEA says global space capacity is so thin and any event can influence price. Last year the rhetoric about Irans nuclear intentions was enough to stir up the price, as were other smaller events disrupting supplies. But the Iranian situation has since cooled down and diplomatic solutions are in the works. So what to expect in 2008 in the way of political uncertainty. Iraq, Iran, Palestine, Lebanon have all seen a cool off in the ast couple of years and the Bush administration rhetoric has become outmoded as has other rhetoric from Iran so that does'nt look like it will stir up oil prices in 2008. Still there will be some uncertainty premium about supply from OPEC and demand from China and India. And demand from the Middle Eastern oil producing countries themselves as well as the increasing demand in India and China will mean that lower demand in the US because of a recession will still mean an increase in global demand over 2007 of 1.5 million barrrels a day over 2007's 85 million barrels a day. What will change the dynamics of this situation is the government mandated fuel economy for all vehicles on the road with Europe more aggressive in this area under the pressures of global warming. If this impacts India, China and Russia as these fuel saving technologies are transferrred there overall consumption should see an impact. Europe's targets are only 4 years away for 2012. And the environment may cause China to bring in newer technologies that both contribute to improving environment and conserving energy. Because China's environmental record is almost catastrophic one could see some of this happen much sooner than expected after the Olympics in 2008. All that might change the way the world looks at oil and its use, and all energy sources and their use. ...