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This report in WSJ says China's government faces severely strained government finances. Local government entities sale of land financed 40% of local government revenues in China, and most of these have dried up with the very real loss of confidence in property sector. Government now faces $900 billion in shortfall in revenues says this report. There may be psychological hurdles in China's growth with the effects on mental health from lockdowns in major cities, the revolt in the property sector with home buyers losing confidence in developers, the loss of confidence of foreign investors from US and EU. The dependence on the property sector to carry so large a burden of growth for the last 2 decades in China may now look like an error. The dependence on foreign investment may also be an error as the loss of confidence could mean some withdrawal and a lack of sustained investment.  It could even be said that restraints on both sectors property and foreign investors could have created alternative paths to growth, and reduced the shift of factories from the US and Europe to China that have now caused trade friction and and a reverse shift of investment back to home countries of US and EU. Trade friction has it appears backfired in a way that extends to the overall relationship which could have been prevented by preventing the hyper growth that happened. Greg Ip of the WSJ has argued that compared to Japan's growth in the sixties and seventies from a country of 100 million the hyper growth for a country of 1 billion for 2 decades created a massive impact on communities in US and EU that were dependent on factories that were lost to China. This has alienated large sectors of the public in the US and EU which could have been prevented by restraints on hyper growth in China. Ip says the growth was too large and too fast for the US to cope. It may have permanently damaged the relations between the two countries showing that trade and globalization had unintended effects when left to business which has no comprehension of how the macro developments can affect the relations between the peoples if the other effects in the relationship such as community impacts are ignored which business says is not its role,  and governments staying away from keeping an eye on how it was happening and adjusting for ill effects with restraint and redirection of business policies. ...

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Barbara Wesel of DW.com says 2017 will be a difficult year for the European Union. Elections will be held in the Netherlands, France, Germany, and possibly in Italy. The Netherlands election is coming up this month and the far right party led by Wilders is likely to gain as much as 25% of the vote but have to negotiate with other parties in a fractured parliament to form a government. Elections in France show Marie Le Pen winning the first round, with an uncertain result in the second round between Le Pen and Macron. A win by Le Pen could lead to the unwinding of the EU. In Germany another coalition government is expected with the SPD playing a larger role as it regains favor with the voters under the EU's Martin Schulz. Wesel says Germany and Merkel are looking like a beacon of stability and hope as the world looks for leadership with America looking inward to fix problems at home.

 

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Rappaport of the NYT asks how it is possible that the U.S. Treasury is critical of the EU Commission's ruling that Apple pay back $13 billion in taxes because of its low tax rate of .005% in Europe, when Treasury is strongly critical of tax avoidance. The negligible tax by Ireland, base of Apple operations, is seen as a state subsidy not available to competitors. It also, as the EU Commission says, does not correspond to economic reality because the revenues are mostly made outside Ireland. An arrangement that is basically a strategy of tax avoidance. Today the leading candidates for president, Trump and Clinton, the major parties, and Congress, all are critical of tax avoidance strategies which deprive Treasury of much needed revenues. Restoring upward mobility is a priority today and programs to provide tution free access to public colleges, healthcare access, and infrastructure development, require public funding. Then why is the U.S.Treasury critical of the EU ruling? It is because Treasury sees this as money that should be coming to Treasury not the EU. However Treasury has failed to make this clear. The Financial Accountability and Corporate Transparency Coalition's Clark Gascoigne, calls it very ironic. And other experts say the money would not be coming to the U.S. anyway unless a low tax rate induces Apple to repatriate profits to the U.S. One expert calls it hypocritical. Senator Schumer says he agrees with Paul Ryan that tax legislation for a low tax rate for repatriation of profits back to the U.S. should be the next step, so that an infrastructure fund can be setup. Senator Levin and transparency advocates sees the EU action as normal and to be expected, as the anti-establishment sentiment today comes from such dealings that create the impression that the system is rigged in favor of some corporations. ...

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Richard Haas and Michael Levi of the Council on Foreign Relations suggest a path of negotiations for a peaceful settlement of the Iran crisis. Haas points to the difficulties in solving the impasse in the crisis through solutions based entirely either on military options or on expanded sanctions. The merit of this approach, says Haas, would also be to demonstrate that the U.S. and the E.U nations have done their best to come up with a negotiated outcome.

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Antonis Samaras, leader of Greece's New Democracy Party, opposes the tax increases mandated by the E.U.'s June 2011 program for Greece. He supports the spending cuts. The shrinking economy with no hope for recovery under the current plan will only worsen the situation. The Greek economy declined by 4.5% in 2010 and will decline 3% to 4% in 2011, and unemployment is already at 16%, with much higher unemployment among young people. Many experts, and editorials in the Wall Street Journal and the Economist, share this opinion. With the austerity program's cuts and tax increases deeply unpopular among ordinary Greeks Samaras's party is moving ahead of Prime Minister Papandreou's socialist party in public opinion polls. Papandreou is not expectd to complete his term of office which ends in 2013, and a change of government may come by the end of 2011. At that point the E.U. leaders will have to negotiate with Samaras. Samaras says he told German chancellor Merkel- if your plan works I will say I was wrong, but if it doesn't you will need a new plan....

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Rupel, foreign ministern of Slovenia to hold summit talks with Russian President Medvedev in June and negotiations to start for a strategic partnership between thr EU and Russia at this summit in June, 2008. Medvedev visited China in May 2008.

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The events leading to the EU brokered deal and the final hours of tense negotiations are described in this exceptional reporting by Benoit, Norman and Fidler. Chancellor Merkel played a critical role in the developments and Catherine Ashton, EU policy chief, played a supporting role. The foreign ministers of Germany, France and Poland, Steinmeier, Fabius and Sikorsi, conducted the tense negotiations with president Yakunovych and protesters in Kiev's Independence Square. At one point the foreign ministers Steinmeier and Sikoski actually talk to protesters in the Square to clear up differences and get support, something that German and Polish leaders have never done together in a Eastern European country. Russian president Putin acquiesced in the agreement by sending an experienced Russian diplomat to help support the negotiations, another first, confirmed by the Polish foreign minister. In a joint presentation with Hollande to media in Paris, Merkel set the serious way Germany viewed the developments- we have seen much go wrong in Europe, Merkel said, now Germany and France would take the action for things to go right. ...

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Washington Post calls a Netherlands unrealized capital gains tax of 36% unfair. The legislation was passed in lower house of parliament. Unrealized capital losses could be used to offset gains in future years under this legislation. The US only taxes capital gains after they are realized and at 15% or 20% for long term gains and a 4% added tax for high income persons. The 36% tax would apply to all who own stocks or bonds not just the wealthy.

In Netherlands the average take of the ogvernment is 3%% compared to 30% in US. Healthcare costs are split 65% 45% between the government and average worker, and mostly all (84% of workers) get additional coverage. The value added tax rate VAT is 21% in Netherlands about 3 times the US sales tax of 6-7%. And the Netherlands is in the EU a relatively moderate tax country compared to France and UK.

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At the 2 day summit in Brussels Sarkozy and Brown are pushing for tougher oversight of banks. Brown wants strict standards for capital reserves of the banks and having financial markets open their books.

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The Bank of Cyprus and the Cyprus Popular Bank (Laiki Bank), passed stress tests given by the EU in 2010 and 2011. By the end of 2010- even as other banks such as Barclays were cutting their Greece government bonds by over 50%- the two banks held 5.8 billion euros of Greece bonds, over $1 billion euros larger exposure to Greece than nine months earlier, according to European regulators. Regulatory supervision failed to alert the banks and the banks risk management failed to see the warning signs in Greece. The Laiki Bank Risk Officer went in the opposite direction actually increasing exposure to Greece, saying in a conference call in August 2010, that he had used the bank's capital position "to deepen selectively some highly profitable client relationships." What went wrong with the stress tests by the EU regulators in July 2010 of these two banks, was that the tests looked at what would happen if economic conditions deteriorated, but did not consider the possibility that government bonds could produce losses. The two banks suffered total booked losses of 4.3 billion euros in 2013 from holdings of Greece bonds. The EU stress tests of July 2010 showed the two banks having total of 572 million in surplus capital. The two banks then went on to issue dividends in 2010-2011 totalling 141 million euros. By March 2013 the Laiki Bank was "on respirator" for a few months, according to the Central Bank of Cyprus, until the 10 billion euro EU bailout in March 2013 with the closing of Laiki Bank and the sharp downsizing of Bank of Cyprus....

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Russia's takes on a tough negotiating position in the winter of 2025-26, just when the Russian economy suffers decline in oil revenues. Opaque loans in the defense sector that make up 25% of loans or $202 billion could be a problem. Cost of the war in 2025 are over $200 billion. Other problems are the finances of Lukoil and Rosneft, the increasing amount of sanctioned oil that is sitting on tankers in the sea with no buyers. Gazprom has a loss of $12.9 billion in 2025, with cash reserves depleted from $22 billion in 2022 to $6-8 billion in Jan 2026, with $20 billion of additional debt taken on. Rosneft profit dropped 70% in 2025 to $3.6 billion. Consumer spending is down by about 9% in December 2025 compared to 2024. Yet this is unlikely to lead to social or political problems in Russia. It will make it more difficult to finance the war compared to previous years. The Ukraine economy needs $135 billion for the next 2 years for funding the budget which now depoends on laons from the EU. Both Russia and Ukraine are fighting an exhausting war as it enters the fifth year of the war, exhausting their economies and their population, as the leaders of Russia and Ukraine fail to reach an agreement. ...

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The 32 year old leader of the movement called Five Star started by comedian Beppe Grillo in Italy, Luigi Maio, now leads the effort to form a government in Italy. The M5S party party won 32% of the vote in Italy's 2018 elections. The Northern League a far right party based on the region near Milan led by Matteo Salvini, came in second. In combination with Berlusconi's Forza Italia it has 37% of the vote, not enough to form a government on its own. The M5S is a centre left party which shares euroskepticism with the Northern League, but remains a centrist party that has little in common with the Northern League and Berlusconi. The FIve Star Movement sees fresh elections as the only next step as it sees no chance of a coalition with the far right parties.   

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Largest drone and missile attacks on Kviv and Lviv of the war on August 20 2025 soon after DJT meeting with Putin in Alaska and EU leaders meeting at White House. This has raised concerns that Russia is not seriously working to end the war. The lack of EU peacekeeping force acceptance by Russia poses serious obstacles to Ukraine or the EU supporting an agreement that has no safeguards. It means the war may continue for some time till both sides see no gains from continuing the war. Russia's position at this time is that territorial changes need to be made in eastern region.

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One has to separate the posturing and the rhetoric from the true positions of the parties to difficult negotiations between the ECB, IMF, EU, and the Syriza government in Greece. French opinion is reflected in the comments by Finance minister Michel Sapin, who said to reporters in Brussels- "If this government was elected, it's also because Greece has lost 25% of its national wealth in the space of 5 years." The government in Greece needs the 7 billion euro payment from the EU as the last instalment in the bailout package. France's Hollande government and the Renzi government in Italy favor growth measures over the austerity path advocated by Germany. The IMF's Christine Lagarde, a former French finance minister, was quick to differentiate between reforms such as tax collection, which is weak in Greece, with austerity opposed by the Syriza government. Lagarde told the newspaper Le Monde that the reforms on tax collection are not austerity, and need to be done. The IMF has 2.5 billion euro loan due in March, 2015. Debt is also owed to the ECB by July 2015. The ECB holds about $25 billion in Greek government debt. ECB president Draghi announced a 1 trillion euro government bond buying program in Jan. 2015 with a portion of the bond buying and risks to be borne by the ECB. The ECB could help the negotiations by stepping in to buy Greek bonds. A lot depends on the flexibility shown by both sides as the hard work of negotiating a solution on debt relief and structural reforms in Greece- such as the tax collection mentioned by Lagarde- progresses. Because of the deflation facing the eurozone, and economic uncertainty, the huge bond buying effort by the ECB to improve economic conditions, the positions of the EU and the ECB are likely to favor a toning down of the sharp rhetoric during the early days of the Greece crisis in 2011-2012. This would avoid adding additional economic uncertainty to the situation facing the eurozone. Tsipras and Syriza would seek to move to the centre in their positions based on discussions held earlier in meetings between the EU, the ECB and Tsipras before the elections....

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Central Banks and populist governments clash on what is best for long term financial health in the new EU Eastern European countries. Poland, Hungary, Slovakia, face higher deficits and serious diagreement about state finances.

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CPC Central Committee Proposal on Formulating the 15th FIve Year Plan for National Economic and Social Development (4th Plenary Session 20th Central Committee October 23 2025). It gives the outline of main ideas in domestic and foreign policies that China adopts for the next 15th 5 year Plan to 2030. It shows how China wants to navigate the next 5 years in the world. It gives the first signs that China wants to do Socialist Modernization, Chinese style Modernization of its economic and social structures in this phase. The first impression from this and the 2026 National People's Congress is that China is seeking to work with Germany, with EU and with the US to modernize its economy, not as in the past, but now more sensitive to all the changes taking place in the world. The goals are comprehensive yet presented in modest manner ( no China Dream ambitiously worded goals that had ruffled feathers in the US) presenting China in a way that would win acceptance and integration into the world's leading powers.  ...

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A study by the EU Chamber of Commerce in China says European companies are being unfairly treated in the awarding of public contracts.

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The US envoy to Belarus responds to overtures from Belarus's leader Lukashenko for improved relations, release of hundreds of political prisoners including the husband of a opposition leader who is thought to have won the last Belarus open elections in 2020. Today it is not realized that politicians with lack of vision or foresight - Bush, Obama, Merkel, failed to grasp that in 2020 two events happened that were linked- the Belarus electons bringing another pro-EU government on Russia's border which was squashed before it could take office and the pro-democracy movement in Hong Kong also squashed in 2020 by China PRC. Crimea was made part of Russia in 2014 when Ukrainian protesters in Kviv and Lviv near Poland ousted the government of pro Russia leader Yanukovych in the Maidan revolution. Russia under Putin responded 2014-2020 with a simmering effort to take parts of eastern Ukraine that were close to and sympathetic to Russia. This was an effort to counter NATO or pro-EU countries coming to Russia's borders in the way JFK opposed pro-Russian regime in Cuba. Obama and Merkel never understood or grasped this or were too involved in the eurozone, migration crises (Merkel) or war in Afghanistan (Obama). The result was that in 2020 Russia helped squash the election results in Belarus with another pro-EU government impending. Within 2 years Russia under Putin with tacit Chinese support invaded Ukraine in Feb 2022. Belarus shares a border with Russia and it is closely allied with Russia in the Eurasian Economic Zone that includes former Soviet Bloc countries such as Kazakhstan. Gradually following the recovery of the Russian economy by 2010 the emphasis shifted to create something similar to the Soviet Union, a bloc of countries in central Asia and in Eastern Europe that are part of a Russian sphere of influence. For much of the period of the Obama/ Merkel administrations in US and Germany this was ignored as most of the politicians never gave Russia the importance it sought, not accepting that the economic power was not measured only in GDP- also in science and technology, nuclear technologies, space, in energy resources, and Russia's position in Northern/Central Europe and Central Asia since 1700.  It is this situation that the DJT administration faced with US challenges of the Mexican and Venezuelan drug and people trafficking in the western hemisphere has responded with the Monroe Doctrine to reassert American influence in Latin America by respecting Russia's effort to have some measure of influence on its borders, that the US seeks on it's borders. Without Russian or Chinese intervention in Latin America and with the the Monroe Doctrine in place America can protect the interests of the American people and the people of Latin America for free and good government. What Bush, Obama, Merkel lost sight of is that by each power having some strong measure of influence in their regions, and the tendencies for benevolent influence put in place, there is significantly more room for respecting the hopes and aspirations of people in their regions through democratic or other people oriented forms of government than by the situation in which economically the US was dominant after the fall of the Berlin Wall but other influences would lead to US decline- open but not free trade with China, and the recovery of the Russian economy, drug and people trafficking by gangs in Latin America where the Monroe Doctrine for US leadership had prevailed till the 1960's. ...

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After coming down to $0.95 to the US dollar in September 2022 the euro is now back up to $1.07. A drop in energy prices and easing of recession fears in the EU is sparing a revival of the euro. A milder winter in Europe and an impressive effort in cutting gas consumption is helping the EU. The stronger euro also helps in tackling inflation in the EU.

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Bundeswehr started in 1955 by chancellor Adenauer of the CDU -with civilian leadership embedded in a democracy. In 2025 80% of Germans hold a positive view in a recent survey. It started with 101 volunteers in 1955 with enrollment up to 400,000 in the Cold War and down to 200,000 more recently. Being restructured for the issues facing the EU today in 2025 by chancellor Merz of the CDU.