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France and Germany support the EU coronavirus rescue package of 750 billion euros with 500 billion euros in grants to struggling businesses. Four countries- Austria, Sweden, Denmark and Netherlands- which supported the austerity policies that hurt working families in Europe for a decade after the financial crisis of 2009, do not support grants and instead call for loans to be made. This time Germany has swung over to the French side and southern European countries such as Italy and Spain that suffered badly from the virus. Without solidarity in such a situation the EU concept becomes meaningless and Merkel says these countries that oppose common borrowing do not understand the gravity of the crisis facing Europe's economies after the virus. 

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With an unemployment rate of 13% compared with 7% as the European average, and Spain having 3 million unemployed, the situation is serious. Spain's savings banks predict another 1 million may be unemployed to take the unemployment rate up to 18%. There are 5 million immigrants among the unemployed, as the immigrant population has risen eight fold in the last decade. The Zapatero government has a euros 33 billion public works programme that it hopes will lead to 25,000 new building projects by May to keep unemployment down. Unemployment benefits will run out for the first wave of jobless by December, 2009. The social safety net represented by the family support that is the backup during such times in Spain is weaker now, with many families having single parents.

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Mario Monti, Italy's prime minister, tells Alessandra Galloni of the WSJ, "Germany will never let France go." French economist Sorman says Americans do not realize that the EU and the Euro were created for political, not economic reasons, and the idea was to bring peace to Europe and especially between France and Germany. He sees the EU countries staying through this crisis together, and France emerging more competitive from this experience.

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Iliad SA's Free Mobile plan with subscriptions at 2 euros per month is disrupting the mobile market in France. France Telecom lost 615,000 customers in the first quarter, and Vivendi lost 274,000 subscribers in that period.

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Italy raised 18 billion euros in a record auction on Oct. 18, 2012, meeting its needs for the rest of the year. Italy's yield dropped to 4.64% on Oct 18. Spain raised 4.6 billion euros at 5.32%. Italy sold most of the BTP Italia bonds to Italian citizens with a 4 year bond linked to Italian inflation and designed for Italian retail investors with a new eBay type internet platform, including a loyalty premium of extra 40 basis points. Italian retail investors have 8 trillion euros in net private wealth and household wealth in Italy is more than 4 times the sovereign debt, according to the Bank of Italy. This is a big difference compared to Spain, because the interest on the bonds remains in Italy for consumption and investment. Spanish households are highly indebted after the housing bubble.

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Germany will give 16 state authorites 2.5 billion euros to support a6 euro monthly rail pass that can take you to anywhere in Germany for a month. About 7 million tickets have already been sold. Deutsche Bahn is operating at 80% of capacity at this time. Inflation is up 7.9% in Germany last month and this is a result of the war in Ukraine.

In other aid the German government has given-

Cutting the fuel tax by 30 cents a litre for gasoline to keep prices below 2 euros.

Those in work will get a one time 300 euros energy rebate for energy costs in autumn.

A 100 euros child benefit bonus per child.

People on other welfare benefits will also receive 100 euros.

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Deutsche Bank's 500 million euro in profits from trades in bets related to the London Interbank Offered Rate (LIBOR).

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Jorg Wuttke, chairman of the EU Chamber of Commerce in China says Germany exports 600 million euros worth of good to China every day. China exports $1.3 billion euros world of goods to Germany every day. Germany companies have heavily invested in Germany and millions of jobs in Germany depend on investments in China from engineering services to engine parts. Big companies making cars, chemicals and engineering goods make in China and have markets in China. This makes it very difficult for Germany to develop its own independent policies in relation to China for its own security following the war in Ukraine where China has supported Russia. Two decades of Merkel and CDU policies with the participation of the SPD leadership have led to this situation. Scholz is aware of this as his coalition partners Lindner of FDP, Habeck and Baerbock of the Greens oppose the dependency on China which restricts Germany from developing its own independent policies during a period when there is war in Eastern Europe with Russia. ...

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The area around Balzano in the South Tyrol region of Italy that borders Austria has none of the problems of the rest of Italy in maintaining higher birthrates. With provincial support and a thick network of family support it is much easier to get childcare so that women can work and there are other benefits. Strictly one off payments by the federal government are never enough. The Baldo family in Balzano gets an additional $200 euros per month for each child from the provincial government in addition to $2000 euros a month from the federal government. The provincial government also subsidizes apartments and groceries at the supermarket offer subsidized groceries. In Italy apart from this Alpine region birthrate per women is stuck at 1.38 children per woman. NYT shows the Baldo family and their six children up close. Ms. Baldo at this time has decided to stay home, but her sister has four children and works as a nurse with public nursery support from the provincial government. ...

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German chancellor Angela Merkel took a lot of criticism during the height of the euro crisis in 2010-2012, but maintained her composure, sense of direction, and flexibility to a changing environment. She emerges from the leadership test more confident than ever during the 2013 elections for chancellor. Relations with Greece under president Samaras are also being mended after the riots in Athens during 2011-2012. She has also shown flexibility coupled with firmness in the setting of deficit targets for eurozone countries, and the courage to address issues of equity and fairness by calling for setting minimum wages industry by industry. On social and womens issues members of her cabinet have pushed for fairness. She will be remembered for her leadership, ability to learn from mistakes as time progressed during the eurozone crisis and taking firm action when needed, as the eurozone recovers from its financial crisis.

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Costas Paris interviews Lucas Papdemos, former prime minister of Greece, and a former vice president of the ECB. Papademos points to the grave consequences for Greece of an exit from the euro with high inflation and higher interest rates, and gains in price competitiveness diminished by the inflation. He says Greece must stick to the committments for cutting spending and new taxes made earlier under his government.

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A four month extension till the end of June was agreed to in negotiations between the EU, IMF, ECB, and the government of Greece. Under the agreement Greece will have to present a list of budget cuts and economic changes to the EU, ECB and IMF on Feb. 23, 2015. This will be reviewed by EU finance ministers on Feb 24. The economic measures will have to be implemented for Greece to get its 7.2 billion euro instalment pot pf a 240 billion euro bailout.

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European manufacturers are expanding manufacturing in the US because of the high value of the euro. They are also looking east. Eastern Europe now comprises 15% of eurozone imports and Turkey and Russia and additional 7%, compared with 12% to the US, almost twice as much exported to the rest of Europe alone than the USA. And an additional 17.5% to countries in Asia excluding Japan. European manufacturers are also increasing productivity to meet the impact of the higer euro and this could have beneficial effects.

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IMF forecasts for Greece's growth rate are proving too optimistic. The IMF forecast is for zero growth in 2013, and increases of 2.3% and 2.9% in 2014 and 2015. Even in its pessimistic projections the IMF forecasts a 1% downturn in 2013 and growth of 1.3% and 1.9% in 2014 and 2015. The government sector was a large part of the economy. Now that this is shrinking, the export sector which only represents 20% of GDP is too small to generate needed growth. Greece also lacks the competitiveness and the large foreign enterprises that operate in Ireland, making growth less likely. A major problem is also the 40 billion euros Greeks have withdrawn from their banks in recent years. Even the figure of 120% of GDP that is expected in 2020 under the March 2012, 130 billion euro bailout is a very hypothetical figure, having no sound basis. Landon Thomas cites a confidential study the IMF had circulated in February 2012, showing the long term prospect for Greek debt if growth does not materialize because of lack of competitiveness. It would increase the debt to GDP ratio to 178% by 2015, and leave it at the current level of 160% of GDP in 2020. Some experts say the whole debt sustainability analysis makes no sense, with the question being insolvency in the case of Greece, not illiquidity. And requiring a focus to bring debt to manageable level to create prospects for growth. The Wall Street Journal emphasizes this in its editorial on Feb. 29, 2012....

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Moody's downgraded its outlook on Germany's triple-A credit rating to negative. It also shifted to negative the outlook on triple-A ratings of Netherlands. Spain's ten year bond yield went up to 7.51% on July 23, 2012 according to Tradeweb. Analysts estimate Spain needs to issue 28 billion euros of debt for the rest of 2012 to cover deficits and repay maturing debt, and 50 billion euros in short term Treasury bills. An additional 30 billion euros may be needed if tax revenues decline increasing the deficit, and to meet the needs of regional governments. In changing the outlook for Germany, Moody's emphasized the costs Germany would incur if Spain needed a full bailout and if the situation spread to Italy, including the large exposures of German banks to Italy and Spain.

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Face masks become mandatory in over 100 congested areas of Paris, and in other French cities. A fine of 135 euros for not wearing a mask. 2288 new infections reported for France in last 24 hours for August 9. 

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The government of Pedro Sanchez has announced additional $10 billion in cost of living aid to take the total to $45 billion. It comes through reduced VAT and $200 one off payments to households making less than 27,000 euros a year. The government has been able to bring inflation down to 6.8%, lowest in the European Union, though food inflation is higher.

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The hidden costs of pollution are shown by the Forever Pollution Project in France. Le Monde and partners estimate the cost at euros 12 billion a year for cleaning up PFAS, with the smallest particles TFA widely present in water to be treated. The cost of cleanup in the US for PFAS must be vastly higher in the US and has not been estimated.

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Since mid-2014 the dollar has strengthened by 19% against the euro and 17% against the Japanese yen. This is putting new pressure on American manufacturers to come up with efficiency improvements to cut costs and move into markets with better pricing power. This will increase in importance in 2015-2016 as the euro moves towards parity with the U.S. dollar increasing the competitiveness of German and other European manufacturers. The Japanese yen at 116 to the dollar in Jan 2015 gives Japanese manufacturers an edge in pricing competitiveness.

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Germany's Interior Ministry and the Federal Press Office in the Chancellery are taking the lead for setting up the Center for Defense Against Disinformation, says DW.com citing Der Spiegel. Steffen Seibert heads the press office in the chancellery. Fines of 500,000 euros have been proposed for fake stories on Facebook.

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Mercedes is seeing signifcant sales growth in China. It is Mercedes's third biggest market with sales of 100,000 cars compared to 67,000 in 2009. Daimler CEO Dieter Zetsche says that given no downturn in the world economy Mercedes-Benz cars should reach its target for return on sales of 10% by the second half of 2012. He predicted EBIT of 2.5-3 billion euros for 2010, and plans to boost expenditures for R&D in fuel efficient technology and capital investments in new vehicle models in the second half of 2010. Analyst Warburton at Sanford and Bernstein, writes that Mercedes is likely to pass 7% margins in the first half of 2010, and will get a boost from a weaker euro plus strong sales in China. The only question is, as Dieter Zetsche noted, prospects depend on no downturn in the global economy. China's economy is growing too fast to be sustainable growth and a property bubble is developing, and its not certain how long strong sales in China will last. There are other signs of a slowdown in the global economy. See global economy....

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The European central bank increases interest rates by quarter percentage point taking the deposit rate to 3.5%. The US Fed held off on increases. The US Fed started early with its increase in interest rates and maintained a steady posture with 8 interest rate increases over 2022-2023 in a period of just over 12 months. It has strengthened the dollar against the euro. The slow response of the ECB and price gouging in Europe has worsened the inflation picture there. The US Fed's policy combined with consumers resisting price gouging by halting purchases from stores, untangling of supply chains, the Biden administration's series of actions to tackle the cost of living increases, and overall investment in the economy that keeps employment resilient including government investment for the first time, is creating a better economy for America than most of the last two decades.