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The new government of prime minister Enrico Letta takes office in Italy in April 2013 following the reelection of president Giorgio Napolitano. Letta is 46 years old and represents a new generation in Italian politics. He is a former Christian Democrat and member of the European parliament. Letta studied at the University of Pisa, and did graduate work in international affairs. In the 1990's he was president of the European Young Christian Democrats. He was associated with Beniamino Andreatta, a Christian Democrat economist and founder of research group Arel. Letta was his chief of staff when he became foreign minister in 1993. In 1998 Letta was minister for European Affairs, and the following year Industry minister. In 2009 Letta became deputy secretary of the Democratic party. The firm European connections, a good sense of how Italians feel about the economic changes, a connection with young people, and his grasp of the needs of business and labor in improving Italian competitiveness, make him an excellent choice after the inconclusive parliamentary elections in Italy. ...

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Typical of so much of what is written about the World Health Organization and its role in the pandemic, this podcast in the WSJ fails to quickly convey the critical function of the WHO as an early warning system the world has depended on, including China. The H1N1 epidemic originated in Mexico. Asian countries including China and India depended on very quick response from the country where the epidemic originated  in allowing entry into the affected area for experts from advanced countries such as the U.S. The global response was then coordinated across countries quickly with complete transparency. The head of China's CDC himself faced a problem with transparency with the provincial authorites in Wuhan. 1.    Fundamentally this quick entry was denied the U.S. Request by U.S. to China was made on Jan. 6 for U.S. team to go to Wuhan, quick permission was denied and given only about 6 weeks later on Feb 16. This delay is the crux of the problem for the U.S.. Taiwan confirmed human to human transmission on Jan. 1, the WHO was saying this was not clear as late as Jan. 14. These costly delays are what the U.S.  letter is about.  The head of the CDC China Gao Fu called Dr. Redfield head of CDC in the U.S. on the next day after he suspected Wuhan provincial authorites were vague about what was happening. Gao Fu was alarmed when scanning the internet on December 30, 2019, about rumors of a vaguely worded lung disease in internal memos of Wuhan. He called Wuhan authorites and was not getting clear answers on that day, then deciding on December 31 to send his own team to Wuhan, as reported in German magazine Der Spiegel- Hackenbroch, Zand, 05/20/2020.  Der Spiegel says in its special report on the early period in Wuhan that Gao Fu was so alarmed about what was happening enough to be in tears in his series of calls with Dr. Redfield in the immediate days that followed. The date was shortly after the GAO Fu sent the team to Wuhan, December 31 and New Years Day 2020, as reported in Der Spiegel. See the link to Lyrarc gist of Der Spiegel's "A Failed Deception: The Early Days of the Coronavirus in Wuhan."  2.  President Trump points out the standards of the WHO- in the concluding point of his letter to WHO- when a three time prime minister of Norway, Gro Brundtland was head of the WHO during the SARS crisis of 2003. She acted quickly and decisively and no time was lost. It is this failure of the early warning system under the new president of the WHO after 2017 Dr. Tedros that alarms the U.S.  with about 100,000 deaths.  3.  This failure it can now be said was partly a result of a election in 2017 for the position of WHO president which was flawed. This was the first time a WHO head, an important position was put up for an election. The Executive Board was responsible for this appointment since the founding of the WHO as part of the UN, based in Geneva, Switzerland, after World War II. This system worked. The election was clearly a bad process for appointing the president of the WHO which should be done entirely on the capabilities of the person holding this position not on a flawed voting process. It is flawed because India and Bangladesh hit by a cyclone during the coronavirus have suffered greatly, as have other countries, but had only 2 votes for 1.5 billion people, when Barbados (385,000 population) and Laos (7 million) which had less than one  hundredth the population had the same number of votes. The U.S. had one vote. The election resulted in lobbying and a process in which many candidates stayed away because they simply would not go through such a process. The position was too important to the world- most of the advanced countries had forgotten about the danger of epidemics to let this happen by 2017, as shown in the way the austerity years led to cancellation of the preparations for pandemic in France and Britain. The austerity years and neglect of public health during these tech boom years in the western world made it possible for this to happen. 3.   Along with the 1 month ultimatum action is already being taken to restore the effectiveness of the importance of the Executive Board. The head of the health ministry in India, Dr. Harsh Vardhan, has been appointed the new chairman of the Executive Board on May 22. This restores the voice of billions of people in Asia in the process, and brings the major countries with the greatest risk in a pandemic into the decision process for tackling the pandemic, this includes the rest of the world.     ...

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This article clearly shows that Russia is turning the corner for full scale use of western technology to tap oil and gas fields in the North. Note the efforts to bring in western expertise include- 1. Efforts to hire Donald Evans, former U.S. Commerce Secretary, to be Chairman of Rosneft. Evans turned down the offer. The hiring of Peter O'Brien a former Morgan Stanley investment banker as chief financial advser.2. With China National Petroleum as a strategic partner. 2. The financial backing and expertise of state run oil companies around the world now give them the ability to contract directly with Schlumberger or Baker Hughes or other oil field technology suppliers. This changes the whole playing field with less need to negotiate with the major oil companies and the ability to do it themselves at their own pace and strategic advantage and execute their own oil policy. Previously negotiating with the oil companies meant giving up some of the ownership of the oil fields to the oil companies in return for the technology. The oil services companies sell the technologies on a fee basis. 3. The pressure to move ahead aggressively with new technology. Estimates from IEA in Paris by Chief Economist Fatih Birol, show that increasing oil production by one and half million barrels a day to level of ten and half million barrels a a day requires Russia to invest $900 billion dollars by 2030 or about 40 billion a year. The only way to generate this kind of investment is to grow its oil development capabilities, keep prices high but stable, invest in the latest technology and bring some of it inhouse....

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Investors in China fear that the overheated economy and property bubbles, may see a sharp turn with excessive tightening of monetary policy. China rebounded quickly after the 2008 crisis, but did this with a huge stimulus and by encouraging excessive lending levels. Some of this local government lending is suspected to have gone into low quality projects with the danger of bad loans. Inflation was 2.8% in April, and as lending tightens the Shanghai Composite Index has fallen 16% in the last month. The crisis in Europe, the extremely short 2-3 month horizon of mainland Chinese investors, the excessive supply of shares- attempts to raise $74 billion in share issuance in mainland and Hong Kong markets and an IPO of $30 billion for Agricultural Bank of China- all put pressure on stocks. OECD index of leading indicators for March 2010 show a drop from February, and the Chinese economy grew 11.9% in the first quarter 2010.

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Italy's prime minister, Mario Monti, a senior EU official before becoming prime minister, has the credibility and credentials to bring the French and German sides together on a new plan forward for the European Union, says Steven Pearlstein of the Washington Post. In this report from Rome, where leaders of Italy, Spain, France and Germany are meeting to discuss solutions Pearlstein describes the solutions Monti is putting forward. The European Investment Fund would be built up so that it has funding of about $175 billion or 1% of Europe's GDP to finance truly productivity and growth enhancing projects of innovative small and medium sized business in transportation, energy, education and environmental sectors. These companies have suffered shortages of capital as banks pulled bank from lending. It is the inadequate private investment that is causing the greatest damage in this crisis and $175 billion is at the low end of the amount needed in this crisis. Other steps Monti is pushing forward- for immediate steps to tackle the crisis deposit insurance to prevent a run on banks is essential for European banks. This would come with a eurozone regulatory authority that would have the powers to regulate European banks. The European Financial Stability Facility would be the "sovereign buyer of last resort," under Monti's proposal. Eurobonds come up as a key part of the solution. This is not because German and French taxpayers would be required to finance economies of Spain and Italy. As was shown by the U.S. Troubled Asset Relief Program (TARP) a well designed program could pay for itself. This would include the EU financial authority taking up stakes in the banks getting help and closing banks that are insolvent. The key point is that if properly executed and executed in a timely and appropriate way this does not have to cost French and German taxpayers- the important thing being to support the eurozone economies before the situation deteriorates. Borrowing at 6% for Spain and Italy will only put the situation out of control as deficits rise rapidly. The concessions for tighter regulation of European banking systems, reducing risk in banking, setting up adequate reserves, closing poorly run banks, and ceding powers to a European Financial Authority that can make the final decisions, are the steps that would have to go with these arrangements. Sound financial management requires that the kind of banking risks taken in the speculative bubbles in Spain, the lack of transparency and credibility in banking estimates of bad loans in the system, and the glossing over the problems at Bankia, would have to be addressed in solutions through regulation by a credible European Financial Authority to convince skeptical German public opinion that financial accounts are conducted in a proper manner....

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During the Greek debt crisis in 2011 the ECB bought Greek bonds at a discount to face value to support the price of Greek bonds. It did so under the agreement that the bonds would be worth the full amount. Now as part of the negotiations between Greece and private bondholders (mostly French and German banks) about how much losses private bondholders will take- to make Greek debt serviceable as its economy shrinks and tax revenues decline- the ECB says it will take $11 billion in losses on these bonds as its contribution. The ECB will do this on the condition that Greece comes up with an agreement with private bondholders that makes debt serviceable. This could mean increasing private bondholder losses to 70%. from 50%. The central banks of EU countries hold $12 billion of Greek bonds. The ECB says this will not apply to these bonds. Negotiations are also underway between the EU and Greece for a 20% reduction in Greece's minimum wage and an additional 3 billion euros in government spending cuts, and pension cuts for retirees. The EU is asking for a written committment from the Greek government and from Antonio Samaras of the New Democracy party to the austerity program, as the measures are highly unpopular in Greece and are leading to continued street protests in Athens. ...

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Blackston and Karnitschnig describe the European Central Bank's role in the current crisis and buying of bonds of troubled eurozone countries. And the resistance in Germany to the ECB's purchase of bonds of eurozone countries to prevent contagion effects in the eurozone. ECB President Trichet only reluctantly pushed the ECB into bond purchases in the recurring crises, and saw the ECB's role as strictly limited to controlling inflation and maintaining a stable euro currency. There is resistance in Germany to the ECB printing money to cover eurozone debt of Greece, Ireland, Italy and Spain. This comes from the searing experience with hyperinflation, an economic crisis similiar to that of the U.S. with the Great Depression, when the Reichsbank printed money in the 1920's to buy large quantities of government bonds. The Bundesbank that ensured Germany's postwar recovery focussed on a single mandate to control inflation, and this is a key part of the ECB's charter. The first president of the ECB when it was founded in 1998, was Dutchman Wim Duisenberg, who would tell politicians: "I hear you, but I don't listen." When Frenchman Trichet became the second ECB president, he focussed on inflation fighting efforts. He warned against the extravagant spending and fiscal irresponsibility of some eurozone countries saying "we are dancing on a volcano."...

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Honda plans to move more of its manufacturing to the U.S. as the value of the yen drops below 80 to the dollar in 2011. Honda faces problems from parts shortages after floods in Thailand, and U.S. market share down 1.5 percentage points to 9% in 2011. Honda's profit declined by more than 50% for the third quarter of 2011. The yen trading at 77 to the dollar in Dec 2011 is making it impossible for Honda to make a profit from vehicles made in Japan and sold in the U.S. Honda plans to double the capacity of the Civic plant in Greensburg, Indiana, increase capacity at its other assembly plants. It will build a new plant in Celaya, Mexico, in 2014, to manufacture the Fit subcompact. This will raise North American production from 1.29 million vehicles to close to 2 million. About 200,000 to 300,000 of these vehicles will be exported to other international markets. Profits on small subcompacts are small, making manufacture of the Fit more economical in North America than in Japan. In 2011 Honda manufactured between 30-40% of vehicles in Japan, the new plans are to reduce this to 10-20% in the next 10 years, a major shift....

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Hon Hai chairman Terry Gou told corporate employees that Hon Hai plans to increase the number of robotic arms in its manufacturing plants from 10,000 to one million by 2013. He says the move will "improve working conditions and provide a better career path to employees." The improvement of working conditions is a major concern after a number of suicides. The plans to automate dangerous and monotonous tasks is intended to migrate workers to other work. Hon Hai has about 1 million employees in China. It is moving plants to the less costly interor of China where wages are lower- to Chengdu, Wuhan and Zhengzhou from the coastal areas.

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The Trump administration's early proposal for NAFTA moves away from campaign pledges to completely renegotiate the treaty, instead taking the approach of working to improve the U.S. trade position in relation to Mexico and Canada. It includes seven objectives for tougher rules for labor and the environment favored by Democrats in Congress, and it also has support from Republicans with its effort to update NAFTA for changes in technology and in other areas since the accord was signed during the Clinton administration. The area in which U.S. and Mexican business are wary is one in which the Trump administration still seeks to keep the option of imposing protective tariffs, and a border-adjusted tax to level playing field for differences in taxes, as well as other measures to protect American jobs and interests. Because any renegotiated NAFTA also has to pass both houses of Congress this proposal took into account the different constituencies and interests for this issue. Robert Lighthizer, trade representative under president Reagan is likely to become the next U.S. Trade Representative and lead negotiator. We first profiled Lighthizer in a group in Lyrarc for pointing to the need for a level playing field in trade. As early as 2010 Lighthizer argued in op-ed articles that globalization and trade practices should ensure a level playing field for the U.S., and was covered in Lyrarc. ...

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Ireland is paying close to 6% for the cash it is getting while European authorites are paying 3% to issue bonds in January 2011. With the rate at 3.5% over German bond yields, J.P. Morgan estimates that Ireland would have to generate a primary surplus, excluding interest costs, of 2.3% in 2015. This is what it would take to stabilize debt against GDP. Borrowing at one percent lower Ireland would need a primary deficit of 0.2%. Ireland is in its third year of fiscal austerity, and this unjustly penalizes Ireland. An interest rate reduction would be contingent on Ireland achieving fiscal targets and monitoring by the European authorites.

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Efforts to change labor laws by Italy's prime minister, Mario Monti.

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The warning light is again on for Greece in the beginning of 2012, as the rapidly deteriorating economy makes a 50% loss by private creditors insufficient to help it meet repayment or refinancing of bonds coming due in 2012. Additional funds will be needed from EU countries unwilling to do this. 14.5 billion euros in Greek bonds come due on March 20, 2012. Greece also faces a public increasingly resistant to austerity cuts. A vountary exchage of existing Greek bonds by private creditors for new bonds at 50% face value and maturing over a longer period will be done under English law. This will be harder to change in the future. Most of the existing bonds were issued under Greek law which can be altered by Greece's parliament.

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One of the problems facing the Republican People's Party, the CHP, is how to connect with religious voters. CHP is the party that is most closely associated with modern Turkey's founder, Kemal Ataturk. CHP was the main party in Turkey till the recent dominance of the AKP Party in elections. AKP drew support from the more religious and rural population in the parts of Turkey outside cities such as Ankara and Istanbul. CHP rarely identified itself with street protest and remained aloof from ordinary people making it hard for it to contest elections against the AKP - winning Ankara and Istanbul but losing the elections in the last decade. The AKP also allied itself with Turkey's Ottoman heritage and appealed to nationalist sentiment against a conservative aloof CHP leading to a split in Turkey between the secular urban and the religious minded more rural people. CHP also did not work with minorities such as the Kurds to build a broader coalition. This is changing with the march from Ankara to Istanbul led by CHP leader Kilicdaroglu. The march came after the justice system appeared to be allied with president Erdogan, and a 25 year sentence was given to one of Kilicdaroglu's deputies. Erdogan now appoints the judges in the judiciary and the crackdown on the opposition since the failed coup of 2016, has led to a sense that Turkey is now run as a one party state. An estimated 1.5 million Turks participated in the rally in Istanbul, according to DW, showing that the opposition is forming to the arbitrary rule since the emergency powers assumed by the president. For the last decade Erdogan and the AKP Party formed the government. What changed since 2016 is the new constitution that gives new powers to the president and the arbitrary rule since the crackdown on the opposition that intensified after 2014, and which has increased since the failed coup in 2016.  ...

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Ireland and Portugal both have debt to GDP ratios of more than 100%. Still Ireland is better positioned to weather the eurozone crisis. Foreign investment attracted by low taxes and an educated labor force gives Ireland signficant advantages to return to growth. Citigroup forecasts show a 5.5% decline in GDP for Portugal in 2012, and large probabilities that the deficit will overshoot. Ireland expects 0.5% growth in 2012. Ireland's exports are 60% of GDP, compared to 24% for Portugal. Yields on Portuguese bonds due 2020 are at 13%, compared to less than 7% for Ireland. But funding Portugal through the end of 2015 is expected to cost 40 billion euros, according to Capital Economics estimates, or only 0.4% of eurozone GDP, making the problem in Portugal very manageable for the EU.

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Under the rules for the European currency and the European Union there is no mechanism or process of fines or other sanctions to promote compliance to debt and deficit rules. In the case of Greece, an examination of budget reports shows that Greece never met the deficit rule of 3% for any year except 2006 and it has never been within 30 percentage points of the debt ceiling. Greece's statistics are faulty and deficit figures are continually being revised upwards. Several times the figures were quadruple what was initially reported in late 2009, for instance the deficit figure was 3.7% of GDP, then revised to 13% of GDP, setting off the current crisis for the Euro and the European Union. In 2001 Greece failed to reflect $2.2 billon in military expenses. According to Eurostat, the EU statistics authority this was 10 times what was saved from the derivatives swap arranged by Goldman Sachs to trim Greece's deficit. That transaction trimmed the deficit by one tenth of a percentage point.