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Antonis Samaras continues his efforts to get the EU to agree to a two year extension for deficit targets agreed to in the March 202 bailout. He meets Merkel in Berlin, Aug. 24 and Hollande in Paris, Aug. 25. Merkel's coalition partners the Free Democrats oppose an extension. The opposition Social Democrats leader Steinmeier tells the Frankfurter Rundschau newspaper "its not very smart to abandon all conditions for aid over an extension of 12 months." Samaras tells the Sueddeutsche Zeitung newspaper: "our economy shrank 27%. Greece is bleeding, It is really bleeding." And German finance minister Schauble tells Germany's SWR2 radio that its too early for Greece to come back and say the agreed aid is insufficient considering that its ony 6 months since the March 2012 agreement. Merkel and other leaders in the Christian Democrats say they will wait till a report from the troika (the EU, ECB and the IMF) in October 2012 before responding.

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Rubin questions the idea that lowering the deficit by reducing tax expenditures, deductions and loopholes at the same time as lowering rates would work. It would not raise enough revenues if many of the deductions that help the middle class were not considered doable and crossed off the list. He disagrees with Republicans about increasing taxes to Clinton era levels as creating disincentives for work and business by citing the economic record of growth in jobs and GDP during the Clinton period. On the proposal to use limiting deductions and loopholes for the the rich as away to provide a more equitable distribution of the tax burden he says this would still require increasing taxes on the middle class to achieve deficit reduction.

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Greece is estimated to lose $30 billion in uncollected taxes each year. In an effort to make the wealthy pay their fair share in deficit reduction and austerity measures the Greek government is going after tax havens in London of Greeks shifting money abroad. This includes important members of parliament including the president of the Greek parliament.

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A big hurdle for local brands in China is the Chinese consumer's interest and respect for foreign brands. Asked about local brands buyers say they can't think of any, or say Chinese brands are shoddy in quality and value. Brands such as Haier in consumer appliances and Lenovo in tech are an exception. During the big surge in consumer sales in the last two decades Chinese companies producing local brands thought it adequate to simply imitate foreign brand names rather than take the difficult route of establishing the credibility of their own brand- an effort which might take years. Often the foreign name was changed slightly to keep the resemblance but mean something positive to Chinese consumers in the local language. Common are names such as Adidos, Hike, Cnoverse and Fuma for sneakers. Clio Coste keeps the connection to Lacoste with its crocodile logo. Coca Cola in Chinese is Kekoulele, translated to mean Tasty Fun. Only now are local companies giving serious attention to creating long term brand entity and image. The serious attention to brand names and branding comes at a time when China increasingly depends on consumer sales to power the economy with the decline in real estate and slower manufacturing. For the 11 months of 2014 retail sales were up 12 percent over the prior year period to $3.8 trillion, according to the National Bureau of Statistics. ...

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The new oil law allowing foreign oil companies to compete with Pemex passes the Senate in Mexico and now goes to the lower house. The legislation removes the 4 oil worker union's representatives from the 15 person Board of Pemex. The oil law now leaves only a 10 member board- five appointed by the government and five independent members approved by the Senate. Because past opening of investment by the private sector in state owned railways and telecom sectors has led to wealth passing into the hands of a few business owners and worsening competitiveness, there is concern in Mexico about how this law will be implemented so that it benefits Mexico and Mexicans through foreign investment in the oil industry. Leftist parties are pushing a bill in the lower house to allow a referendum on the oil law by 2015 if 1.6 million signatures are collected. Oil experts point to foreign investment in the Mexican oil industry as further enhancing the prospects of North American oil production in comparison to the position of Middle East oil producers, because of Mexico's large shale oil and gas reserves and the prospects for new exploration in deep waters. ...

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Polls after prime minister Papademos assumed office show nearly three fourths of Greeks see his appointment as a "positive" step for Greece. The popularity of the Socialist party of Papandreou has suffered the most in public opinion. One poll shows only 11% of Greeks would vote for the Socialist party, compared to 21% for the New Democracy party. The New Democracy party has widened its lead over the Socialists.

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Only 61% of shareholders present at the annual general meeting voted in approval of the management at Deutsche Bank in May 2015. Legal settlements and lack of trust in strategies of management have hurt credibility. A large part of the lack of credibility comes from the culture at Deutsche Bank which is seen as slow to change. Co-CEO Jain was head of the investment bank when traders engaged in activities that are causing large legal settlements for wrongdoing. Strong criticism came at the annual meeting from shareholders. Han-Martin Buhlmann of the shareholder association VIP raised the question: "Mr. Jain, are you the solution to the problem or part of it?" Alison Esse, managing director of change consultancy, The Storytellers, says shareholders had voted no-confidence against senior management because they lack the credibility to restore the reputation of the bank.

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Allan Meltzer says a Fed QE III woud be bad monetary policy. He puts several questions to Bernanke- how the Fed and Ben Bernanke can know now what is the right interest rate policy in mid 2013, and what reason can the Fed give for adding excess reserves when U.S. banks have $1.6 trillion in idle reserves at the Fed. Meltzer cautions the Fed and other policymakers not to pay attention only to short term forecasts, which can be susceptible to large errors. And calls for attention to the long term consequences of their actions. One point he emphasizes is that the unemployment problem cannot be resolved with short term policy actions nor can it be resolved in a short time. It will take population growth, falling housing prices and rising rents to create opportunities for new construction. Another change is the transition to a less consumption driven and more export oriented economy. This transition which has started will also take time. He urges the Congress and the administration to focus on: reducing corporate tax rates by closing loopholes, long-term reductions in entitlement spending, a 5 year moratatorium on new regulations, and the Fed adopting an explicit inflation target between 0% and 2%....

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S&P said it will maintain India's credit rating of triple B minus, the lowest investment grade rating, yet it may downgrade it to "junk status" in the next 2 years. S&P said this could happen "if the external position continues to deteriorate, growth prospects diminish, or progress on fiscal reforms remains slow in a weakened political setting. India's growth rate declined to 6.9% in the year ending March 31, 2012, down from 8.4% the prior year. The problem is that India's current account deficit is growing rapidly with the high import bill for energy supplies. The current account deficit is now at 4% of GDP. The trade deficit increased to $185 billion in this fiscal year, up 56% over the prior year. Additional problems are finding ways to finance the deficit with foreign capital, as European banks are pulling back during the current eurozone crisis. Commerce Secretary Rahul Khullar says this could be a big problem. Net foreign capital investment is declining rapidly from $72 billion in February 2012 to $387 million in March, with a net outflow of $27 million in the April 1-25 period. The budget deficit, which has drawn the attention of the RBI, India's central bank, and of S&P, is at 5.9% of GDP for fiscal year ending March 31, 2012. This is larger than the government target of 4.6%. The government has set a deficit target of 5.1% of GDP for the fiscal year ending March 31, 2013....

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How the Simpson-Bowles Commission recommendations on reducting tax expenditures and the Romney, Feldstein proposals to limit tax deductions and loopholes to make the rich pay more- at the same time as the tax code is simplified with lower rates- offer a basis for moving towards a deficit reduction plan that has support on both sides of the aisle in Congress, of Democrats and Republicans. Jeb Hensarling and Pat Toomey are the Republican members on the Supercommittee to address deficit reduction, who support a balanced approach to raise revenue from taxes and spending. Obama advisor, Chrisitina Romer sees the Simpson-Bowles approach to limting tax deductions as a good starting point for building an agreement. Romer goes so far as to say let the Republicans in Congress decide on infrastructure project selection as there so many worthy infrastructure improvement projects that getting started would be the main objective.

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WIth India's oil imports at four fifths of the country's oil needs, the depreciation of the Indian currency, the rupee, is especially painful. The rupee exchange rate has declined from 55 per dollar at the end of May 2013 to 64 per dollar in August 2013, a 14% decline. India provides full subsidies and this accounts for a large part of the current account deficit. Government cuts in fuel subsidies to reduce the current account deficit are diluted by the depreciation of the rupee, with a fall of one rupee in the exchange rate equal to 4 months of cuts in subsidies, according to Moody's analyst Vikas Halan.

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The prospect of a combined vote of 30-35% for both major political parties of Samaras and Venizelos, with the rest of the vote splintered among right and left wing parties, in the 2012 Greece elections. This will make governing with austerity measures even more difficult.

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Spain's central bank was lauded for macroprudential supervision before the housing bubble burst. Will China's central bank and financial authorites which have managed the housing bubble upto this point face similiar problems? Can China be the sole exception even as housing bubbles burst with wide repercussions in the U.S., UK and Spain? Nicholas Lardy, of the Peterson Institute of international Economics, says urban housing stock makes up 41% of Chinese household wealth in 2011. The same figure for the U.S. is 26%. Chinese buyers invest in homes because low interest rates on savings accounts cannot keep up with inflation. Real estate investment was 13% of GDP in 2011. Home ownership is a recent development in China, only since 1990, Chinese have never experienced large price declines. Household debt as a percentage of disposable income has increased significantly in recent years, up to 53.6% in 2011 from 31.3% in 2008, according to Lardy.

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The mortgage interest deduction mostly benefits wealthier people with larger mortgages who need it least, and who are likely to buy homes regardless of the deduction, say experts. Both the Brookings Institution and other experts such as Moody's chief economist, Mark Zandi, see the deduction as part of the negotiations for deficit reduction. The Brooking Institution's Ted Gayer, says the deduction subsidizes acitvity such as borrowing large amounts of money to buy larger homes which the U.S. should not want to subsidize in the current state of the country's finances. The Simpson-Bowles plan and the Feldstein-Romney plan sought to put unnecessary tax expenditures and deductions on the table for negotiation. The deduction was not part of the last tax reform in 1986 under president Reagan. Zandi says any changes should be phased in over a number of years so that housing sales ar not affected in the current recovery. David Stephens, CEO of the Mortgage Bankers Association says any changes should be implemented gradually. ...

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Matt Miller, a former Clinton aide, says both U.S. parties have failed to do serious problem solving. The reason is that both are looking primarily for election advantage and are not interested in blending the best of liberal and conservative thinking. He even goes so far as to say both parties don't trust the public enough to lay out all the facts openly and explain what action needs to be taken. This is clearly true in one of many examples- the way Clinton advisor Bowles and Republican Senator Simpson took up the job of coming up with a deficit reduction plan looking at things from all angles, and laying out all the facts. Contrast that with the way a Democratic president Obama shied away from openly discussing Bowles-Simpson's closing of most tax expenditures as a key a part of a new action plan. Republican leaders Boehner, Cantor, McConnell, instead of seriously challenging the Democrats to take up the Bowles-Simpson or Rivlin-Domenici proposals, focussed their attention on defunding the government unless certain conditions were met. Serious debates and discussion that should have taken place to arrive at a consensus never took place, eroding the credibility of politicians of both parties, as Miller points out. The failure of leadership brings America back to its roots in community organizing through independent intitiative at all levels for crucial problem-solving discussion. This is the way to arrive at a consensus of what needs to be done for renewing America....