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Money goig to countries with national oil companies also ends up in these countries central banks and reserves which are invested in US governmet securities helping ease the credit crisis in the USA and helping keep interest rates low.

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The mismanagement of the economy under president Macri is leading to an economic crisis in the country. By embracing economic orthodoxy and slashing subsidies for fuel, electricity and transportation Mr. Macri who won the election 3 years ago has cause the prices of these basic goods to skyrocket. This has hurt the middle class and poor in Argentina. For most of this century Argentina has pursued populist policies, and in the last five decades periods of free market principle based economics were followed by severe crises, and subsequent restoration of populist policies to improve the economic conditions that had deteriorated.  The peso lost half of its value in 2018, leading to a IMF bailout of $57 billion. Inflation is at 50%, unemployment above 9%. To stem the fall in the peso the central bank increased interest rates to 60% stifling the economy and business. Under his predecessor Christine Kirchner the peso's value suffered and its currency reserves were low after fall in soyabean prices, yet the currency had not suffered the kind of decline that it has seen under Mr. Macri. The cutting of subsidies and the economic crisis has increased the number of poor to about a third of the population. Argentina now faces another of the repeated cycles of going from a populist Peronist administration to a free market orthodoxy supporting government, followed by an economic crisis and a shift back to Peronist populist administration policies. Part of the problem is that Argentina, and Brazil, and most of Latin America is still dependent on commodity exports, and the economy dependent on commodity prices. The manufacturing sector has not taken off as it has in Asian countries. This has led to repeated crises in times when the currency reserves declined and affected the currency, also leading to bouts of severe inflation.   ...

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The Bush administration's and Paulson's thinking that letting the government buy parts of the banking system was unthinkable, as recently as late September, may have led to squandering of valuable time. Now Paulson is following Gordon Brown's lead in planning an injection of capital in banks in return for equity stakes, using much of the $700 billion Congress has authorized, and Paulson says the package that passed Congress gives Treasury all the authority it needs to do so. The failure to be open to this thinking earlier may have cost valuable time in addressing this crisis. And now there are second thoughts on whether it was wise to let Lehman fall into bankruptcy, because the Administration had not correctly anticipated or calculated the true cost of the Lehmann bankruptcy in terms of the way it created a crisis in the rest of the financial system. Paulson has still not taken Gordon Brown's lead in guaranteeing lending between the banks which the British are doing as part of their plan. Is the administration too slow in its response and a bit wrongheaded or stubborn headed as each step of the crisis has moved faster than its ability to respond, and its response being one step behind. Frederic Mishkin of Columbia University a former Fed Governor says, "if you delay and create uncertainty, the amount of money you have to put up goes up." It appears from Paulson's remarks over time first turning down proposals for capital injection into banks for equity stakes, and now in making that route central to his plan, that Paulson and Bernanke simply did not anticipate the shutting down of credit markets and the collapse of stock market prices that occurred, and they had no backup plan prepared for a situation such as this. And on top of this the backup plan they went out to sell to Congress turned out to be short on details and in this sense naive for the amount requested. And then by refusing to consider alternatives such as capital injection for equity stakes, it was wrong headed, if not closed minded. William Poole who retired in August as President of the Federal Reserve Bank of St. Louis, says that " I am not aware that Treasury presented any evidence on auctions that have been successful when they are used for assets that are so heterogenous", referring to the reverse auctions that would take weeks to set up and would be terribly complicated to buy up troubled assets, as part of the plan presented to Congress in but 3 pages. Now the plan appears to be to let Fannie and Freddie, which were given $100 billion by the Treasury as authorized by Congress, to move ahead with the purchase of troubled mortgage securities, something for which Fannie and Freddie have the capabilities. In the end the crisis in confidence and near panic generated in the markets and the climate of fear may go way beyond the actual losses incurred from debt securities, and some of this may be the result of a clumsy and poorly thought out approach by Bernanke and Paulson. The cost of fixing the problem will be higher and the recession more prolonged because of this. It is a situation of capable people blinded by ideological reasons to see what is happening and in Bernanke's case not making enough of a case to Treasury about his reservations and his own thinking that capital injection was the right approach, as people familiar with the early planning say Bernanke argued that it would be easier and more efficient to inject capital directly into banks. ...

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The People's Bank of China lowers the benchmark lending and deposit rates by 0.25 of a percentage point, and cuts the reserve requirement ratio by 0.5 of a percentage point. The PBOC said the move was designed to offset "the persisting downward pressures on the country's economic growth." It was also designed to offset the large volatility in China's stock markets. The PBOC also removed the upper limit on interest rates for fixed term deposits of more than one year, as part of interest rate liberalization. The move also counters the large capital outflows affecting China, as is happening for all emerging markets, of $70 billion in July. These outflows may have accelerated in August 2015 with declining investor confidence. Experts say the reserve ratio cut should inject about $100 billion into the banking system.

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The devaluation of the Argentine peso from 9.8 to the dollar to 13 to the dollar in Dec. 2015 by president Macri is leading to higher inflation hurting the working class. The cutting of export taxes is helping farmers. Removing most currency controls is designed to help increase foreign investment by letting foreign companies freely repatriate profits. Also expected to be removed are bureaucratic procedures that limit imports of new equipment for manufacturers. Middle class voters see the moves helping the economy in the long run with new foreign investment and changing the outlook for investment. A former central bank president Mario Blejer points out that after 12 years of the previous Kirchner administration Argentina needs investment- by improving the outlook for investment and removing import controls the government plans to stimulate investment to lead to economic growth. Inflation is up 25% and Macri is keeping Mrs. Kirchner's price control programs in place to prevent a surge in inflation beyond the impact of the devaluation. ...

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The austerity plan that prime minister Belusconi of Italy set before parliament on August 29th was quite different to the plan he agreed to in negotiations with the European central bank. The negotiations led to support by the ECB with purchase of $30 billion of Italian bonds. Berlusconi left out a surtax on top incomes in the private sector. It also left out savings to be made at the local government level by mayors and governors. Berlusconi proposed a new pension calculation which would postpone the retirement of Italians by excluding military and university service. Also being prosposed by Berlusconi and opposed by unions is the extension of the retirement age for women. Unions say this will make it harder for Italian women to care for their grandchildren in a country without an adequate system of daycare. Slowly the whole package of austerity measures seems to be coming apart and this alarms ECB President Claude Trichet and his successor Mario Draghi.

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China's vice premier, Li Keqiang, wil visit Spain Jan 4-6, 2011. In an editorial page article for El Pais, Li wrote that China will continue to purchase Spain's public debt in the future. China is a large buyer of Spain's sovereign debt, owning about 10% of the total foreign holdings. Spain's central government will need to raise 170 billion euros in 2011, and its regional governments an additional 30 billion euros. Natixis expects 824 billion of eurozone government bonds to be auctioned in 2011. For China the eurozone is its largest market and it is concerned abou the impact of a eurozone crisis on imports from China. A declining euro would make Chinese exports less competitive and costlier in European markets. And China is wary of the impact on its export industries at a time when its economy is trying to make a soft landing, and strains are showing with an asset bubble in real estate, too much bank lending and high inflation.

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Efforts in 2014 by Jizhong Energy Company to reduce pollution in the city of Xingtai, population 7.6 million, by closing down the worst polluting plants and installing new equipment. The World Bank put the cost of pollution, including cancer and other health problems, at 9% of gross national income in 2009. The Ministry of Environmental Protection estimates 3.5% of GDP as the cost of pollution in 2010. Xingtai's pollution levels have been recorded by air quality monitors at as high as 30 times China's national standard. Government figures show the PM2.5 in the city's air is 150 micrograms per cubic meter over the last 12 months, more than 4 times the national standard. To get some idea what this means, consider that Fresno, California, with the highest pollution level in the U.S. had PM2.5 level of 18 micrograms per cubic meter. To show it is serious the central government requires the city to post pollution figures online, down to individual smokestacks and exhaust ports.

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Use of oil for transportation has increased from 30% ten years ago to nearly 50% in 2013, according to Sanford Bernstein, as more cars are added to China's roads. This makes it less likely that a slowdown in China's growth will affect demand for oil. Sales of passenger cars increased by 11% in January and February 2014. A study at France's central bank by Gauvin and Rebillard shows only a much smaller effect on oil prices from a hard landing of the Chinese economy, compared to the effect on metal prices. Passenger cars now make up two out of three vehicles on Chinese roads, according to LMC Automotive. The growth in cars is likely to continue, not just in China, but in other emerging markets such as India, Brazil, Mexico and Russia. Metal consumption is different, as it comes mostly from housing, infrastructure and factories which are the most affected parts of the economy in China.

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Krugman says that China fears that a decline in the value of the dollar will reduce the value of the 70% of the $2 trillion in assets it holds, that are in the form of US Treasury bills. This may have been the reason Zhou Xiaocuan, China's central bank governor called for a new currrency to replace the dollar as new "super-sovereign reserve currency." He doesn't think this is likely to happen. Neither is his hope and that of Japan that somehow the two countries can export their way out of current difficulties. The US will not be the market it once was, that is certain. So Krugman says China, Japan, and the Europeans on the issue of the Stimulus are all hoping that things will return to the way they were. Something that is not going to happen. March figures in the US for jobs lost hit an high of 663,000, and this crisis says Krugman has years to run.

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The Japanese yen surged in value following the 2008 financial crisis as it was seen as a safe haven. As a result the Korean won declined by 42% against the Japanese yen. This continued till 2012. Japanese companies had to compete overseas at 80 yen to the dollar and shifted operations overseas. Now with the policy of monetary expansion of the Japanese central bank the situation is reversed in December 2014. The Korean won is up 40% against the Japanese yen since 2012. The Japanese yen is now down to 118 to the dollar in Dec. 2014. Abenomics gets a new mandate with the snap election in Dec. 2014. Aaron Back says Samsung may have gained ground in televisions and smartphones but other areas in electronics such as chips, displays and image sensors remain competitive and responsive to price. In autos Hyundai market share has declined to 4.4% by Dec. 2014 from 5.1% in 2011, according to MotorIntelligence.com. So far Japanese companies have used the currency advantage to improve profits and come up with better products. By using profits to invest in new technology and productivity Japanese companies can provide more features at the same price points to gain market share without having to cut price. After years of declining margins in electronics, autos and other markets this appears to be the current strategy. Another reason for this is that Japanese companies have already shifted production overseas, the shift being higher for Honda than for Toyota. Technological improvements from investments in R&D in Japan can be transferred to manufacturing operations overseas just as Apple is doing with smartphones manufacturing in China. The currency shift also improves Japan's position relative to American and European competitors in international markets....

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How the strengthening currency creates probelems for Indian and Russian exporters and the concerns of the Central Banks of these countries to prevent a too rapid strengthening of their currencies especially when its a result of transient money flowing in from overseas.

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The Bank of Japan reduced interest rates by 0.2 %, from 0.5 % to 0.3%, lowering the overnight lending rate. Citing higher energy prices and lower export demand it lowered the growth forecast to zero for 2008. This is the first time in 7 years that the Bank of Japan is doing this. Japan has never recovered from the real estate and stock market bubbles of the 1980's and interest rates in Japan have been at levels near zero for many years. With low interest rates and a huge deficit Japn has few options left. The small nature of the rate cut is unlikely to increase borrowing or stimulate the economy say experts, but is more of a symbolic move that Japan will coordinate its efforts with other global economies. Even so half of the governing board voted for and half against this cut with central bank governor Maasaki Shirakawa casting the deciding yes vote. Upto now Japn's significant help has been in the form of suppplying yen and dollars to money markets to ease the global credit crisis. Another move is a $51 billion stimulus package that will give income tax rebates to households. Japan would like to pick up the slack in global growth from USA's weakness but is unable to do so because like other Asian economies its growth is export based with low consumption spending at home. This is true also of China and China's need for infrastructure spending is not as great as it once was leaving imports of machinery at lower levels, which gives less support to export driven growth from Germany or the USA....

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The U.S. Federal Reserve released its new economic projections for GDP growth, inflation and unemployment in 2012-2014 and the decisions reached by the June 2012 Fed Open Market Committee (FOMC) meeting. This follows uncertainty in financial markets with the $125 billion rescue of Spanish banks by the EFSF, the eurozone rescue fund, and 10 year Spanish bond yields reaching 7% even after the rescue announcement. The Fed lowered all its forecasts to reflect the gloomier outlook. The "central tendency" is for the U.S. GDP to be in the range of 1.9%-2.4%, dropping it by 0.5% from the April forecast and 2013 forecast with a similiar drop to 2.2%-2.8%. 2014 GDP forecast is at 3.0-3.5% Inflation is forecast at 1.2%- 1.7% range, instead of 1.9%-2.0% for 2012 and is at 1.5%-2.0% for 2014. Unemployment is is forecast at 8.0%-8.2%, increasing by 0.2% for 2012 from the April forecast, and with a similar increase is at 7.5%-8.0% in 2013. Unemployment gradually declines to 7.0-7.7% in 2014. The decision reached by the FOMC is for the Fed to continue its program called Operation Twist to extend the average maturity of its balance sheet beyond June 2012....

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Rule changes after the failure of British lender Northern Rock, in which the Financial Services Authority permits a bank not to disclose that it received help from the central bank in certain circumstances.

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Loan officers in the Institute of International Finance Survey showed a tightening of credit standards and moderation in loan demand for the 2nd quarter of 2011. Commercial real estate sector showed a sharp decline in Latin America and Europe. A third of respondents said local funding conditions had tightened. More than 40% of banks in Europe reported decline in funding conditions.

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Simon Nixon points out that most of the 490 billion in euros borrowed by European banks under the Long Term Refinancing Operation of the ECB in Dec. 2011 is for rolling over maturing debt, rather than buying of government bonds. European banks financing needs based on figures from Barclay's Capital are over 300 billion euros for the 1st quarter of 2012. This suggests huge demand for the Long Term Financing Operation in the next quarter. For Spain and Italy the newly created lending facility should lead to higher bond buying by small and midsized Spanish banks and Italian banks, as this will boost their profitability. Spanish bonds yield 5% and Italian bonds yield 6.5% and loans from the ECB using the bonds as collateral are available at 1% for three years, which makes this an opportunity for these banks to boost profitability. The proportion of government bonds of Spain of Spanish banks bank assets is 7% and the figure for Italian banks is 9%. Nixon says an increase of this ratio by three percentage points by Spanish banks would created additional demand for Spanish government bonds of 45 billion euros, which is a third of the issuance for 2012....

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Deposit insurance at the top of the priorities for economic and banking changes in China in 2014.

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The Bank of Japan's plans to buy 100 trillion yen of Japanese government debt in 2 years to fight deflation is having a positive effect on the eurozone economies. Japanese investors are buying eurozone sovereign debt. J.P. Morgan estimates the increase in investments for overseas bonds by Japanese investors in 2013 at 45 billion euros. This is lowering the yields on the sovereign bonds of France, Netherlands and Austria to record lows and lowering the yields of sovereign bonds of Italy and Spain. The 10 year yields on Italy's government bonds declined to 4.326%. Yields on 10 year Japanese government bonds was 0.514% on April 8, 2013.