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Stock markets have declined about 1% during the current banking crisis. This shows that the action taken by president Biden quickly taking over Silicon Valley Bank and closing Republic Bank is working. Treasury Secretary Janet Yellen and the central banks of US, EU, Swiss, worked together to take immediate action. Swiss central bank and the government stepped in to arrange the backing for UBS to takeover Credit Suisse bank.  The crisis affected market sectors in differing ways. Information technology stocks were up 5.7%, energy stocks went down by 7%, bank stocks declined 6%, sensitive materials sector stocks went down by 3.5%. Risks remaining are that the loss of confidence in regional banks could affect lending. The Fed's policy of containing inflation by raising interest  rates could continue say experts leading to information tech stocks losing any gains. Any drop in the price of oil could help the economies of the US and EU, India, Japan and China. By March 15 prices of US crude had dropped for West Texas Intermediate benchmark to $67. Any drop of prices to the $60 level increases growth in the EU, US, China, India and Japan, reducing chances of a recession. ...

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Half of the 17 percentage points of lower investment in Britain between 2016 and 2023 came from administrative barriers with EU and of Brexit. Britain had deindustrialized and hoped to get growth from so called "clever industries" such as finance, media, and higher education. The Tories party led by Johnson and then Sunak painted a rosy picture for Britain leaving the European Union and doing better without it by working with China and the US and connecting to global supply chains. They ignored the actual facts of the globalization cycle reversing itself leaving Britain exposed in the storm.The slump in investment from Brexit hit Britain hard, the Ukraine war meant higher prices for energy imports from Norway and the US. The result is that only about half percentage point of 2 percent cumulative GDP growth in Britain between 4th qtr 2019 and 4th qtr 2023 came from jobs growth compared to about 3.75% in the EU economies. Eurozone growth at 4% was twice that in UK, and the US with higher productivity and job growth was growing at four times that in UK and twice that in EU at 8% over this period. ...

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As part of the European Union Brtiain could not shape its own trade deals since the 1970's. The current Brexit standoff leaves little option of changing this. The new Department of International Trade is unlikely to accomplish much even with 400 staffers and a new trade negotiator hired from New Zealand. Britain is likely to remain in the EU trading bloc customs area for many years under the standoff with EU. Countries will wait till Britain finalizes its trade deal with the EU under Brexit. It took Canada 7 years to achieve a trade deal with EU. 

Brexit uncertaintly, split in Conservative Party and Labour Party's agreeing to a second referendum on Brexit mean little progress on trade deals for Britain.

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As China's excess manufacturing capacity is put to use there is a flood of Chinese imports entering the EU and the US. Biden administration is conducting trade discussions with China warning about overproduction.

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The new administration of Francois Hollande in France includes Pierre Moscovici, as Finance Minister. Moscovici was European Affairs minister in 1997-2002 during the formative period of the European Union, served in the European parliament and wrote a book on economics with Hollande. This brings someone with deep EU experience in a critical role of shaping EU policies. Laurent Fabius, is Foreign Minister. Fabius was prime minister in the 1980's. Michel Sapin, a former finance minister is minister for Employment, Labor, and Social Dialogue. The credibility, talent and experience of this team will be critical as the EU enters a difficult phase in 2012-2013.

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A major problem for getting grain out of Ukraine by truck and rail is the EU bureaucratic paperwork, says this BBC report. For truck routes long waits at the border are common and queues can stretch as long as  25 kilometres or 16 miles. By rail the Ukraine rail system is wider than the EU's so that the grain has to be transferred for rail on the border.This can take as much as 30 days or 16 days. This is limiting the shipments say Ukraine farmers and most of it is at this time corn shipments.

For years Ukraine farmers were used to sending grain out through the port of Odessa on the Black Sea. This is now closed till negotiations lead to its opening or EU and the US finds some other way to do it.

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Spain's national statistics agency confirmed that the Spanish economy contracted by 0.3% of GDP in the 4th quarter of 2011. The central bank of Spain predicts the economy will contract by 1.5% in 2012 if Spain makes spending cuts to meet the defict target committed by Spain with the EU of 4.4% of GDP. The deficit was 8% of GDP in 2011 and the new Rajoy government announced cuts and tax increases amounting to 1.5% of GDP. A separate IMF report predicts a 1.7% contraction in GDP of Spain in 2012. Opposition party leader Rubalcalba says Spain should renegotiate its deficit target with the EU in the light of the expected contraction. Spain's prime minister Rajoy hinted he would move in this direction.

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The U.S. Mexico, Canada trade agreement USMCA is now seen as a model for future trade agreements with China, Japan, Germany, the EU, and Britain as it leaves the EU. It is based on a pro-growth, labor protections, higher wages in America model. The USMCA provisions to raise American wages for workers, improve labor protections in developing countries, pro-growth, and level playing field, are portable and can be transferred to other trade agreements. The USMCA now has support from all parties and is expected to become law when it passes Congress next week. The USMCA when applied to countries that favor or subsidize their businesses also provides a template to level the playing field and ensure fair competition.

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Globalization is being replaced with government support for attracting new investment and industry. Germany is providing $11 billion for 2 Intel semiconductor plants. The Biden administration $280 billion CHIPS and Science Act investment by the US sets the new pathway for government to support industry to increase investment and create good paying jobs inside the US. This reverses decades of neglect of American manufacturing by administrations from the time of president Reagan through the Bush, Obama and Trump administrations. A new world order is being shaped that enables the EU and the US to compete with China with direct government support for industry.  The US and the EU gain, the UK and Singapore lose out in the new arrangement.

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The details of the deal negotiated by the EU, Germany, France and other eurozone countries for a Single Resolution Mechanism, Single Resolution Board and Single Resolution Board in December 2013.

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The International Energy Agency estimates that a price of $100 a barrel would mean U.S. imports of oil at $385 billion, and European Union imports of $375 billion. This is $80 billion in addition spending on oil imports for the U.S. and $76 billion for the E.U., compared to 2010. The impact of a $20 increase in the price of a barrel of oil translates into a 50 cent increase in price per gallon at the gasoline pump. Economic estimates show a drop of 0.5% in GDP growth for the U.S. resulting from such a price increase of $20 per barrel.

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Egyptian leader ElBaradei describes his talk with U.S. Secretary of State Kerry and E.U. leader Ashton on the day of the coup on July 3, 2013 to convince them about the need for the military to intervene to oust president Morsi. He says two and ahalf years have been wasted but this time Egyptians have to get it right. Morsi was elected with the help of liberals, but failed in ElBaradei's view to form an inclusive government and respect all sides of opinion, including the young people who formed the core of protests against years of military rule.

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Theresa May, prime minister of Britain, faced a difficult situation by Jan. 2017- the European Union was not going to budge on the free movement of people and services within the EU. With no prospects for negotiations on the migration issue and a decision to retake control of migration, May announced on Jan. 17, 2017, that she would pull Britain out of the single market. By Jan 2017 Theresa May was perceived in the media facing tough challenges and having no clear path, and no clear plan, and little support from the civil service, business, and within a divided Conservative party, to implement Brexit. This has not changed much even with this decision, as the additional hurdle of getting Scotland, Ireland and Wales, and the close to 50% of the people who voted against Brexit to support this move remains as large as ever, the situation of ample uncertainty, for May and for Britain.

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The Labour Party in Britain pulls the plug on further talks with the ruling Conservative government of Theresa May. No agreement could be reached on whether a customs union should be forged with the EU after Brexit, or on whether there should be a second referendum on Brexit as most Labour Party members want. Mrs. May has struggled to get her agreement negotiated with the EU passed in British parliament after trying several times, leading to most observers calling it a huge mess.

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Prime minister Passos Coelho of Portugal makes the decision not to ask for a precautionary credit line from lenders, as Portugal exits the EU bailout program in April 2014. Portugal received bailout funds of $78 billion euros from the EU, IMF and the ECB in 2011. Portugal's economy is expected to see growth of 1% in the next 2 years. Unemployment declined from 17.7% in the beginning of 2013 to 15.2% in 1st quarter of 2014. Portugal returned to bond markets in April 2014 with 750 million euros of 10 year government bonds at 3.575%. Still Portugal will take a long time to fully recover and the EU will continue to monitor its financial position. The last loan to the IMF is scheduled for repayment in 2024 and to the EU in 2042. Exports and a return to bond markets are the two bright areas, but the government debt continued to climb from 94% in 2010 to 129% in 2014. A 15% unemployment rate and mere 1% growth through 2015 suggests a slow recovery similiar to Spain.

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The European Recovery Fund package finally gets settled after long negotiations over the weekend. It is settled by lowering the nonrepayable direct aid to countries hardest hit by the pandemic of 500 billion euros the initial target to 390 billion euros. The change was made to meet Dutch demands that are based on right wing parties in Netherlands critical of the deal and upcoming elections in the country. Mr. Rutte of the Netherlands held on to the end. He has been in power for about ten years by following the Dutch mood carefully. This time both Merkel and Macron, both France and Germany supported the 500 billion euro plan for nonrepayable aid to countries particularly in southern Europe that took the brunt of the pandemic- Spain, Italy and Greece. The EU's executive branch will now for first time issue debt on a large scale to fund this nonrepayable aid and additional loans of 360 billion euros. There is also a multiyear EU budget of 1 trillion euros for 2021 to 2027 designed to meet the goals of European recovery. The way the EU is setup a lone holdout or a small country like the Netherlands with the help of two other small countries Denmark and Sweden could hold up the agreement against the interests of the larger nations Germany, France, Italy, Spain, Portugal. Poland and Hungary also strongly supported the 500 billion euro target for nonrepayable aid. The combined population of these countries is about 314 million compared to just 17 million for Netherlands, 10 million for Sweden, and 6 million for Denmark. In addition Merkel has recovered her footing in Germany after the pandemic and most right wing parties in Europe have lost ground during the pandemic. That Mr. Rutte could push this far in the face of the need to show solidarity at a time like this shows weakness in the fabric and structure of the EU, and its rules and organizing charter. Normally a blocking minority would need 4 countries and 35% of the population to block EU proposals supported by the majority. This could be used if the blocking is seen as not in the common interest. In recent years most decision are made with unanimity, but this is one in which solidarity needed to be shown without the long negotiations taking some of the spirit and vigour behind the earlier plan. ...

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Mario Draghi, former head of the European Central Bank, who ran ECB policy to rescue the Euro currency in 2012 is being asked to form a new government by the president. Mr. Conte's coalition failed to get the support of Matteo Renzi's left party in parliament leading to its collapse.  Italians are wary of the austerity policies of Mario Monti,  professor and EU bureaucrat appointed by premier Berlusconi to the EU Commission, who was appointed  during the eurozone financial crisis in November 2011 by the president.  At the time prime minister Berlusconi had lost the confidence of EU officials. Mario Draghi has a different history after his work at the European Central Bank counteracting the austerity approach of German finance ministry. He also steered the ECB policy at a difficult time for Italy with rising interest on debt. Today Italy has lost about 89,000 lives, and 8.8% of GDP was lost in 2020. Moderate factions of all parties right and left wing are expected to support Draghi. Draghi also has the advantage of 200 billion in euro funds coming from the EU for Italy's recovery in 2021. Germany today is not the austerity policy Germany of 2011, as it supports going big and spending for the recovery. ...

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About 171,000 refugees tried to cross the 250 mile stretch of ocean in rickety boats from Libyan ports into Italy in 2014, according to Frontex, the EU border agency . Refugees from Syria, Libya, Tunisia, and Eritrea are fleeing their homelands. A smuggling trade is carried out by tribes in Libya for these refugees, with one tribe making $60,000 a week. The tribes then use the money to buy weapons in the Libyan civil war. Migrant deaths at sea and inadequate rescue efforts are leading to a humanitarian crisis for Italy and the EU.

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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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One result of the rapprochement of the US and Russia is that Russia has now   agreed to Ukraine joining the European Union. This is part of the Ukraine/EU Peace Plan put forward by Ukraine, with Ukraine calling for aset date to join the EU. Ukraine has proposed a demilitarized zone in the eastern region that would put eastern Donetsk in the demilitarized zone including also parts of Russian occupied eastern Ukraine. This is a major step in the right direction so that the Ukraine issue can be settled. Germany meantime is leading the effort to build its arms industry to counter Russia and Germany, France, Britain are joining together to counter Russia as the US pulls back under the DJT administration to asserting itself in the Western Hemisphere with the Monroe Doctrine to fight the drug trafficking gangs in Venezuela and Mexico and pother parts of the western hemisphere. The Monroe Doctrine was possible in 1823 till 1960 with the full support of Britain. It is now possible with the cooperation of Russia as Russia is accepted as a dominant power in Northern Europe, a goal set by Russia under Putin.  ...

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Without a final Brexit agreement Britain has the advantage of being able to use Northern Ireland, which would remain in the EU, as a way to send British goods into the European market including goods from companies subsidized by Britain. This and related reasons on Britain being able to set its own rules on the borders between the two Irelands, and on its trade and movement of goods, is why Boris Johnson says Britain does not absolutely need an agreement on Brexit with the EU.

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The high energy costs and the need for the funding approved by the European Union mean the new Italian government of Giorgia Meloni will work closely with the EU. Italy's difficult fiscal situation with high debt to GDP limit the possibilities for Meloni to carry out policies independent of the EU. Her election campaign was fought mainly on cultural issues, opposing immigration and calling for a return to family and Catholic values, while extending support to the European Union positions on energy and other issues, says the WSJ.

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Boris Johnson leads a new British government that is composed mostly of ministers who want to see Brexit happen, and giving the positions of Home Secretary and Foreign Secretary to persons who do not care what happens as long as Britain leaves the European Union. Johnson's date is October 31st for leaving the EU. Sajid Javid, a former Deutsche Bank AG executive is the new chancellor of the exchequer. Priti Patel is new Home Secretary. Dominic Raab a former lawyer who has called for parliament to be suspended if need be so that Brexit can be pushed through is the new Foreign Secretary. Dominic Cummings who headed the Leave campaign for the Brexit referendum in 2016 is the new adviser at 10 Downing Street. Johnson's strategy is to pack the cabinet with people loyal to his vision of leaving the EU October 31st regardless of what the EU does.  The EU has not changed its position and is even less likely to consider any new Irish border proposals. Three top ministers are opposed to Mr. Johnson's views and resigned. Treasury chief Philip Hammond, Deputy primeminister David Lidington, Justice Secretary David Gauke, all resigned in opposition to Mr. Johnson simply pulling Britain out of the EU. Johnson once said all he feared from Britain abruptly leaving the EU was a shortage of Mars bars. During the election in the Conservative party Mr. Johnson was mostly quiet and avoided any gaffes to sound statesman like, yet as the process unfolds Mr. Johnson is likely to face the same problems faced by his predecessor Mrs. May. Added to this is the new opposition of moderates like Mr. Hammond and Gauke in the Conservative party that could topple the government and lead to a general election with just three vote swing in the other direction doing this. Mr. Johnson has prepared for this by having Mr. Cummings as a top adviser in the event he faces a general election. Meantime the Labour party initially not favoring a second referendum with Mr. Corbyn's ambiguous views on Brexit, as shifted gradually to the leadership and the rank and file all favoring a second referendum and for Remain. As Greg Ip has pointed out in the WSJ this week the conditions have changed with protectionism, nationalism and hostility to globalization, and president Trump not planning concessions of any sort even for the UK in trade negotiations. This means to low productivity of less than 1% to support stifled wages, one would have to add a 3.5% hit to GDP from a no deal Brexit such as Mr. Johnson approves according to the IMF. With the migration issue not what it was three years ago and reduced to a trickle this new situation must be on the minds of Mr. Corbyn, Labour and Conservative moderates. ...

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Banks in the UK are considering giving investment bankers allowances to make up for lower bonuses mandated by new EU rules. This is one of the mechanisms banks are considering to be able to pay competitively. EU rules do not limit total compensation making it possible to shift pay given earlier as bonuses to the new 'allowance' category. For instance a 1.8 million euro bonus might be dropped to 1 million euros and 800,000 euros given as an allowance. Such an arrangement means banks can adjust the allowance as markets and regulations change. Increasing fixed salary would mean effects such as higher pension costs. Most of the 35,000 higher level banking employees to which the EU rules apply work in London, England. The UK Prudential Regulation Authority has come out against the EU bonus rule and the UK has taken this up in a legal challenge at the European Court of Justice. U.S. and Asian banks are deferring parts of bonuses and paying in a mix of shares and cash.

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Questions about how large oil companies could be slowing down the action needed to meet climate change targets set by the US and the EU. The Ukraine war disrupted oil and gas supplies leading to the realization that a transition period would include some oil and gas. The Greens and Energy Minister Habeck in Germany secured emergency oil and gas supplies from Norway and Qatar to get through the winter. Yet the basic goals of meeting climate change targets set by the EU and the US and other countries remain intact and require serious action. How will this be done and who will set the climate change action plan? The large oil companies have too much invested in fossil fuels to prepare for the future with renewable energy.