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"China's Superbank," by Henry Sanderson and Michael Forsythe looks at the rise of China Development Bank to provide insights into the two decade real estate boom in China, and the trillions of dollars in loans made by state owned banks to finance China's state owned industries and infrastructure development. The authors say these loans based on land owned by the state, improved with roads and other infrastructure and then sold to industry, have helped finance China's urbanization and industrial development. But it has also created problems including eviction of farmers from the land by local government authorites increasing inequality, led to misallocation of capital on bad projects, and an unsustainable model of development focussed on state owned companies. A major side effect of this is not covered in the book. This is the impact of crowding out of credit for private industry in China, with privately owned business having to pay higher rates in the underground loan market or lacking financing. A major focus of the report "China: 2030" by the World Bank and China's official think tank Development Research Center is on reversing this development to come up with a sustainable development model. The report was supported by World Bank chief Zoellick and China's new prime minister Li Keqiang. "The Great Rebalancing," by Pettis, a finance professor at Beijing University, looks at the other side of the financing of China's boom- the low interest rates on savings for China's consumer. This reduces household incomes and reduces purchasing power as the interest rates are lower than the rate of inflation. Lower value of China's currency also reduces the purchasing power for China's consumers. Estimates show the low interest rates cost China's workers and consumers somewhere in the range of 3 to 8% of GDP annually in bank deposit income. This money is funnelled through the banking system to make more loans for infrastructure and growth at the state owned companies, concentrating exraordinary level of financing in one direction. As a result the consumption share of GDP in China has actually fallen in the two decades of hyper development. This is about 34% compared to 50-55% for other Asian economies....

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Stuart Stevens, the chief strategist of the Romney campaign points to the Romney campaign's success in getting a majority of votes of people making over $50,000, a majority of white voters under 30 by a 7 point margin, winning the votes of a majority of America's middle class, and falling short of a win of the Electoral College by 320,000 votes. He says Obama turned Democratic party weaknesses of being too liberal and too dependent on minorities into advantages. The Pew Research Center and other expert opinion cited as the principal reaon for the defeat, Romneys failure to empathize with voters. He appeared callous in his image with Hispanic voters with his self-deportation stand, and similiarly his position on the auto bailout was shown as callous in a barrage of political ads by the Obama campaign in the midwestern states, the remark about the 47% dependent on government help simply reinforced this notion of being insensitive to concerns of the less affluent. The candidate never succeeded in shaking off impressions in the minds of voters of being a private equity executive who could not empathize with weaker sections of the community, which were reinforced by heavy negative advertising in the 2012 election. Stevens says nothing about the short sightedness of a callous immigration policy of self-deportation adopted by a former governor of Massachusetts, in the face of Census statistics showing more children of minorities, especially Hispanics, born each year than children of any other demographic group in the U.S. The changing demographics may have made a crucial difference in many states....

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Defense Secretary Gates does not see Russia as the threat it was in the Cold War, first because Russia's conventional forces are a "shadow" of what they were during the Cold War, and Russia has adverse demographic trends that will diminish Russia's ability in conventional forces. He sees the Georgian war in the context of Russia's seeking to exorcize, as he puts it, past humiliations. And Gates sees opportunities in the relationship with Russia. Such things as Russia's willingness to work with the US on Afghanistan. Evidence of this is Russia supporting the renwal of the UN resolution on Afghanistan. Another indication is that Russia he says is very worried about the drugs coming out of Afghanistan, and has been supportive to provide alternative routes for Europeans to get equipment and supplies into Afghanistan. These views come across in an interview on December 17, with Charlie Rose, a five time elected Congressman, for the PBS Charlie Rose show. They are also reflected in an article in Foreign Affairs journal's current issue. Gates was a CIA analyst and has some insightful observations. Gates told Charlie Rose that he does not see the Islamic radicals and violent Islamic extremists as a threat in the same way as the threat in the Cold War years. This threat is not as big as the threat to freedom during the Cold War. He says the failure in strategic communications was huge as agencies of the US government engaged in activities in other countries, like the Agency for International Development and the US Information Agency, were neglected starting in the in the 1990's. Communications in other countries of what the US represented and stands for was left to the Pentagon, a role the Pentagon was ill-suited for. He sees the Islamic terrorism as more of an ideological conflict. Speaking at a town hall meeting at the Balad Air Force base in Iraq, in December, Gates pointed to these communications failures as a real challenge for the new administration. But he now sees a huge opportunity in this past failure, and ways of addressing it creatively, in addition to commiting resources and people to this effort. Walter Pincus wrote this article, and its part of the fineprint analysis effort at the Washington Post in which speeches, reports, and other documents are examined by people like Pincus, to catch the really important things, uncovering the fine print that really makes the headlines. Another aspect of this fineprint effort is that there are a huge number of reports, and speeches and documents that had a tone reminiscent of the Cold War during the Georgia war and yet they do not correctly reflect the real situation about Russia, as Gates sees it from his analysis of what is actually happening. Gates has used Foreign Affairs, the Dec 17 Charlie Rose Show on PBS in which he was interviewed, and the speech at the Balad Air Force base in Iraq, to communicate his views and analysis. They are important to underline and emphasize precisely because they show that all that cold war hysteria reporting and speeches may be misleading and lead to improper conclusions and mistakes in policy, wasted effort, wasted resources, and lost lives. And just as the US strategic communications was starved of resources and effort, so also this necessary work to retrieve and give emphasis to the important things is neglected. One additional link to this is the speech, discussion, and QA session in Washington DC at the time of the G20 summit in which President Medvedev and the new administration's elder statesman and diplomat Marilyn Albright, former secretary of state, expressed their hopes and plans for a new era in Russian-American relations. ...

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Manuel Barroso, president of the European Commission, tells Italian newspaper La Repubblica on September 1, 2014, that Russian president Putin made some abnormal remarks in a phone conversation. Responding to Barroso's question about whether Russian troops had crossed into eastern Ukraine, Putin is reported to say: "That is not the question... But if I wanted to, I could take Kiev in two weeks." The WSJ editorial on September 3 referred to an earlier editorial on "Putin Bonaparte," giving some idea of how such comments by Putin are seen in the media, and how Putin's actions in Ukraine are creating new tensions with the NATO alliance and the U.S.

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Brazil's economy is forecast to contract by 2% in 2015, the currency has lost about one third its value and the stock market is down 22% in the last year. This follows the decline in demand for Brazil's commodities exports as China growth slows down. Experts say Brazil is now seeing another boom bust cycle similiar to boom-bust cycles in the past, such as the 1966-73 boom followed by years of hyperinflation and stagnation. Brazil's exports to China declined 17% in the first 7 months of 2015. The crisis is in many ways similiar to crises in other emerging markets dependent on commodities exports. The resources boom leads to overvaluation of the currency, and decline in development of manufacturing away from dependence on commodities exports. Other errors rise from complacency and politics prevalent in such periods. These errors include mismanagement of resources with poor resource allocation decisions such as spending on soccer stadiums in cities in the northeast while basic bus services remained underfinanced in large urban areas, large overspending by the government using state owned bank BNDES to offer rates at below market rates, a credit fueled boom and credit card binge for households, and a reversal of capital flows from the U.S. and Europe with the sharp decline in investment climate. There is a severe loss of confidence in the government of Dilma Rousseff with her approval rating as low as 8%. Corruption scandals at Petrobras show close links between the Workers Party of Rousseff and executives, with about $2 billion in misused funds. Brazil, like other emerging markets such as Russia and India, have taken some lessons from the 1997 financial crisis by setting aside large foreign exchange reserves for a crisis. Brazil's reserves of $397 billion help it cushion the effects with funding of the safety net and support to industries to avoid large layoffs. Other problems not tackled as in Mexico, India, and other emerging markets, are the weak educational system, and poor infrastructure, that create bottlenecks for growth. Brazil could face a lost decade after the debt overhang, decline in foreign investment and commodity export generated revenues. ...

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Hugo Dixon says the deal made by eurozone leaders for Greece in July 2011 favors private creditors. The bondholder haircut was much smaller, eurozone governments and taxpayers will make up the difference. This he says is like a cat in the bag presented to the receiver as a pig as long as he does not look inside, called a "poke." Dixon says that if Greece cannot implement austerity measures under a new government and the deal has to be renegotiated bondholders may face a larger haircut than the 20% under the current arrangement. It would have been better he says to do this now but the ECB's threats may have led to the German and French governments treating private creditors with kids gloves.

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Cochrane says the best option today is for Europe to accept a sovereign default for Greece. He says the European Central Bank which stands behind the euro, should not be used for buying bonds of troubled countries with shaky "collateral." This would only lead to a situation where EU countries would have to recapitalize the ECB. He emphasizes the fact that Greece will not pay back this debt. And the only way out is to have a situation similiar to Argentina where it needs to start over, and it would at some point be able to borrow again. Austerity is deeply unpopular in Greece and with higher unemployment Greece's financial situation is rapidly deteriorating. Making austerity something that was tried to buy time but will not work. Cochrane also makes the point that the euro itself acts like the euro bonds that EU countries are reluctant to support, it means the ECB backs the currency and supports it- which makes it vital to keep the ECB whole and prevent the dilution of its financial strength. Axel Weber, former head of the Bundesbank, resigned to express his opposition to the ECB buying the bonds of troubled eurozone countries, which he said was outside the ECB's mandate to conduct monetary policy....

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The CDU convention in Leipzig, Germany passed a compromise resolution that lays the ground for a EU country to voluntarily leave the euro zone and still maintain membership in the European Union. The resolution called for changes to the Lisbon Treaty to allow a euro zone member that is "unable or unwilling to permanently obey the rules connected to the common currency... to voluntarily... leave the euro zone without leaving the European Union." Merkel told delegates that Europe must change the EU treaty to allow for strong automatic sanctions for violations of the monetary union treaty. "We need to send a clear signal. We don't whine; we don't complain. We know instead that we have a job to do." On the issue of voluntary withdrawal from the eurozone, the earlier decision by Merkel and President Sarkozy of France- when prime minister Papandreou of Greece decided to put the issue of membership to a referendum- was to tell Greece that leaving the eurozone would mean leaving the European Union. This CDU resolution provides a basis for Greece to resolve its debt problems outside the euro currency, as experts suggest....

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Greece's national statistics agency Elstat shows data indicating a rapidly deteriorating Greek economy. The unemployment rate went up to 20.9% in November, up from 18.2 % the prior month, with the total number of unemployed at 1.029 million. Industrial output declined by 11.3% in December 2011 compared to the prior year. The unemployment rate is 48% for young people ages 15-24 for November 2011 compared to 35.6% in the prior year. For women the unemployment rate was 25.4% in November, compared to 17% the prior year. In the region of Attica, which includes Athens, the unemployment rate was 21.1% in November compared to 19.2% in October, and 13.9% the prior year. This creates new concern whether austerity measures will work and whether the Greek people can go through a decade of austerity programs, with debt still at 120% of GDP in 2020 under the program designed by the EU and the IMF, or whether there are other solutions that offer more hope of recovery.

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The riots in Athens as the Greek parliament voted to support the passage of an EU plan of austerity cuts, including a 22% cut in the minimum wage, pension cuts and large cuts in the number of government employees. The Popular Orthodox Rally party in the governing Greek coalition withdrew its support, 22 members of the Socialist party and 21 members of the New Democracy party in parliament opposed the measures. Elections are planned for April, 2012. Antonio Samaras, head of the New Democracy party, told parliament that he supported the measure only so that Greece could continue using the euro and have "the possibility tomorrow to negotiate and change the policy that is being imposed on us today."

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Spain and Italy's 10 year government bonds yield declined to 3.2% in April 2014, compared to 2.68% on U.S. 10 year government bonds and 1.56% for German 10 year bonds. This is a far cry from the dark days of 2012 when these yields for Italy and Spain hovered at 7-8%. Italian bonds reached a peak in Nov. 2011 of 7.408% and yields declined to 3.221% on April 8, 2014, according to Tradeweb. Spain's bonds reached a peak of 7.637% in July 2012 and declined to 3.204% on April 8, 2014.

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Gen. Martin Dempsey took a cautious approach to U.S. involvement in Afghanistan and Syria. He did not approve of the way Gen. McChrystal expanded U.S. involvement in Afghanistan, and the hasty manner in which the Iraqi army was trained under his predecessors leading to some commanders being appointed who later became members of sectarian death squads. Under his command the U.S. limited its role in Afghanistan and Iraq and handed more responsibility to local forces. Gen. Dunford who succeeded Dempsey as chairman Joint Chiefs of Staff for the U.S. follows the cautious approach set by Dempsey. Dempsey's approach extends to what he believes is an Heisenberg effect in physics where when you you observe or touch something it changes the way it functions and operates. For critics such as Senator McCain, who served in Vietnam as a pilot, if Dempsey did not want to intervene in some country, he could invent the reasons not to get involved. President Obama exceeded the caution exercized by Dempsey, leading to a situation where the U.S. after hasty action under a Republican president seemed to lurch in the opposite direction under his Democratic successor by not taking action where U.S. presence was needed, followed by a corrective course to make up for this....

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New York Times readers respond to Drew Western's article in Sunday Review, NYT of August 7, 2011. Readers express disappointment with President Obama's lack of courage and initiative.

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Germany went through a period of stagnant growth and persistently high unemployment leading to reforms of the welfare system and entitlements under the Schroeder administration. The reforms led to lower unemployment benefits and an effort to get the unemployed take up jobs. Instead of unemployment benefits that amounted to half the salary indefinitely, unemployment benefits ended in 12 months under the reforms, and workers were forced to take up jobs or dig into their savings. The cuts to benefits led to more of the unemployed taking jobs that were not their first choice with lower incomes. Unions agreed to defer wage demands and wages remained relatively flat for a long period. The "kurzarbeit" system of government subsidizing employers to retain workers during economic downturns, helped cushion the workforce from ups and downs in the economy. Unemployment which was in double digits a decade ago, is now 6.1%. The system still preserved some other aspects of generous benefits- parental leave of 14 months at two-thirds salary, vacation time and publicly sponsored health insurance. Recent changes include raising the retirement age to 67 from 65. The Organization of Economc Cooperation and Development estimates that the 200,000 jobs saved in Germany during the recession of 2008-2009 cost the government $7 billion. Government funds helped companies retain workers by paying a portion of worker salaries and averting layoffs.This comes to $35,000 per job. Compare this with the $38.9 billion allocated to a loan program at the Energy Department under the U.S. stimulus. 8050 jobs were created under this program according to the Washington Post- for the money spent so far in Sept 2011- 2 years into the loan program, of $19.3 billion. This comes to $2.4 million in government guaranteed loans per job. The Energy Department says that 33,000 jobs were saved under the $5.9 billion that was given to the auto industry under this program for investments in manufacturing to improve fuel efficiency. This comes to $178,000 per job. The Energy Department and Congress estimated a 5%-10% loss on the $38.6 billion loan program for loans that go sour, such as the Solyndra solar company $535 million loan. This comes to $1.9 billion at 5% loss and $3.8 billion for a 10% loss. The purpose of these figures is to show the cost of programs when the programs fail to achieve job goals or produce too little for the investment. The $3.8 billion loss under the program is over half the $7 billon Germany invested for the 200,000 jobs saved as estimated by the OECD. That ranks as a far superior investment than the Energy Department program. For the U.S. there are aspects of German reforms such as "kurzarbeit" that bear emulation, with serious questions about the effective use of the U.S. stimulus funds. For the rest of Europe the stingier unemployment benefits, raising the retirement age to 67, and other reforms send a different message. From the average German the message is: we made the tough changes, the rest of Europe cannot expect Germans to pay higher taxes while they put off similiar changes. Italy needs to change its retirement age, just as the Germans have done. As Chancellor Merkel puts it: "People in countries like Greece, Spain, Portugal shouldn't be able to retire earlier than in Germany. It's important for everybody to put in effort to make it roughly equal. Germany will only help when others really make an effort." Which is why Greece, Spain, Italy, even France are faced with making serious changes. This isn't stalling when it comes to euro bonds, from the German perspective. And it isn't about the lack of committment to the idea of a European Union, as all major political parties in Germany, the CDP, the SDP and the Greens, all strongly support the idea of a European Union. ...

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Brooks points out that the best way to arrive at workable solutions is to take the best ideas from all sides of the political spectrum. The Republicans and the Democrats are too ideologically and politically driven and lack the imagination to come up with good solutions.

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Tax cuts initiated by the Bush administration and to a smaller degree by the Obama administration account for $6.3 trillon of the $10 trillion deficit in 2011. This is about half the $12.7 trillion gap between the $2.3 trillion surplus predicted by the CBO a decade ago for the year 2011 and the current deficit of $10.4 trillon. Two wars and higher defense spending add another $2 trillion. The Stimulus added $700 billon. The Prescription Drug Benefit for seniors $272 billion. This is based on new analysis of CBO data by the Pew Fiscal Analysis Initiative. The record shows unrestrained spending by both parties has led to the current mess. Pete Domenici who chaired the Senate Budget Committee at the time of the first tax cuts in 2001 says "in the end the floodgates were opened." This also shows how quickly the situation can change if sound fiscal practices are abandoned. Two wars were financed entirely with borrowed money for the first time in U.S. history.

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This was one of the last reports written by Anthony Shadid, New York Times foreign correspondent, before his death in Syria. It covers the Islamist movement's shift to modernism and incorporating an outlook that includes ideas of liberal democracy from Britain, as seen from Tunisia. No longer is the main source of ideas coming from Egypt. A diverse group of thought is being developed in Arab and North Africa, and in places like London, where emigres from the Middle East during the years of repression gathered to discuss ideas for the future. Said Ferjani's as one of these emigres is one of sources of the new thinking and approaches of Islamist thought.

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The SPD's Peter Steinbruck's criticism of Merkel's handling of the eurozone crisis. Speaking to the Bundestag Steinbruck said Merkel had wasted time and billions of dollars of taxpayers before committing to keep Greece in the eruozone. "You should have held this speech three years ago... Never has Germany been so isolated in Europe as it is today." He said Merkel was not being honest with Germans that to be part of Europe Germany had to take on some of the cost and that it was worth it. Instead she was riding the wave of negative opinion for the eurozone and at the same time trying to keep up Germany's influence in Brussels, creating a perception of a new kind of German "industrial imperialism." This comes as France's president Hollande expressed serious dissatisfaction with Merkel's handling of the eurozone crisis in an interview with reporters of 5 European newspapers in October 2012.

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Since 2004 consumer spending's share of the economy in China has fallen from 40% to 35%.

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Elvira Nabiullina, head of Russia's central bank, is a think tank economist who was Economy minister before becoming chief economic advisor to Russian president Putin in 2012. She is one of the liberal economists in Russia who see the years of economic growth following ruble devaluation in 1998 as an example of how devaluation can actually help the economy. The devaluation lowers costs for manufacturing and agriculture, and is seen by some economists as having done more than oil price increases to help the Russian economy grow during president Putin's first term from 1999 to 2004. Nabiullina's position to support a free float after the sharp decline in the value of the ruble following the plunge in oil prices, is based on the need she sees to use the crisis to reduce Russian overdependence on imports. This policy had other advantages by reducing the need to tap Russia's foreign currency reserves to defend the ruble. Russia's gold and foreign currency reserves are at $385 billion. In Jan 2015 the central bank cut interest rates. A policy of increasing rates would trigger a sharper recesssion. Russia faces a unique situation in that the oil price decline and the decline in the value of the ruble occurred at about the same time of about 50%, so that the budget continues to be balanced. The number of rubles coming in from oil exports remains the same after the crisis. Nabiullina told Russia 24 television- "We have to live in a different zone, Russians should orient ourselves more toward our own sources of financing projects, and to give a chance to import substitution."...