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The German parliament will try to set an example by turning down thermostats to 20 degrees centigrade from 22 centigrade and turning off hot water boilers that provide warm water to the wash basins. There are 736 MP's and 5000 parliamentary staff in government buildings in the government district of Berlin.The CDU wants all ministries to follow this example. Only 63% of reserve supply storage is filled in Germany for gas that heats the country in winter and a cutoff of Russian gas supplies could happen at any time.

Chancellor Scholz says an average family of four could have energy bills this winter go up significantly calling it "social dynamite." One estimate is for it to go up by 2000 euros per year for a family of four. Vonovia, Germany's largest residential landlord says it will turndown thermostats to maximum of 17 degrees centigrade in winter.

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At a joint press conference with French, Romanian and Moldovan foreign ministers German Foreign Minister Annalena Baerbock announces 695 million euros of aid to Moldova as it deals with refugees from Ukraine. Out of about 4.2 million refugees that fled Ukraine 2.4 million went to Poland, and 1.8 million refugees to Romania, Moldova and Hungary. Moldova is one of the poorest countries in the region and is struggling to cope with the refugee influx which is the highest per capita refugees. "We have your back," Baerbock told the Moldovan prime minister Natalia Gavrilita. It's just the "kick off point for a long term continuous support platform for Moldova," said Baerbock. Gavrilita formally signed an application for accession of Moldova to the European Union shortly after the Russian invasion.

Moldova a country with 2.7 million people is dealing with an influx of 400,000 refugees. About 100,000 have decided to stay.

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The rule requiring health pass showing one is fully vaccinated goes into effect in France starting July 28 at restaurants, coffee shops, trains, and other public places. For the first week restaurants will not be fined. After this they can be fined 1500 euros for a single violation. The passe sanitaire in France is now required  for all public places where more than 50 people gather, such as events and museums including the Louvre in Paris. It will be extended to restaurants, cafes and shopping centres in August.

French premier Castex says 97% of the 18000  daily average new cases in France, up by 150% since the prior week, are from the unvaccinated. This has made health authorites and the government concerned about the delta variant high transmission rates and the high proportion of people still not vaccinated. For France this poses risk of a new kind of fourth wave, causing the government to take strong action to accelerate vaccinations.

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Achievements of Elvira Nabiullina as central bank chief in Russia since 2013 are the reducing of US dollar reserves from 40% to 11%of $600 billion in Russian reserves shifting to hold most of its reserves in euros, gold or renminbi Chinese currency. She also implemented the alternative to SWIFT the global bank messaging system, and changed the payments infrastructure to process credit card transactions in the country so departure of Visa and Mastercard had minimal effect.

In this way this highly respected banker has protected Russia's economy from western sanctions, says NYT. She is trusted by president Putin and was adviser to Putin in 2012, minister of economic development before that when Putin was prime minister. When Russia suffered an economic crisis in 2014 as oil prices fell sharply and Saudis increased oil production, the ruble fell. Nabiullina increased rates to 17%, and the economy shrank till it stabilized with inflation down to 4% by 2017.

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Better management of the economy has sustained Russian economic growth in past crises such as in 2008 when oil prices collapsed. Russian central bank chief Nabiullina has helped steer the economy holding US dollar reserves to just 11% the rest of $600 billion reserves in renminbi, euros and gold. Yet the war in Ukraine has introduced limits. With labor shortages and the technological isolation the war in Ukraine is setting new limits on economic growth, says the WSJ. Going forward the limit is about 0.9% economic growth a year. Before 2008 the Russian economy growth was at 7% growth a year, it dropped to 3.5% after the invasion of Crimea in 2014. With China facing deflationary trends, little recovery in growth, this shows that geopolitical tensions are changing the prospects of important economies. With globalization dimming the prospects of Singapore and UK have suffered. The US is investing in growth, and Germany is following the US model.

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Reports from automotive experts in Stuttgart show German car companies and suppliers are not well prepared for the competition in electric cars. Their leadership may not be taken for granted in electric car world causing threats to jobs, tax revenue and growth. It was in a Stuttgart garage that Daimler and Maybach invented the internal combustion engine 136 years ago in 1884.

The Institute for Employment Research of the German government prediction is that if electric cars make up 23% of all cars sold in 2035 the country would lose 20 billion euros in output, 0.6 percentage of GDP, and 13% of its 870,000 auto industry workforce. This is because China is emerging as a formidable competitor in electric cars and has invested heavily in this sector.

As in broad band infrastructure shown in a recent report in Lyrarc, Germany has failed to invest enough in electric cars.

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The coalition of socialist, greens and communist parties could win about 205 seats says the Ifop poll. Jean Luc Melenchon is leading a effort by socialist parties to form the next government in France. It is the only alternative to Mr. Macron's party in the parliamentary elections on June 12 and June 19. Meenchon supports raising the minimum wage by 15%, introducing a wealth tax and lowering the retirement age. Another poll by BVA shows only 35% of French voters want Macron's party to win a majority. 

Germany under Scholz's socialist SPD and Greens has increased the minimum wage to 12 euros per hour as part of the election platform. The trend in Europe is now for support to workers and families to meet the high cost of living with inflation accelerated by the war in Ukraine, the energy shortages and higher food prices.

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The dollars situation may not be as bad as it looks. There are signs that the dollar is strengthening against the British pound and the Australian dollar and other important currencies. And the weaker dollar is already working to reduce imbalances in America's trade deficit. There are two aspects of the dollar's role, one is as a means of international exchange and the other as a store of value. For the first reserves of any country need to be highly convertible and America offers highly liquid markets and this has not changed. As a store of value the dollar has lost some of it value especially against the euro. But the reason that the dollar should not see a sudden drop in value is because the largest holders of dollar reserves China with $1.4 trillion and Japan with $1 trillion would stand to lose by shifting out of dollars significantly at atime when the dollar was so undervalued besides hurting their export markets if it affected the US economy. And though the euro looks good in the short term, over the longer term Europe's aging societies may see lower growth and the future may look different once the USA has corrected some of it imbalances which is precisely what the weaker dollar accomplishes as the US exports start humming. Seen against the historical background the USA has periodically gone through this situation with dollar weakness in 1977-79, 1985-88, 1993-95. In 1985 the dollar went to 81 Japanese yen and there was concern about its reserve currency status at the time. However the dollar has weathered these storms. And there is always the option for a country to peg its currency not to one currency alone but to a combination of the dollar and the euro. This was the case before 1914 when 3 currencies the British Pound, the French Franc and the German Mark were used. In the post 1918 environment the dollar replaced the German mark alongside the Pound and the Franc. The Persian Gulf countries have this option so they can use their own monetary policy to control inflation by pegging not just to the dollar but to a basket of currencies as Kuwait has done. See the link to the Persian Gulf countries handling of this currency issue in WSJ, November 20th and Nov 1, 2007....

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American companies, Google, Alcoa, Amazon and others are supporting the European Union's push towards reductions of carbon emissions for combating climate change. They are doing this by buying renewable energy through long term contracts that help reduce costs by about 10%. Google is doing this to support its data centers. Amazon is doing this with investments in wind farms in Ireland, and renewable projects in Spain, Sweden, and the UK.

The European Union plans to increase the proportion of renewable energy to 32% by 2030 at a cost of 260 billion euros.

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The October 2012 meeting of EU leaders ends with agreement for setting up the EU banking supervisor in the course of 2013. German chancellor Merkel turned down Spain's push for direct aid to its troubled banks and not aid from the ESM bailout fund to Spain which would increase Spain's sovereign debt. The Spanish government has indicated that it might take 40 billion euros out of the 100 billion euros approved by the EU for Spain. Merkel's view is that any direct aid will only go for future recapitalization not to clean up the mess at Bankia and other banks that stems from the failure of Spain's banking regulators and the housing bubble. Merkel said at a news conference: "If recapitalization is possible, it will only be possible for the future." Merkel also said preparations to set up the single banking supervisor would probably go into 2014, and by then "we won't have any more problems with the Spanish banks- at least, I hope not." Germany sees the need to have a carefully developed banking supervision system setup rather than a hurried approach. Merkel is aware that this might be seen as action taken to avoid committing German taxpayer money before elections for chancellor in Sept 2013- "No matter what I'm going to say, it will probably not be the right answer by your standards." ...

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Spain released reports by audit firms that showed 62 billion euros would be needed to recapitalize the affected parts of its banking system. This is below the 100 billion euros in rescue funds offered by the EFSF, the eurozone rescue fund, in loans to the Spanish government. The Spanish government is pushing for direct aid to the banks to cut the knot between the banking risk and sovereign risk that is pushing up the yields on Spanish bonds to 7% in June 2012. Spain's 3 largest banks will not be accepting aid funds- Banco Santander, BBVA, and La Caixa.

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ChemChina, a unit of China National Chemical, plans to acquire Italian tiremaker Pirelli & C. SpA. The intial bid id for a 26% stake in Pirelli owned by Camfin for 1.8 billion euros. The next step is for ChemChina to bid for the rest of Pirelli's stock outstanding at $15 a share. This values Pirelli at about 7.1 billion euros. China National Tire & Rubber Co., the ChemChina unit, gains from the acquisition by acquiring Pirelli's technology to upgrade its products and increase market share in China. Pirelli's CEO Provera will remain CEO and headquarters, R&D, will remain in Milan.

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In a effort to improve nutrition for the urban poor in India, the Indira Canteens formed in 2017 have already made substantial progress in Bengaluru (Bangalore). The canteens backed by the state offer subsidized meals, breakfast costing 5 Indian rupees or 7 U.S. cents, lunch and dinner costing 10 rupees or 14 U.S. cents. About 65 million Indians live in urban slums, a highly marginalized group, many migrants from nearby villages who now live in slums that are often near neighborhoods of the affluent and upper middle class. In addition to low income groups, rickshaw cab drivers, and laborers, this program has benefited school and college students who also use the canteens. More than 170 canteens have been set up in Bengaluru in a hub and spoke model with canteens located near colleges and hospitals and supplied from central kitchens nearby. An app gives the menu, nearby locations and takes feedback. It costs the state 16 million euros from a state budget of 26.4 billion euros, and is an imitation of a similar project Amma Canteens in neighboring Tamilnadu state. It reaches 250,000 people a day in Bengaluru. ...

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The Italian government is making changes that would increase competition, provide funds for infrastructure and reduce red tape. Mario Monti, the Ialian prime minister, told a news conference: "Italy's economy has for decades been hindered in its economic and social growth by three big problems: insufficent competition, inadequate infrastructure and too much red tape." There are fears that the $40 billion in tax increases and spending cuts set in December 2011 to cut the deficit would lead to a sharp contraction in the economy. The IMF predicts a 2.2% decline in GDP for 2012, the Bank of Italy's estimate is 1.5%. Changes planned would permit gas stations to choose providers, improve the legal system, add 5,000 pharmacy licenses, and add 500 notaries. Industry minister Passera says the cabinet approved 5.5 billion euros for infrastructure projects.

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As appliance maker Fagor goes into bankruptcy with $1.16 billion in debt during Spain's long downturn, 1800 workers lose their jobs. Unemployment in the Basque town of Mondragon in northern Spain where Fagor is located, is up from 15% to 22%. Fagor was founded in 1955 and sold refrigerators, washing machines and televisions. Sales were 14 billion euros in 2012. An injection of 300 million euros from other members of the Mondragon co-op network and 80 million euros from workers failed to prevent the factories from closing. Decisions for international expansion with the acquisition of a French appliance maker created problems for Fagor because of the long economic downturn in the home base. Failure to move jobs to emerging markets with lower costs hurt Fagor, as Whirlpool and Electrolux moved jobs to China and other developing countries. Fagor's unique co-op structure of worker ownership made it difficult to move jobs outside Spain and France, and issuing new shares for capital is not possible under the co-op structure. ...

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Under a proposed capital infusion into Peugeot the French government, Dongfeng Motor of China, and the Peugeot family would each control 15% of the company. Dongfeng and the French government would buy new shares of about $7.50 to $8 each, and providing 800 million euros each. The Peugeot family would provide 100 million euros. Currently the Peugeot family controls 25.4% of the shares and 38.1% of voting rights. Earlier GM sold its 7% stake in Peugeot, and Peugeot turned to its partner in China for the capital increase. Peugeot shares declined by 11% to 10.21 euros on Jan 23, 2014, as a result of investor concerns about the prospect of three different shareholders interests. Peugeot expects to use the capital increase for technology investments as it struggles to come out of a prolonged slump in its European markets. One of the conditions made by Dongfeng Motor is that the current chairman Thierry Peugeot be succeeded by an executive not connected to the Peugeot family or the French government....

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Difficulties facing Britain which depends on continental Europe for exports and would be affected by whatever happens in Europe, and yet is reduced to being on the sidelines. This comes at a difficult time for the Cameron government, which is a coalition of Conservative party members who are euroskeptics, and the Liberal party members who are the most europhile of the the three major British parties. Sarkozy and Merkel have made clear that they would move ahead with a closer fiscal union within the eurozone, no matter what Britain's views are. This leaves David Cameron's government to what Labor leader, Ed Miliband, called "handwringing," as Britain can do little about the future direction of the EU. Cameron is able to please backbenchers in parliament from his party with talk about protecting British interests, but has no neotiating leverage, according to Steven Fielding, director of the Center for British Politics at the University of Nottingham. Britain may also have antagonized European leaders. Sarkozy said about Cameron and British government views: "You say you hate the euro and now you want to interfere with our meetings." This also happens as Britain faces rising unemployment, and deficits larger than anticipated after austerity measures taken by the Cameron government....

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Mexico reports 1092 deaths from coronavirus. Mexico has 101,000 cases and 11,729 deaths, a death rate of over 10% of cases. Brazil passes 600,000 cases only 4 days after passing 500,000.

Germany is implementing a 130 billion euro package to revive the economy. Measures include temporarily reducing VAT from 19% to 16%, giving 300 euro payment for each child. Incentives to buy new cars, and relief for municipalities with high debt are also included. This is on top of 1.1 trillion euro rescue package in March. To fund this effort Germany approved new borrowing and disregarded the deficit rules.

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Efforts to cut costs by new Lufthansa CEO Carsten Spohr have led to pilot strikes in Dec. 2014, with flight cancellations and 160 million euros of lost earnings in 2014. Intense competition and high operating costs are leading to this determined effort to bring costs down. Lufthansa and other major airlines such as Air France have seen the market change with about 40% of the intra European travel market having gone to Ryanair, EasyJet and other low cost carriers. Lufthansa's profit has declined to 300 million euros in 2013 from 1.2 billion in 2012, giving urgency to CEO Spohr's effort to remain competitive. For 2012 and 2013 Lufthansa cut costs by about 1 billion euros, and the target is for another 500 billion euros in savings for 2014. Most of this was done by job reduction of 3500 jobs, and by shifting low cost flights outside the Munich and Frankfurt hubs to a separate lowcost carrier, Eurowings, based in Dusseldorf. This has echoes of the strategy pursued by Air France for Transavia low cost carrier, leading to strikes by the pilots unions and flight cancellations. The Eurowings carrier will use a different pay structure with about 30-35 percent lower pay and benefits than the main Lufthansa carrier, done by separate agreements with pilots, maintenance and cabin crews unions. Critics say the focus on a separate low cost carrier is not the right strategy as it would remain a small part of Lufthansa group. Spohr, a company executive with 20 years in various Lufthansa positions says this is only part of a larger strategy and other changes to make Lufthansa competitive. Just as at Air France, pilots unions of Lufthansa see this as a step towards reducing in future the pay structure at the main airline operations. Labor costs are about a fifth of 30 billion euros in annual revenues at Lufthansa in 2013, with 118,000 employees worldwide....

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Healthcare, climate change, pensions and social benefits, are three issues uppermost in the minds of German voters. Three million new young voters most of them only about 2 years old when Merkel started 16 years in office, look for change. They are well informed and for these young voters climate change is the most important issue. DW.com shows three voters and how they plan to vote. One voter has cast a mail in ballot for The Greens party. The second voter will vote for the Greens. Both because of climate change concerns. The third voter Thurid says her mother is a geriatric nurse and is not vaccinated. She is vaccinated but had talks with her mother and understands her worries about vaccination. She will vote for the Free Democrats because they oppose compulsory vaccination. The three leading parties for young voters are the Greens party, the Free Democrats, followed by the Social Democrats all in the range of 16-18% of support. The Greens have sent out 2 million brochures to voters. Out of 60 million voters in a German population of 80  million, 3 million is only 5% of the vote. What makes a difference is that it is consistent with the general direction of voters young and old, all looking for change in Germany as the CDU party attracts only about 20% or one fifth of German voters. Social Democrats Scholz is way ahead of Christian Democrats Laschet in how voters view each candidate. Will German voters be well informed enough to make a decision based on their desire for change after 16 years of Merkel or will the CDU bringing back in the last days of the campaign the old fears that the communist Left party would somehow find its way into the government using the Greens as a way in- this is a question for German voters. In1994 during the Cold War with Soviets Kohl used this to keep the Social Democrats out and Greens out and formed a coalition with the FDP. Yet today Merkel has grown close to both Russia and China and away from the Western alliance in a way that was unimaginable under Adenauer who helped build the new Federal Republic of Germany after the war. Merkel refuses to even immediately accept a call from a new US president Biden, American president who is closest in style and temperament to Harry Truman who faced off the Soviets in Berlin in 1948.  The FDP opposes a wealth tax or any form of taxes in which the wealthier pay a fair share of what is needed to build crumbling infrastructure in Germany neglected in the Merkel years. In Germany social and economic disparities have grown during the pandemic with poverty increasing during the pandemic as has happened throughout Europe and the world. The US is already committing to increase taxes for the upper incomes. This is where voters have a choice- do nothing with infrastructure, health or climate change or do something by increasing taxes. The choice is now before the German people.  With this question comes a choice for western civilization, with the recent election in the US, and two elections in Germany and then France. Will it look with optimism to the future or will it huddle up in a deeply cautious and slightly pessimistic view of the world that is embedded in Angela Merkel's cautious vision that ended up only responding to crises- some self inflicted as in migration policy, and even self inflicted in tackling euro problems created in the euro currency's faulty design. In fiscal policy as in migration policy Merkel has reversed her position- by supporting European solidarity. Will Germans vote for optimism or never ending caution? Are lessons learned?     ...

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Both Ranbaxy and Dr.Reddy's, two of India's largest pharmaceutical companies, are bidding for Betapharm, Germany's fourth largest generic drugs maker. Ranbaxy's bid at 500 million euros was 50 million euros higher than Dr. Reddy's. Betapharm based in Augsburg, Germany, has sales of 161 million euros, and a workforce of 350. For Dr. Reddy's this is a way to get a foothold in a branded generic market in a developed country, says Dr. Reddy. This will be the largest foreign acquisition for an Indian pharmaceutical company.

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Greece with the backing of the EU behind its debt situation has managed to sell $5 billion euros of 7 year bonds at 6% to refinance its debt.

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The IMF's estimate of extra aid needed for Greece to meet the damage done in the first 6 months of 2015 is $60 billion euros ($66.6 billion). The additional aid required is because of the worsening of the economy under the Tsipras Syriza party administration in the first half of 2015, the collapse in the negotiations, loss of trust, the imposition of capital controls, closing of the banks, and the growing uncertainty created by the referendum of July 5, 2015 on the debt talks and membership in the European Union. This may leave Greece worse off than before, as the cost of the cuts at issue in the talks were significantly smaller, and the small gradual improvement in the economy under the Samaras administration in 2013-2014 has suffered a serious setback. This is an unfortunate setback as Greece was allowed the needed flexibility on the most important points of the percentage of surplus and dateline, and cuts in the public sector employees.

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The terms of the debt restructuring deal with the bond swap in Greece become clear on March 9, 2012. In the deal with private bondholders -using collective action clauses to force remaining bondholders into the deal- about 96% of the 206 billion euros of Greece's bonds will be exchanged. Private bondholders held out throughout most of 2011, delaying the inevitable as Greece's economic situation became increasingly hopeless. This created a logjam with the German government, which insisted on serious private sector participation and bondholder haircut as the cost of poor lending decisions of the French, German and other European banks that made loans to Greece out of proportion of the ability of Greece to payback loans. Charles Dallara of the Institute of International Finance, negotiating for European banks, offered a 10% average loss on the bonds in July 2009. It was not until German Chancellor Merkel told Dallara at a late night meeting on October 27, 2011: "this is my last offer," for a 50% loss on the face value of the bonds, was agreement reached. The Greek debt swap that now takes place will give private bondholders a loss of 53.5% from the face value of 200 billion euros of bonds that they hold. The new Greek bonds issued in place of the old bonds include short-term bonds issued by the eurozone rescue fund at 15% of the face value of the old bonds, and a series of Greek bonds with maturity ranging from 11-30 years valued at 31.5% of the face value of old bonds. That even this 53.5% bondholder loss will not be adequate, as Greece's economy looks irretrievably damaged as it spirals downwards, is shown by the value of these bonds already trading in a hypothetical "gray market." The new 30 year bond is quoted at 17 cents and the 11 year bond at 22 cents. The questions remain about the stalling by the banks in taking the losses earlier- was this the wisest move considering the losses beyond Greece as the eurozone economy as a whole has suffered from the prolonged negotiations stretching through 2011, lurching from one crisis to the next? Even if the stalling was designed to give time for banks to repair their balance sheets, was this the best strategy, considering the damage inflicted on European economic growth. John Taylor of Stanford points out that the European banks delayed the unavoidable serious debt restructuring for too long, when insolvency was the real issue not illiquidity, and exaggerated the effect of contagion from the beginning- in John Taylor, WSJ, 2/22/2012, A Better Grecian Bailout. And John Cochrane of the University of Chicago, points out that French and German governments if they bailout French and German banks should do so openly and frankly rather than cover this up as bailouts of countries, because this would lead to serious questions about the poor lending decisions of the European banks and government supervision of the banks- in Cochrane, WSJ, 12/2/2010, 'Contagion' and other Euro Myths. As early as Feb. 2010, Cochrane was suggesting the forced exchange of new bonds with long debt maturities for exisiting bonds with short debt maturities, as short term debt was the major issue here. ...

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Asking China to pay for part of the eurozone bailout is not in the interests of Europe, the U.S., or the world, says this New York Times editorial. China has said it expects the eurozone countries to stop criticizing China's currency policies in return for any help. It is not in China's interest to maintain these policies that create serious distortions inside China by tilting policies away from domestic savers with low interest rates and domestic consumption with higher prices. It maintains an export dependent model that is becoming harder to sustain as western economies face a slowdown.