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The eurozone economy has grown by 3.6% and created 4 million jobs since the start of the bond buying program by the European Central Bank in 2015, according to the ECB. This means that the program has largely accomplished what it set out to do to revive the eurozone economy.

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European Central Bank president, Mario Draghi, addressing the European Parliament in Brussels on April 25, 2012, supported both sides in the issues facing the eurozone, calling for continued vigilance on structural reforms to improve competitiveness of countries in the eurozone such as Spain and Italy, and at the same time saying it was imperative to generate economic growth. He told the European parliament: "The uncertainty about the present situation is very, very, high... Any exit strategy is premature given the current economic situation." Saying that the fiscal compact had been negotiated recently to control spending, yet what Europe needed was also a growth compact- "but my most present thought right now is to have a growth compact." He emphasized that it was now upto governments and banks to pick up the ball. The ECB's achievement was buying time with its 3 year loans to banks in Spain and Italy and other EU countries in Dec. 2011-March 2012, which he described as no ordinary achievement. Francois Hollande and Angela Merkel seized on Draghi's comments to show they were doing the right thing. Merkel conceded that growth was needed, saying sustainable initatives would be good for Europe, that what Germany was opposing was simply stimulus spending that would increase debt without the structural reforms to improve competitiveness. Hollande for his part said he would call for eurozone bonds to pay for industrial and infrastructure projects, and a financial transactions tax....

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The annual report on China by the IMF points to a diminishing margin of safety and higher risks for delays in needed economic changes from earlier infrastructure and construction focussed policies which neglected Chinese consumers and savers. The IMF pointed to risks from the shadow banking system and the real estate bubble that need to be addressed.

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Comedian and politician Beppe Grillo, from Genoa, who leads the Five Star Movement party. This party has increased its support from 4% in 2011 to about 18% in recent opinion polls. Grillo is a moderate liberal who has benefitted from the unpopularity of austerity measures taken by prime minister Mario Monti and the rapidly declining support for Berlusconi's People of Freedom party after recent coruption scandals. He has opposed traditional politics of established parties since 2005 when he pulled together people over social media and the internet. Support for political parties in Italy is rapidly fragmenting with Berlusconi's party dropping to 17% in polls and no party having significant support. In this situation business leaders support a continuation of the Mario Monti government beyond the April elections if no party gets a mandate from voters. Grillo says his movement is similiar to other movements that oppose the euro and austerity measures such as the Marie Le Pen movement in France. It is against this background that the Social Democrats in Germany have united behind Peer Steinbruck, a former finance minister, who has the best chance against Merkel in 2013 elections for chancellor in Germany. Most of the difficult and necessary actions that Merkel and the German public have supported are already taken- the changes in labor laws in Italy, France's 2013 budget that targets 3% deficit in 2013, efforts of Italy, France and Spain to improve competitiveness- and capital markets continue to provide vigilance in this direction, creating a situation where Merkel may have exhausted her effectiveness. This creates an opening for a change in policy in the eurozone that offers more German flexibility on stabilizing the eurozone and supporting the embattled governments of Monti in Italy and Rajoy in Spain facing popular protest and not enjoying the kind of support Monti says France has from Germany....

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The People's Bank of China's decision to reduce the reserve requirement for deposits at banks by 0.5% is not likely to have much impact, as banks already have enough money to lend. The problem is more a lack of demand for loans as the economy slows. Inflation fears restrict the use of growth tools such as lowering interest rates and the housing bubble limits the use of construction spending to increase growth. Political uncertainty with a leadership transition, and economc uncertainty in Europe also limit options.

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Spain's plan to reduce corporate taxes by 5% and individual income taxes by average 12.5% in 2015-2016, reversing earlier austerity measures. A similiar move in Italy.

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Tourists from China went up by 20% in 2015, going over 1 million. Foreign enrollment at Australian educational institutions was up significantly in 2015, going up to 645,000, up 25% over 2012 with the weaker Australian dollar. Australia's services sector including inbound education and tourism exceeded in value the minerals and metal ores exports in the last two months of 2015. This enabled the Australian economy to grow by 3% in the 4th quarter of 2015 over the prior year.

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In addition to the efforts by protests to preserve Hong Kong's special autonomous status, there is a protest by students "Occupy Central," similiar to the "Occupy Wall Street" protests. That aspect of the protest is aimed less at Beijing than at the financial establishment in Hong Kong. Because of its role as financial capital in Asia a lot is at stake for the U.S., Britain, and for China itself, in preserving the special role that Hong Kong has enjoyed for two decades since 1997 transfer from Britain. That independent role and separate status is needed for a world financial centre and access to the best human resources.

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Areddy describes the choices facing China's president Xi Jinping as he faces protests in Hong Kong demanding the resignation of Chief Executive Leung Chun-ying. Protestors are also calling for canceling of a plan to limit nominations for chief executive to a committee loyal to Beijing. Xi Jinping has experience with Hong Kong affairs as he held the portfolio for Hong Kong affairs as part of the leadership when he was vice president. There are precedents where Beijng has changed course, as it sees it important to put memories of Tiananmen protest suppression behind. In 2003 six years after Britain handed Hong Kong to China -under an agreement for "one country, two systems," that granted separate status and system of government to Hong Kong- an anti-subversion law was pulled back. And the unpopular Chief Executive Tung Chee-hwa, a shipping magnate, resigned after 18 months. Beijing has to balance its concern for the "contagion effect" of protests on other parts of China, with the need to maintain the right climate for business and investment in Hong Kong and other financial centres. With slowing growth and limits to overexpanding credit, a crackdown in Hong Kong would further exacerbate problems with the international community, and create tensions in Taiwan about future reintegration with China. China warned foreigners not to interfere, and the American Consulate in Hong Kong stated it "strongly supports Hong Kong's well-established traditions and Basic Law protections of internationally recognized fundamental freedoms, such as freedom of peaceful assembly, freedom of expression and freedom of the press." The British government also pointed to Hong Kong's "fundamental rights and freedoms, including the right to demonstrate," which were in the spirit of the 1997 transfer agreement....

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The yield on Italy's two year bonds reached 7.269% on November 9, 2011. Italy needs to rollover $300 billion in debt over the next 12 months. And liquidity is becoming a serious problem as investors become cautious about buying Italian bonds. Investors who were attracted to the higher yields on Italian bonds now see the market as too unstable to make purchases. Peter Schaffrik, head of European rates strategy at RBC Capital Markets in London, says that the Italian bond market, the third largest in the world, was quite liquid, with investors buying or selling 500 millon euros of Italian bonds at a clip. Now, he says, its hard to trade more than 50 million euros. The only hope is to get enough stability and confidence back into the market, as Italy is too large for any rescue effort by the ECB, IMF or the EFSF. With some stability Black Rock's Fundamental Fixed Income portfolio's chief investment officer, Rick Rieder, says Italian bonds are something he would buy.

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Efforts to boost the share of national income that goes to rural households and workers in China. The share of income taken by state owned enteprises and taxes paid by the enterprises would have to change for reducing the gap in incomes and reducing inequality in China.

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German chancellor, Angela Merkel, appeals to members of the Christian Democratic Party to support the European project at a party convention in Leipzig on November 14, 2011. "We live in times of epic change. Our political compass has not changed. But the context is constantly changing," said Merkel. The 2 day convention used the motto: "For Europe. For Germany." Her message was that it will take years of hard work to fix the crisis and yet this has created an opportunity to put the European project on a sounder footing. Finance Minister Schauble put it succintly as he supported Merkel's appeal: "We now need to build the political union in Europe we never managed to build in the 90's." This comes as changes are taking place in Europe with new unity governments being formed in Greece by Mario Monti, a former EU commissioner, and in Greece by Papdemos, another EU official. And it comes as a head of Italy's central bank, Mario Draghi, who had pushed for stricter controls on spending by the Italian government, is now the head of the European Central Bank. Merkel also hit on the theme of a stricter financial union, and the need for courage to change the treaty underlying the European monetary union to allow strong, automatic sanctions for violations of the treaty. She also emphasized that the government had ruled out issuance of eurobonds that makes the EU as a whole responsible for the debt of individual countries. On that point she said: "Everywhere we look we find behaviour that cannot go on for long. Everywhere people are living as if there is no tomorrow."...

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Stephen Moore of the WSJ interviews Grover Norquist, head of the advocacy group Americans for Tax Reform. Republicans in Congress and other Republican leaders have signed on to the "no new taxes pledge" promoted by Norquist. There is increasing pressure on Norquist as the media, White House, and executives on Wall Street call for flexible positions from both sides on taxes and spending cuts. Norquist insists that not much has changed. He says that the increase in taxes on the rich is only symbolic and has to be followed up with increasing taxes on the middle class. He cites a Rasmussen poll that shows 75% of Americans believe this. Norquist is convinced that the Democrats with their spending plans are out to take the U.S. in the direction of European economies, the tax increase on the rich would be followed up with a energy tax or a value added tax to pay for unrestrained spending. His solution is for Republicans to pass a bill that extends the current tax rates past January after roughing it through the tax cliff date. Even the sequester option is better than increasing taxes says Norquist, letting the Defense Department make the cuts where appropriate. Norquist does not favor the option of reducing tax loopholes and deductions as a way to increase taxes as proposed by Simpson Bowles commission and Ryan-Romney in the election campaign. ...

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The IMF's changing views on the value of fiscal austerity. In the current debate about the value of fiscal austerity, there is the IMF view, a German view based on its own experience, and the views of other countries in Europe. The IMF's view has shifted over time. The IMF World Economic Outlook 2010, describes its view of the effects of austerity measures in the form of spending cuts and tax increases- "Fiscal consolidation typically has a contractionary effect on output. A fiscal consolidation equal to 1% of GDP typically reduces GDP by about 0.5% within 2 years and raises the unemployment rate by about 0.3% percentage points." Over the longer term there are benefits as the private sector is not crowded out in the search for captal funding by the excessive government borrowing. The IMF's economic models suggest that it would take 5 years before reaching the breakeven point when the benefits of austerity measures exceed the effects of austerity. The German view held by German central bankers is that the actions stimulate growth in the short term. Manfred Neumann, professor emeritus at the Institute for Economic Policy at the University of Bonn, says this is called the "German hypothesis" as it reflects the experience of Germany from austerity actions taken by Germany. Laurence Ball, professor of Economics at John Hopkins University, is critical of the "German hypothesis" and its application across Europe in different situations. Germany is a large exporting nation and exports helped counterbalance the effects of austerity measures. Within the eurozone with fixed exchange rates the exports of less competitive countries cannot be boosted through devaluing the currency to gain price competitiveness. The other problem is that with interest rates close to zero in the euro zone the central banks cannot cut rates aggressively to counteract the effects of spending cuts. The problem gets compounded when a number of countries are taking austerity measures at the same time accentuating the downturn....

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The huge risks the misallocated stimulus capital from real estate speculation poses for the Chinese economy. China's government rapidly expanded lending after the 2008 global financial crisis. One estimate is that about 10 trillion yuan in new loans were made in 2009, over twice the amount of 2008, expanding the loan portfolio and money supply by one third. A major problem is vacant homes as Chinese put their money in second homes as an investment. Chinese are not investing in the stock market because of the volatility, and with the low yields in bonds and banks money is going into real estate. According to a Morgan Stanley economist, about 25-30% of private commercial and housing space is vacant. This happens just as middle class Chinese are being priced out of the housing market. Prices went up by 12% in the housing market this year according to the China National Bureau of Statistics. Couples wanting to leave their parent's homes find it difficult to do so. It was the topic for a Chinese TV series "Dwelling Narrowness." ...

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China's new leader Xi Jinping and the prospects for U.S. and European business. Little is known of how Xi will change things except for his personal style during his visit to Iowa during the U.S. trip.

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Krugman questions whether the assumptions behind the austerity policies are true- that they would inspire confidence in economic recovery, or that in the absence of austerity policies borrowing costs would go through the roof. The recent events in Holland with the collapse of the government in the Netherlands- when a party leader supporting the government said he did not want to hurt pensioners in the Netherlands just to satisfy German opinion- and the mood in France with economic anxiety vote going to Marie Le Pen and Francois Hollande in the first round of presidential elections, shows that very little confidence has been created. High unemployment and economic anxiety are leading to a reappraisal of austerity cuts that depress the economy and reduce tax revenues, but Krugman says no changes are taking place to correct these policies. This is true for Spain with its high unemployment, and Britain which now has two quarters of negative growth.