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The Social Democrats leader Sigmar Gabriel is Economics Minister in the coalition government of Angela Merkel in Germany. He is sympathetic to French premier Manuel Valls effort to reduce austerity in the 2015 French budget now being reviewed by Brussels. Here he takes the initiative to call for discussion on the issue of growth and austerity facing the European Union, by joining French Economics minister Emmanuel Macron in asking two economists Pisani-Ferry and Enderlein at the Berlin Institute of Governance for advice on generating growth. The process started in late summer with the defeat of the centre right government in Sweden which supported Merkel's strict austerity policies for balanced budgets. The elections to the European parliament showed the dire situation facing Cameron in Britain and Hollande in France with the unpopularity of austerity policies, higher taxes and cutbacks. The Socialist Hollande government has the lowest public opinion ratings of any postwar government in France, at 18%, and it is unwilling to go further down the road with austerity. At the same time Valls has found a partner in Italy with the growing popularity of Matteo Renzi in Italy who won 40% of the vote in Italy for the EU parliamentary elections of 2014. ECB president Mario Draghi, has generated the debate by saying at a October 2014 Brookings Institution conference in Washington D.C. that countries that have fiscal space (referring to Germany) should use it. He added that governments that did not take action in the economic crisis facing the eurozone of no growth will be swept away by public opinion. IMF president Lagarde, a former French Finance Minister under Sarkozy, has also questioned policy of strict austerity. For the first time since the start of the eurozone crisis in 2010 there is an opportunity for open discussion on future policies for renewal in the eurozone....

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U.S. president Obama says at a rally in Philadelphia that Donald Trump is a fradulent champion of the working class, saying that Trump is simply exploiting the populist mood, that for 70 years he has shown no concern for working class people. Obama told the crowd he understood the public's mood for change and that he himself had benefitted from it. Yet he said that it did not add up. Obama said: "This guy is suddenly going to be your champion? I mean, he spent most of his life trying to stay as far away from working people as he could, and now this guy is going to be the champion of the working people. Huh." "I mean he wasn't going to let you in his golf course. He wasn't going to let you buy in his condo. And now suddenly this guy is going to be your champion." 

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Lee describes the problems the Russian economy faces with the depletion of the Reserve Fund following collapse of oil prices. Finance minister Siluanov says the Reserve Fund could run out by 2017. The National Wealth Fund hols $73 billion and is used for infrastructure projects and bank bailouts, and pensions. The defense budget is expected to decline by 5% in 2016 as the military buildup slows from a slower economy. The World Bank predicts a poverty rate of 14.2%. The 50% decline in the ruble has hurt imports. The lack of access to international capital markets has also hurt growth, even though Russia has only small debt.

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PC shipments worldwide declined by 14% in the first quarter of 2013, compared to the prior year quarter, according to IDC. Gartner Research's estimate for the first quarter PC shipments shows a decline of 11.2%. IDC analysts say the introduction of Windows 8 with touch screen capabilities has not reversed this trend. It may have exacerbated the trend because Windows 8 made changes that reduced the PC experience to bring in touch screen and other features available on tablets, and made the product more confusing to use. This view of IDC is confirmed by some companies which say the incremental value of Windows 8 is not worth the cost of training employees to use the new PC's with Windows 8.

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The Wall Street Journal's reporting in Sept, 2011, on France's bank BNP Paribas. Contributor Nicolas Lecaussin quoted a BNP Paribas executive saying the bank no longer had access to dollar funding. There is a loss of dollar funding to French banks from U.S. money market funds as the funds reduce exposure and shorten maturities. Analysts point to the French banks having one of the lowest ratios of liquid assets to short term funding needs in Europe. This reporting was questioned by BNP Paribas and French government officials. This happened as central banks including the U.S. Fed intervened in markets in September 2011, to ensure full availability of dollar funding to French banks.

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Merkel expresses her support for Portugal during a meeting with prime minister Pedro Passos Coelho of Portugal in Lisbon on Nov. 11, 2012. In a news conference which was live on German television Merkel said: " I feel a great sense of determination here in Portugal to overcome this difficult phase." Recognizing the cost of austerity measures and spending cuts, the 16% unemployment rate, Merkel added: " I know that its very hard for some people. Unemployment is high, especially among young people. Consequently, Germany in particular wants to support Portugal through professional training for young people." The German chancellor is travelling with a German business delegation which is meeting with Portuguese executives to determine areas for German cooperation with Portugal to generate growth in the economy.

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Instructions in a 2012 law say the money from fines paid by banks for LIBOR related offenses should go to communities throughout Britain. A program in North Yorkshire teaches military veterans how to use "therapeutic baking" as a way to ease stress through cooking and by kneading dough. The same social housing charity, Riverside ECHG, says its focus is on making sure people are not sleeping in bushes or cars. A program in Harrowgate uses these funds to resurface tennis courts at a treatment center for injured police. British prime minister Cameron promised during the recent election to use 227 million pounds from fines paid against Deutsche Bank in April 2015 for financing 50,000 apprenticeships. Critics say the money should have gone to people who were harmed by the banks actions, yet in the case of LIBOR related offenses it is not clear who was harmed and by how much. The idea for the 2012 law come from Chancellor George Osborne. Osborne said about sending money back into local communities- "It is fitting that the money paid in fines by people who demonstrated the poorest values in our society is used to support those who demonstrate the very best."...

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As the U.S. population ages and grows at a slower pace the demand for automobiles is likely to peak in 2013-2014, and moderate in subsequent years. Automakers need to be vigilant about adding manufacturing capacity to avoid the problems faced in the last decade when sales and profits declined.

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The new J.D. Powers Quality Survey put out in Feb 2013 showed the Lexus, Toyota, Mercedes, Buick, Chevrolet, Lincoln and Dodge Ram brands performing at the top level in number of problems reported by owners of 3 year old vehicles. Land Rover, Jeep and VW brands did poorly. Most of the Chrysler Dodge cars performed poorly. The redesign of vehicles initiated by Fiat Chrysler CEO Marchionne does not show up in this study. The redesigned Jeep and other vehicles will show in next years study. The study also showed buyers of economy vehicles were likely to switch easily when buying another car. New models are showing fewer problems and are more dependable compared to previous years, with the average number of problems declining from 170 per 100 vehicles in 2009, to 132 in 2011, and 126 in 2012.

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John Taylor on the dual mandate for inflation and unemployment and discretionary policies by the U.S. Federal Reserve that ended up creating booms and busts in the U.S. economy. He advocates replacing the dual mandate of "maximum employment" and "stable prices," which was inserted into the Federal Reserve Act in the 1970's, with a single mandate for "long-run price stability." Taylor points out that this will still give the Fed flexibility, as it is focussed on long run price stability. The Fed does not have to overreact to short run increases in inflation. And he points out that this actually will work well for unemployment as the booms caused by an overextended period of low interest rates such as that in 2003-2005, have led to booms followed by busts with high unemployment.

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Reports from the Sixth China North-South Lung Cancer Summit meeting of 300 experts focusses on controlling tobacco use and promoting early detection and treatment of lung cancer. Lung cancer is now the leading form of cancer in China, with 22.7% of cancer deaths each year. Currently about 1 million die in China from smoking related illness each year. CCTV reports this is increasing by 26.9% a year. Causes cited are aging population, air pollution, and widespread smoking. About one in three of China's people smoke, or about 350 million. Awareness of the dangers of tobacco use is not high outside two or three major cities. China manufactures about 1.7 trillion cigarettes a year, according to CCTV, and tobacco contributes 7-10 percent of state revenues.

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American manufacturers are importing more of the parts that go into each product. According to Susan Houseman, a senior economist at the W.E. Upjohn Institute in Kalamazoo, Michigan, the imported portion for these parts is up to 25% from 17%. Even the Bureau of Economic Analysis figure of the share of GDP coming from manufacturing is overstated, says Houseman. That figure was 11.2% for 2009, but is closer to 10.5% if all the imported components are included instead of being counted as domestically made. This is down from 14.2% ten years ago, and about 30% in the 1950's. There is deep concern that the manufacturing decline has weakened America. Houseman says that one cannot separate manufacturing from innovation, and she asks if America can continue to be strong in R&D with a shrunken manufacturing base. James Jordan of the Interstate Maglev project, says Maglev- which uses special magnets to levitate and propel high-speed trains- was invented in the United States. Today equipment for that technology is manufactured and used in Japan, and innovation in high speed trains is taking place in Japan and Germany. The decline in manufacturing is shockingly large. From 1979 employment in manufacturing went down by 8.1 million to 11.6 million, with the largest drop occurring in the last ten years. With it America is losing something significant- all the knowhow and skills that go into making things. Today the airplane wings for several Boeing airliners are made in Japan and shipped here. In a not too distant past these wings would have been built here, and workers with the knowhow and skills for these critical components were part of Boeing's workforce....

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Leonhardt points out in the NYT that Hillary Clinton actually won in the popular vote by a substantial margin, by more than 2 million votes and more than 1.5 percentage points. He says that Democrats need to pay more attention to the working class in midwestern states- the job losses, crumbling infrastructure, and the plight of communities such as Detroit, Michigan which suffered through the bankruptcies of Chrysler and GM, and again with the foreclosure crisis, the financial crisis of the City of Detroit. With a similar situation in the neighboring states of Wisconsin and Ohio, in places like Toledo and other parts of communities facing industrial decline. While the Silicon Valley centred region powered the economy in California, and the financial industry and real estate powered New York, older midwestern communities never really recovered from a long decline stretching over 2 decades. The result was the loss of faith in Democrats among union workers and young people, leading to the loss of Wisconsin, Ohio and Michigan. For most of its history the Democratic Party was based on its union and working class base including a large number of white voters. Only under Obama because of his unique candidacy was the coalition so dependent on the minorities vote. Before minorities were part of the Democratic coalition, but not in the way under the Obama candidacy. A return to its historic and normal base among whites in unions and working class communities, liberals, minorities, is a way to go back to the historic and natural base of Democratic support. In a sense dependence on tech communities for election funding and the tech booms, globalization, may have distorted Democrats sense of their historic role as champions of the working class and middle class communities throughout the country. There is now an opportunity to restore this lost mission of protecting the interests of the middle and working class who have seen huge drop in net worth as reported by Janet Yellen of the Federal Reserve at the Inequality Conference on October 17, 2014-"62 million households with a net worth of $11,000 for the year 2013." Poorly covered in the media and not made the utmost priority by Democrats (or Republicans). In the words of Janet Yellen, this was in the past several decades "the most sustained rise in inequality since the 19th century after more than 40 years of narrowing inequality since the Great Depression." She added the shocking words "by some estimates, income and wealth inequality near their highest levels in the past hundred years, and probably much higher than much of American history before then." Even discussion in the media goes back to the Obama coalition and treats it as a way forward for Democrats, when history shows it was different and the situation described by Yellen calls for a serious response. ...

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The ECB's monetary policy is making its way through the financial system to help homeowners in the eurozone with their mortgages. A large majority of Spain's home mortgages have rates that increase or decrease according to the level of 12 month Euribor, according to Spain's mortgage association. The mortgage rate is normally set by adding about 0.3% to the Euribor 12 month rate. In Italy about half the mortgages have variable rates, most linked to Euribor, according to mortgage broker Mutuionline. The decline in 12 month Euribor rate to 0.187% by April 2015, as a result of the ECB's monetary policy, provides significant relief to mortgage holders during the eurozone economic crisis. This is especially true for Spain with its housing crisis and high unemployment. In Portugal the interest rate on most mortgages is determined by using the monthly average of the 3 month and 6 month Euribor, which are close to zero. Some mortgage holders in Portugal are seeing their mortgage payments cut by about half as a result, providing much needed relief to homeowners with mortgages. This is one way in which the ECB's monetary policy is helping the eruozone recovery in 2015-2016. Spain and Portugal suffer from high unemployment which has led to many homeowners unable to afford their mortgage payments, affecting everything from housing prices to consumer spending and demand in the economy, with severe effect in the period 2011-2014....

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Kenneth Rogoff of Harvard University, expert on debt crises, and author of "This Time is Different," says China is one of the best examples of the idea that this time is different, with the idea created that somehow China was impervious to the massive build up of debt. The debt is now over 250% of GDP, and this was possible for so long because of the high savings rate of 30% of disposable income and the millions of young migrants moving to cities to work in manufacturing. The growth of shadow banking, opaqueness in decisionmaking, unreliable data, use of local government financing vehicles, the bubble in housing with a large portion of loans tied to the real estate market, all combine to create serious problems that will take a long time to sort out. Rogoff says the crisis in Tianjin with the deadly explosions in the port area, and the government's inability to provide answers to questions from a alarmed public, only added to the uncertainty and loss of credibility. Rogoff says he hopes the trillions of dollars in reserves will provide China with the tools adequate to tackle the debt problems before they spread to other countries....

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Irwin says about the revised Basel III rules in Jan. 2013- one hopes that Mervyn King of the Bank of England and Basel regulators are doing the right thing, striking the right balance between pushing for higher capital requirements and adjusting this to take into account the stalling economies of Europe and the U.S. Banks were given till 2019 to meet capital requirements. More assets are now eligible to meet capital requirements (including lower rated corporate bonds) under revised Basel III rules. The large legal settlements and speculative losses of large banks in Europe and the U.S. in 2012 put more pressure on banks with the risk of reduced lending.