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E.U. leaders reached a new agreement for solving the debt crisis in Greece and the broader eurozone debt crisis. This time an effort was made to come up with a solution that had some chance of working unlike earlier efforts. Earlier efforts that concentrated on austerity and burdened Greece and other countries in the debt crisis with higher interest rates came under severe criticism as unworkable. The result was higher unemployment, a shrinking economy, higher debt to GDP ratios, and contagion effects. The new plan commits to getting Greece on the path to growth. The European Financial Stability Facility will have powers to buy Greek bonds at their value in the secondary markets which means Greece would owe less to the EFSF, bringing down Greek debt. Greek debt maturities are to be extended over many years and interest rates lowered, with similiar actions for Portugal and Ireland. And private bondholders were given the option of taking 20% less on their bonds or extending the maturities of the bonds at lower interest rates. In return the bonds would have guarantees for repayment by the E.U. so that the private creditors would limit their losses. The draft document of the agreement says all the E.U. countries would commit to fiscal discipline....

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Polls taken before the June 16 elections in Greece show the leading New Democracy party and the Syriza party running very close to each other. Both Tsipras of the Syriza party and Antonio Samaras of New Democracy are calling for renegotiating the agreements with the IMF, EU and the EC, referred to as the troika, so that austerity programs do not fall too hard on ordinary Greeks. Tsipras says the goal is to reach "a just and viable European solution." He added in a news conference in Athens that "We don't claim there is plenty of money. Greeks are not asking for money. They are asking for work and the ability to make a living." The troika imposed a 22% reduction in the monthly minimum wage of 751 euros, or $930. This is unpopular in Greece and both New Democracy and Syriza now support reversing this, and extending unemployment benefits. Syriza proposes a moratorium on debt payments till growth is restored, and stabilizing public spending at 43% of GDP, below the 46% that is the eurozone average and above the 37% demanded by creditors. Syriza says it will scale back the value added tax which falls largely on the poor, raise taxes on the wealthy, and reduce tax breaks....

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Government bonds will be purchased by central banks of each country roughly in proportion to the size of their national economies in the eurozone. Risks for 80% of the purchases of bonds in the $1 trillion program will be borne by the central bank of each country. For 12% of the remaining bonds purchases will be made in the European Investment Bank bonds, here risk will be shared with the ECB. For the remaining 8% the ECB itself will make bond purchases. This avoids a situation where the risk of bonds going down in value is borne by that country and not passed on to other countries in the eurozone, as a matter of fairness in distributing risks. This also limits moral hazard where painful budget decisions are not made by countries in need of budget overhauls because risk can be passed on. A big reason why this can work in 2015 is that the eurozone has already emerged from the crisis period of 2012-2013, and is beginning to experience growth in 2015. Just this kind of boost to lending was provided by the U.S. Federal Reserve when the U.S. emerged from its crisis period in 2009-2011, and helped the economy grow in 2013-2014....

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Polish and other Eastern European immigrants to Ireland return home from the Ireland aand the UK as the economies of the 2 countries and unemployment deteriorate and improved job prospects draw the immigrants back home. In fact share of immigrants in ireland reached a high of 155 as Ireland averaged economic growth rates of 5% for many years. Nearly half a million received the irish version ofa social security number. Polish immigrants were the highest almost two thirds followed by Lithuanians and Slovakians. Hourly wages for Eastern European immigrants are 45% less than for Irish people with the same education and experience. Now Ireland's growth has dropped to 1.2% for the last quarter. The reversal is also of the similiar magnitude. A citigroup econ9omist in Warsaw estimates that half of Polish immigrants to Western Europe will return home in the next 2 years. In the UK half of an estimated one million Eastern European immigrants have already left says London Institute for Public Policy Research in an April report. As the immigrants return the currency dynamics also help the pound has lost 40% of its value against the zloty, Poland's currency, and this makes the UK less atttractive to immigrants. Overall the EU immigration opening has helped both sides, as it has helped stabilize the Polish economy and the UK has gained from the immigrants services as it moderated wage inflation and increased domestic demand and met the demands of the economy as it was growing. Now there is a fear that too rapid an exit of immigrants would hurt demand in these economies and also overwhelm labor markets in Poland. Another noteworthy feature of this immigration wave was the low cost of airlinne tickets which has helped travel across europe and also helped European integration. One immigrant a polish mechanic says that he felt more like a commuter than a migrant, as it conly cost $150 a round trip. How are things in Poland today as they return. Very very different. EU entry has really helped Poland through foreign investment and aid from Brussels to assist the country in its catching up progress. Average monthly wages have gone up 30% with construction wages up 50%. and inflation a low of 4.4%. The difference is striking in the medieval city of Krakow in the southeast that has emerged as an information technology and outsourcing hub. where a steady stream of returning workers is helping companies hire workers to meet the new growth. German commercial truck maker MAN has finished recruting 250 mechanics for a new plant in Krakow with 40% of applications from returnig workers. And those who are returning bring fluent English skills and expertise gathered during their stay overseas, and new attitudes to work. This happened to Ireland as Irish workers returned home in the early years of its boom, they hared skills and attitudes learned abroad, according to an economist at Dublin's Economic and Social Research Institute who sees the same thing happening in Poland....

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The NASDAQ index reached 5000 by April 2015, a level reached in the stock market boom in 2000. Yet investment strategists who were wary of the stock market in the period before the 2000-2002 collapse of the market see this market differently. The NASDAQ itself is not what it was in 2000, with the 2015 NASDAQ component stocks being different for the most part, and the healthcare and other sectors better represented in the index. Only three of the stocks in the top ten in 2000 are in the top ten today, including Microsoft. The S&P 500 trades in April 2015 at 18.5 times its company earnings for the past 12 months, compared to an historical average of 15.5, according to research firm Bespoke. A big part of the difference today is the investment climate of low inflation, which gives the U.S. Federal Reserve flexibility in raising rates. Low rates make bonds with lower yields less attractive, and increase the present value of future earnings. The yield of the 10 year U.S. Treasury was 1.917% on April 25, 2015. In April 2000 it was 6%, and in mid 2007 it was 5.3% before the financial crisis in the two periods. James Paulsen, chief investment strategist at Wells Capital Management oversees $347 billion in fund investments. He also was wary of the U.S. stock market in 1999, yet he does not see the similiar kind of risks today, and sees a long term bullish trend. The scenario he envisages is more of a pause or temporary decline. Paulsen has shifted money to European markets, as U.S. stocks are becoming more expensive relative to their European counterparts, a strategy that is being followed by other money managers since 2014. Higher price volatility is seen in the markets in 2015, with the S&P 500 up 2.9% for the first four months of 2015, and the Dow up 1.4%. ...

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Mark Gilbert, a visiting associate professsor of European History at the John Hopkins School for Advanced International Studies in Bologna, describes the crisis of the political culture in Italy that goes deeper than the economic crisis and has lasted for most of the post war period. Gilbert says the political parties have avoided implementing financial discipline and opening up the economy for most of the last two decades, except for brief periods, and did not take the opportunity of joining the eurozone to make serious changes. Italy has many parties with the Democratic Party having 25-30% support in the polls and Berluconi's People of Liberty (PdL) having the support of 20-25% of voters. There is also the Northern League, the Third Pole of centrist Catholic parties, the Italy of Values party, and the Ecology Freedom party. Italy lacks a national consensus on making the changes. The risk is that Monti will not have enough time to make the changes, as new elections may be held by April 2013. His government was formed as a government of technocrats led by former EU commissioner Mario Monti, after President Napolitano forced the PdL, the PD, and the Third Pole to work together to support the new government. Changes are needed in the legal system, local government, the health sector, and in the university system. One factor favoring Monti is that 90% of Italians voters are dissatisfied with the political parties, according to Italian think tank ISPI. For Italy the EU crisis has in this sense a positive aspect as it has forced Italy to come to grips with economic and cultural changes under a leadership from outside the political system....

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Jeanne Whalen on the Two Speed Economy in the US September 2025- diverging paths of low and high income Americans. With the new administration in 2025 priorities shift to immigration and what to do about 14 million illegal migrants from Latin America and other places, war on fentanyl and drug trafficking gangs with hundreds of thousands of lives lost to fentanyl and drugs in the US, crime and safety which includes the unprecedented illegal movement of drug trafficking in the Nation, and to a bold posture on using US advantages of its huge market to get European Union, Japan, South Korea, and China to level the playing field on trade bring jobs home.The Biden administration had already conceded to DJT's approach in its one term presidency by shifting on uncontrolled illegal migration but not fast enough, by not removing DJT's tariffs, and failing to take an aggressive posture on fentanyl and drug trafficking. Of the DJT plan US has tariff based revenues of 10--15% for all countries imports into US can that it redirect to groups to soften any effects of tariffs. DJT administration oil transition policy of stretching out the transition to give middle class and lower classes cost of living relief was also accepted by the Biden administration and is now the policy of Democrat run California state government.  The US economy was slowing in 2024 under the Biden administration. What has changed in 2025 is that the US stock markets are responding to steps taken by the DJT Republican administration to lower the cost of doing business by softening regulations, and giving US business the upper hand in different industries, and rebuilding the manufacturing sector with calls for EU and Japan/South Korea to invest more in the US as a quid pro quo for market access. This has led to increase in the value of market portfolios of the income earners above 250,000, or 10% of American households. As this happens the process of trade renegotiation has introduced some uncertainty in 2025 and businesses are looking for more clarity before increasing investment and slowing job hiring which hurts younger people entering the job market and lower income Americans. Were things better under Biden? Government Covid assistance and payouts in the early years 2020-2021 helped lower income workers, as this faded and the cost of living autos, housing increased sharply under Biden in 2022-2024 the situation deteriorated. The situation today is similar to the situation in 2024 with the difference in 2025 that inflation is coming down just as government help is receding. And added factor is the DJT administration plan to tackle head on the increasing cost of Medicaid to about $1 trillion by adding new requirements and reducing subsidies. The federal workforce had a disproportionate share of black workers and the policy changes to reduce the federal workforce have increased black unemployment from 6.1% under Biden in August 2024 to 7.5 % a year later. Hispanics have seen slight improvement in unemployment to 5.3% in 2025, and the middle class incomes also have held up and are holding steady. Meantime Bloomberg points out that one third of people in the top 10% are living paycheck by paycheck because of high cost of housing, university education for children, and inflation.     ...

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King Charles 3 day visit to Germany. It is the first state visit by a British monarch in 8 years and the first for Charles. There is a ceremonial welcome at the Brandenburg Gate, a first in Germany. In Hamburg he visits St. Nikolai Church, a ruined church kept in that way as a memory of the Allied bombing of the city in the war. It was designed by an English architect George Gilbert Scott. This is the serious kind of role the king might enjoy says the BBC. It is being compared to Queen Elizabeth's visit to post independence India in 1961 and her visit to post apartheid South Africa in 1995, Ireland in 2011. It brings the message of Britain through Charles showing its connection to Germany and to the European Union at a time when the US and the European Union are coming closer together with the shared values, and the common history, systems of representative democracy founded in Britain.

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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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Paul Volcker outlined the work remaining to be done to make the U.S. financial system safe in an interview with Gretchen Morgenson in October 2011. On Fannie and Freddie he says it is important to get rid of Fannie and Freddie at the first opportunity, because they simply shouldn't exist, and it was a mistake to have institutions of this type that mix profit making private opportunities with an implicit government guarantee. If a government wants to help low income people find housing, subsidize them directly, don't do it in this way by hiding the liability behind a quasi-private institution, says Volcker, in the interview with Gretchen Morgenson of the New York Times. Volcker sees a point of vulnerability in the industry of money market mutual funds, which operate without reserve requirements and capital requirements. The money market funds did a huge amount of lending to European banks and aggravated the pressures on them when they pulled back. One way to correct this is to require mutual funds to post the value of their assets every day to reflect market fluctuations. Safeguards on bank deposit accounts, such as FDIC insurance and bank capital requirements, do not exist for money market mutual funds. Other areas Volcker emphasized are strong enforceable capital requirements for banks, making derivatives transparent and standardizing them, and rotating auditors....

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Ben Inker of Grantham Mayo sees profitability at U.S. companies at a high because of savings in labor costs while consumption has not declined because of government transfer payments and fiscal policy. He sees profits of U.S. companies declining in 2012-2013. This makes the U.S. stocks less likely to perform well in the future, especially the stocks outside of the blue chips which he sees as highly overvalued. A better choice in his view is in Europe and Japan which are undervalued. His funds have 39% in U.S. stocks and most of it in blue chip stocks. His view is that interest rate policy will not have a large effect as the changes will be very gradual, and going from zero percent interest rates to one percent interest rates will not lead to much change in economic activity. From his point of view the largest risk is in shrinking of profits at U.S. companies as the deficit comes down, because today workers are able to maintain consumption because of fiscal policy and companies are able to cut costs. In Europe the austerity cuts are being taken seriously and this will impact profits, so the U.S. will look better in 2012. But value will prevail in the long run as European and Japanese stocks are undervalued and the U.S runup leaves stocks overvalued in terms of future stream of profits....

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Jaishankar was asked at the 2021 GLOBSEC conference in Bratislava in 2021 why he thinks anyone will help India in case of a problem with China after it did not help others for Ukraine. Chancellor Scholz of Germany cites Indian Foreign Minister Jasihankar's remarks in Bratislava, Slovakia, in 2021. Jaishankar said- "Europe has to grow out of the mindset that Europe's problems are the world's problems, but the world's problems are not Europe's problems. That is if it is you it's yours, if it is me it is ours. I see reflections of that. There is a linkage today which is being made. A linkage betwen China and India and what's happening in Ukraine. Chia and India happened way before anything happened in Ukraine. The Chinese do not need a precedent somewhere else on how to engage us or not to engage us or be difficult with us or not to be difficult with us." These are Scholz's remarks at the Munich Security Conference. Scholz says Jaishankar has "a point."  "This quote from the Indian Foreign Minister is included in this year's Munich Security Report and he has a point it would't be Europe's problem alone if the law of the strong were to assert itself in international relations." To be credible European or North American in New Delhi or Jakarta, it is not enough to emphasize shared values. "We generally have to address the interests and concerns of these countries as a basic prerequisite for joint action. And that's why it was so important to me to not merely have representatives of Asia, Africa and Latin America at the negotiating table during the G-7 Summit last June. I really wanted to work with these regions to find solutions to the main challenges they face growing poverty and hunger, partly as a consequence of Rusia's war, as well as the impact of climate change or COVID-19. There is another side to this -Scholz and Germany's president Frank Walter-Steinmeier are from the social Democrats party which has sought closer cooperation with Russia, and also carry a great deal of ambivalence for the war. America is not fighting this indirect war in its neighborhood, Germany is. And some of the roots of this conflict go back to the Napoleonic invasion of Russia in the 1800's period and the German invasion in the 1940's. Macron is even more ambivalent in his position and he has remained this way from the beginning- not committed to humiliating Russia. In a way it is the position of the Social Democrats from the historical context of Germany's invasion of Russia, and Christian Democrats eagerness to create a German recovery with low cost Russian energy that created the dependence that Russia sought to use. In what it sees as the unfairness of NATO being allowed to expand right next to its borders. Because of a sense of righteousness on both sides- Russia of the Soviet period failing to see the feelings of a Budapest in 1956, East Berlin in 1953, and Prague in 1968, sees little wrong in an invasion of Kviv. And with it all the biography of Brezhnev the last leader of the Soviet Union, describes that very struggle in the Great Patriotic War the soviets fought against Nazi Germany which was fought by Ukrainians including Leonid Brezhnev with great will and purpose against all odds.  Cambridge historian has written the history of Europe that Scholz is cited to be reading in 2021- Europe The Struggle for Supremacy 1453 to the Present.  It shows Europe since 1453 engaging in balance of power of European powers, Sweden Denmark, Russia, Austria, Germany, France, Britain, Turkey, continually for 500 years. Europe simply forgot its own history. Asia including Japan, China, Indonesia and India, simply emerging from the situation of falling behind in science, technology, and the industrial revolution and building their economies with the help of the US since the Meiji Restoration in Japan in 1868. The Balance of Power Simms says was maintained for 500 years is simply based on no country allowed to act with impunity, no country allowed to do whatever it wanted because of its position of strength at that moment or period of time. In that situation all other powers regrouped to keep the balance from being upset. The war in Ukraine is also likely to end in a way that is consistent with that which Brendan Simms writes about because this has not changed now for over 500 years. Biden knows this and it has fallen on America to shoulder the burden for this in the last 150 years, Scholz is aware of this, Modi in India sees this, and Jinping in China realizes this even with its concerns about Taiwan.   ...

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Portugal leads the world in developing soccer players, no country has hundreds of soccer professional players all over the world. A country of just 10.3 million, the defending European champion, it has 292 professional players in 45 countries. Even Italy, another soccer crazy nation has only 105 pros abroad. Much of the development of soccer players from a very young age happens at sporting clubs Benefica, Porto, and Sporting. They act as scouts, finishing schools after rigorous practice, and places that transfer players to other clubs, all put together in one place with large soccer academies. The uniformity of coaching, and the primacy of soccer as a sport helps Portugal dominate soccer in a way that is not reflected in its size. Soccer fields in all directions is what you see at Benefica's training facilities in Portugal. 10 soccer pitches are not enough for the director of Benefica's youth academy. 10 different teams of exciting preteens to Portuguese pros need to practice every day.  Christiano Ronaldo was found at Sporting, Ricardo Carvalho at Porto. One boarding school at Benefica has 89 students who do their academic studies at the club and play soccer, attend classes in the morning and play in the afternoon. There are 3 different teams under 14. A pathway puts some of them into the senior squads or for them to become attractive enough to draw a large transfer fee outside Portugal. Five different talent centers and 200 people search for talent by watching under 10's or 12's play soccer games. Once they are chosen they move to Seixal, outside of Lisbon for training. The clubs essentially create value through selection and training for years in soccer academies within the clubs. The clubs support their activities by having a lower cost way to access talent at home, and by generating the hefty transfer fees. Since 2014-2015 season the surplus for Benefica is about 540 million euros. Costs are in the eight figures making it possible to generate a profit by having a sale of a few good players to lower profile teams such as Israel, even if they are not at the level of the top players in the Champions League.  ...

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The world is too dependent on one semiconductor manufacturer, Taiwan Semiconductor Manufacturing Company, TSMC. Companies in Taiwan make 65% of the dollar value of the world's chips. How did this happen? It poses a threat to the US and to the world economy. Finally the US is making an effort to correct this. The European Union already has plans to produce 20% of the world's next generation chips in 2030. Intel plans $20 billion investment for 2 chip factories in the US. Only months earlier this report in WSJ says Intel president Bob Swan was giving more contracts to TSMC for next generation chips.  It shows how much the pandemic has changed views on supply chain security. Intel ousted Mr. Swan for missteps in relying too much on TSMC as this dangerous policy became evident during the pandemic. Such was the culture that existed before the pandemic on supply chains, on investment allocation, and related issues. As a single semiconductor factory can cost $20 billion, the Biden administration is getting involved with Congress to rebuild America's semiconductor industry and independent supply chain. TSMC is built on subsidies from Taiwan government. Morris Chang founded TSMC in 1987 after studying at MIT and working 30 years at Texas Instruments. At founding half of the investment for TSMC came from Taiwan government. The US to rebuild will require the government to support the chip industry in many ways. In this sense the US manufacturers who ceded manufacturing to TSMC were shortsighted- AMD, Intel, Qualcomm Apple. They without realizing it built the model on which TSMC would thrive and invest and grow. Take just one example- to meet Apple's first order TSMC spent $9 billion with 6000 people working round the clock to build a factory in 11 months. Yes Apple did not have to worry about chip manufacturing and quality by contracting it out. Yet over the years it was ceding the manufacture of the most important chips in its products to an exclusive supplier. It was also ceding away the technologies that went with it. Americans were told not to care by the best universities and professors, by economic departments and scientific educational institutions for two decades leading to the situating facing America today. Meanwhile Taiwan is supporting its chip industry even further as it relies on the chip industry to provide protection in its struggle to maintain its independence from China. A situation no American manufacturer understands or had planned to create, but is now left to the Biden administration and president Biden to solve. After twenty years of unchecked capital allocation and investments by the leaders of American manufacturing based on an inadequate and incomplete understanding of the role of manufacturing and manufacturing technologies in the life of America since its founding two hundred years ago, president Biden faces the task of restoring confidence in America. And this at the time of a pandemic that has taken hundreds of thousands of lives.      ...

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John Cochrane provides a no-nonsense assessment of what is happening in the euro-zone financial crisis. He says Americans should stop swallowing all that talk about "contagion" from Ireland. He puts it in plain language- there is no bailout of Ireland, this bailout is about bailing out of German and British banks that made risky loan to Irish banks and the Irish government. And he says that European governments if they choose to bailout German or British banks should do so frankly and openly and not by covering it up as a country bailout. If they did this he fears the governments and the German and British banks would face some serious questioning about their risky bets on Irish debt and the Irish property bubble. The German insistence that debt-holders would have to take a haircut, or losses on the face value of their bonds, has been diluted by the French inserting a provision that this would be after 2013 and on a case by case basis. Cochrane sees the vagueness of a case by case threat as the worst combination possible. He says this relies too much on the assessments of IMF and EU officials. The result would be for big financial institutions to bet on a bailout and to lobby these same officials hard. Cochrane's says the big culprit in the problem facing the euro-zone is short term debt. If Europeans won't let governments default, then they must insist on long-term financing of government debt. It is the short term debt of these countries that creates a crisis atmosphere. If investors become pessimistic about long-term debt, bond prices can go down temporarily without causing damage. The way a crisis happens is bad news develops, and governments having financed with short term debt need new money to pay off old debts. The way to handle this refinancing crisis is to have a large forced exchange of maturing short-term debt for long-term debt, and this is what occurs in "restructuring." And this kind of restructuring ocurred with the Brady plan that helped Latin American economies recover from a debt crisis in the late 1980's and early 1990's. This is the only viable solution, as it will be virtually impossible to bail out all euro-zone countries- Portugal, Spain, Italy and so on. For the US this is an eye opener to get its own financial house in order. US government debt is also tilted to short-term debt maturities, with the majority rolled over every year. and the Fed's quantitative easing will tilt this further to shorter term debt. And in the US, many states and local governments are in serious financial trouble....

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Laurence Peter of the BBC News describes a meeting of EU leaders in December 2016. The new Europa building with its space egg shape will be the location of the next summit in 2016, adding to a sense of history that the EU idea has witnessed since the 1950's, even optimism about far it has come at a time of a few setbacks.  He points out that Theresa May was not without persons to talk to at the meeting, though some video clips showed her looking lonely. EU president Martin Schulz said he was emotional seeing students crying after the Brexit vote, but that it was time to find solutions and not be emotional today. Lunch was offered at the meeting by Spain and Portugal, to mark the 30 years since they joined. People forget how much the European Community meant to the two countries after decades of suffering under fascist dictatorships- it meant new hope and an opportunity to set things right. Problems facing the EU today include, the frustration at the carnage in Aleppo, Syria, how to deal with Britain and Brexit, setting up an asylum system that will work, dealing with Ukraine and Russia without making the situation worse, and remaining concerns about the Greece debt crisis. ...

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Simon Johnson, former chief economist at the IMF, and Peter Boone of the London School of Economics, compare the trip made by Jean-Claude Trichet of the European Central Bank and Dominique Strauss-Kahn of the IMF to Berlin to meet Chancellor Angela Merkel and the German Parliament around April 29, 2010, to the trip Treasury Secretary Paulson made to the American Congress in September 2008. The seriousness is of that magnitude. The crisis is that big when you consider that it affects a number of eurozone countries, and the design of the euro currrency system in which Trichet and Strauss-Kahn were involved from the French side has some serious flaws in that it allows boom zone countries to overborrow and overspend. There is no way to resolve the situation through currency devaluations and other measures. Ultimately the cost will be similiar in the range of $1 trillion, say Johnson and Boone. The money would have to come from the G-20, and the IMF would have to represent the G-20 in negotiations with the ECB, the EU and Germany. The euro would have to be devalued and its value go back to $1 which is close to where it started. Eurozone bonds would have to be sold to finance the recovery, and countries that buy these bonds would then hold a proportional asset at the ECB. Johnson says Strauss-Kahn does not have what it takes to make the tough actions happen. His aspirations to run for President in France create a conflict of interest. A replacement is suggested in the Governor of the Bank of Canada, Mark Carney....

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The deal for buyout of Alitalia by Air France-KLM values Alitalia at0.10 euros a share about 80% below its closing share price of 0.53 euros per share last week. Air France-KLM will give one of its shares for 160 shares of Al Italia and will take on the airlines 1.3 billion euros in debt and losses of a millon euros a day. This values Alitalia at 139 million euros. The Italian Government has put in 4.3 billion euros in the last 5 years to keep Alitalia running till the European Comission ruled out any further help. Alitalia's market share in Italy has dropped to discount airlines like Air One Easyjet and Ryanairdropping from 80% to 30% in the last ten years. The new deal will drop Milan's airport considered to be one of the worst in Europe as a hub and use the airport in Rome ast he third hub after Paris and Amsterdam. It will also retain the Alitalia name. The fire sale of Al Italia shows how the new economic climate is affecting Europe and how a recession in the US could affect the market. At the time Al Italia was also running out of cash with only 282 million euros of cash left at the end of Jan 2008....

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After the secession of South Carolina in late December 1860, for a brief period New York city's governing body, the Common Council, considered secession to become an independent city state. Pro-independence position was because as an independent city state, similiar to the northern German port cities, New York could keep to itself the tax revenue of $56 million- tariffs on imported goods collected at ports- as two thirds of imports by value passed through New York. The state's merchant class was pro-south, especially as most of the cotton exports passed through New York. New York made 40 cents on every dollar that Europeans paid for cotton from the South. The money came from warehouse fees, shipping, insurance and profits. Cotton helped build most of the mercantile buildings in lower Manhattan and rows of upscale brownstones. Wall street businessmen and The New York Herald newspaper opposed Lincoln's election. The New York Daily News was edited by the mayor's brother, Benjamin Wood, and it warned working class whites about competing with emancipated black labor. New York financiers even threatened to stop buying federal bonds. At which point Horace Greeley, pro-Union publisher of the New York Tribune, urged the Treasury to sell bonds directly to individuals. What changed all this was the firing of the cannon at Fort Sumter on April 12, 1861. Hundreds of thousands of New Yorkers gathered in a patriotic rally in Union Square on April 20. New York quickly declared its support for the Union alongside other Northern states that April. ...

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The Japanese yen surged in value following the 2008 financial crisis as it was seen as a safe haven. As a result the Korean won declined by 42% against the Japanese yen. This continued till 2012. Japanese companies had to compete overseas at 80 yen to the dollar and shifted operations overseas. Now with the policy of monetary expansion of the Japanese central bank the situation is reversed in December 2014. The Korean won is up 40% against the Japanese yen since 2012. The Japanese yen is now down to 118 to the dollar in Dec. 2014. Abenomics gets a new mandate with the snap election in Dec. 2014. Aaron Back says Samsung may have gained ground in televisions and smartphones but other areas in electronics such as chips, displays and image sensors remain competitive and responsive to price. In autos Hyundai market share has declined to 4.4% by Dec. 2014 from 5.1% in 2011, according to MotorIntelligence.com. So far Japanese companies have used the currency advantage to improve profits and come up with better products. By using profits to invest in new technology and productivity Japanese companies can provide more features at the same price points to gain market share without having to cut price. After years of declining margins in electronics, autos and other markets this appears to be the current strategy. Another reason for this is that Japanese companies have already shifted production overseas, the shift being higher for Honda than for Toyota. Technological improvements from investments in R&D in Japan can be transferred to manufacturing operations overseas just as Apple is doing with smartphones manufacturing in China. The currency shift also improves Japan's position relative to American and European competitors in international markets....

LyrArc Article Gist
Car sales in Germany are up 40% from ayear ago. This is not about to happen in the USA. The cash for clunkers program in Germany is broad and less complicated.In Germany eligible cars have to 9 years old and the subsidy covered the purchase of any new car, regardless of size and fuel efficiency. In the US the program just signed by President Obama covers a narrow profile of customers. In the US customers who benefitare economically challenged and in the midst of adeep recession. Cars can't be over 25 years old, and can't have a combined highway and city fuel economy rating of more than 18 miles per gallon as calculated by EPA. To get the full $4500 credit customers must buy either a new truck or sport utility rated 5mpg higher than the clunker or scrapped vehicle, or a passenger car rated at least 10 mpg higher.And the credit is given instead of the trade in value, so if the trade in value is higher it doesn't help. The German government is giving away upto $4500 but it started out with 1.5 billion euros to get 600,000 clunkers off the road, but because of the popularity of the program has expanded it to 5 billion euros for 2 million cars and extended it to end of 2009. The US program only has $1 billion for 250,000 cars or one eight of what the Germans are doing for amuch larger car market. Because of the dire shape Detroit and much of the midwest is in, because of the slump in the auto industry, this may be a mistake and a missed opportunity to do what the Europeans are doing, and get an even bigger impact. The American car market and industry is taking a severe blow from the deep recession. Because of the depressed region the impact of a real clunkers for cash program that targets a broader profile, with bigger financing and designed to give a boost to the market, could make a real difference. At this point it is more of a program designed to help people turn in their gas guzzling trucks for passenger cars, and those driving a $200 car are not likely to be the kind of customer who goes out and buys a new car say dealers. See the link to Alan Blinder's stimulus proposal in July 29, 2008, that suggested a $20 billion program even before the current crisis. The present program has only $1 billion....

LyrArc Article Gist
Lohr describes changes underway in capitalism. Capitalism not purely as economic but rooted in the communities it is in and the overall society. As government becomes a partner of business in navigating this perod of acceleration of changes, that were already underway, whats important to society as a whole is taking prominence. At the WSJ summit recently, CEO's cited obesity in America as a number one concern. Issues like climate change and pollution are taking on more weight, especially with the US playing a role in global efforts to control it. Overconsumption of energy and of resources like oil also become a concern that business works to address. The modern corporation, the salaried manager, the industrial peace with unions and management working together, were not always with us, they were a result of the problems experienced in the years between the 2 wars. And the technologies of telephone, railroads, and telegraph, and the automobile created the mobility and communications that accelerated change in societies and communities, rural and urban areas throughout the growing USA. Now another set of changes will accelerate trends already underway. And business will have a more social face with society becoming interwoven with the other things business does and coloring all aspects of what it is trying to achieve....