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In this report WSJ looks at US Treasury Secretary's warning to China about its role in the free world and its position in the international trading system and the obligations to human values that come with it. Janet Yellen is so well known as head of the Federal Reserve and as US Treasury Secretary that it is easy to forget her experience at Yale studying under James Tobin who supported meeting social goals, whom she calls a life long mentor. Tobin set the foundations for economic policy in the Kennedy administration in the early post war period, after working in the Franklin Roosevelt administration during the war. Social goals, business paying its fair share of taxes, building infrastructure, were all a part of the FDR and Kennedy-Johnson administration.  It is also easy to forget that Yellen set the foundations for economic policy under Clinton and then under Obama administration the period when social goals were not met, infrastructure was neglected, globalization meant shipping jobs and factories overseas to China, and lack of financial oversight over banks that led to the 2009 financial crisis. The contradiction made Yellen realize only late during the Obama administration how much of a diversion she had taken from the social goals of the FDR-Truman-Kennedy post war period.  As one of the architects of the economic policy underpinning the emergence of China's role as the factory of the world, that destroyed many working class communities in the US, Yellen is in the economic role that Merkel shares in world of political economy with her integration of the German economy with that of China. Today as she calls for a retreat to the values shared by her mentor James T, Tobin and of FDR and Truman as they responded to the Berlin Crisis in the aftermath of 1945, and the Korean War with large scale invasion of South Korea and the kind of refugee crisis that we see today in Ukraine, there is much room for reflection. Reflection on what was lost in the intervening years of the Bush-Clinton and Obama years that led to the situation that the free world faces with totalitarianism today.   ...

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Thomas Kleine-Brockhoff, a senior transatlantic fellow at the German Marshall Fund of the United States, leads the EuroFuture Project. Here he offers his ideas of the dilemmas facing German leaders in agreeing to letting the European Central Bank take a larger role of supporting the bonds of Italy, Portugal and Spain. He says Germans are seeing a contradiction between European demands for German leadership and not wanting to be led by Germany or perceiving Germany as a hegemon. Brockhoff says Germans have never in the postwar period wanted to or learned to exercize continental leadership. He recounts the postwar period when Germans were content with the deutsche mark, and limited their expression of national pride to the deutsche mark. Giving up the deutsche mark was part of the deal for reunification of the two Germanys, a surrender of economic sovereignty for the sake of a larger integration into Europe. He says that even though the arguments are framed in terms of orthodox economics, economic nationalists who never really wanted to give up the deutsche mark are the core of the opposition to the common issue of eurozone bonds. The German position is to go back to the framework of principles for economic and monetary union and tighten the rules for spending and taxes, something that is good in the long run, but does not work in the short run with shrinking economies from austerity programs and nervous markets. The Merkel government's resolution of this crisis is to set new fiscal rules for the eurozone, and either move in the direction of letting the ECB play a larger role, or support such a move. What is not clear is whether the government will survive the next election taking on this leadership role in Europe, or a revolt in the Christian Democratic party....

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Deutsche Bank's image takes a hit in a criminal investigation of alleged tax fraud at Deutsche Bank involving cross border trading of carbon emissions certificates by traders. Co-CEO Jurgen Fitschen called the Governor of Hesse to protest a raid by 500 German police officers and investigators of the headquarters of Deutsche Bank in Frankfurt. The officers arrested some executives and confiscated data. Fitschen and co-CEO Jain were in a supervisory role for the trading and not directly involved. Fitschen signed a tax declaration that is part of the case. Over 20 Deutsche Bank executives are under investigation in the case. Because Fitschen was also being examined in the case this is being viewed in Germany as placing himself ''above the law," by interfering in a criminal investigation. Christopher Frank, head of the German Association of Judges, a senior prosecutor in Freiburg, said in an interview: "Its disturbing that a bank executive believes he can influence the independence of the judiciary through a phone call...This shows a fundamental misunderstanding of the principle of separation of powers."...

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Tougher sanctions on Russia in July 2014 with the addition of Moscow Bank, VTB Bank. Sberbank was not added but other steps limit its access to financing in European financial markets. The limited access to international capital means banks and other companies will have to turn to the government for financing. Growth was estimated at 3.8% and lowered by the IMF to 0.2% in its latest forecast for 2014. It could turn negative, showing the impact both of the emerging markets crisis in early 2014, compounded by the crisis in Ukraine in the second quarter on the Russian economy.

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The Journal's Jeff Bennett talks with Rodney O'Neal, the CEO of Delphi Automotive. O'Neal says Delphi's success depends on focussing on advanced technologies where emerging market producers are less able to compete. He has focussed on 33 product lines which are 'green,' safe' and connected.' If it doen't create value then revenue and cost numbers are wrong, is O'Neal's lesson from the bankruptcy filing. He likes the chaotic discussion coming form strong debate, where views are expressed with passion and counterpoints made, and he takes this debate seriously, because as he sees it choosing the right course is a significant task in itself, which takes much time to correct if wrong. There are major improvements in emission and fuel economy ahead and a high tech future for the automobile industry. He see America's future in high-tech where America can do better than emerging market producers, and ensuring that the steady flow of exceptional American talent continues to be channelled properly....

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The economic crisis is global because with a few exceptions like Germany the housing prices have seen a bubble around the world, worse than in the US in places like Ireland and the UK, and similiar to Florida and California in Spain, and also in places like China and India whwere a stock market bubble helped sustain housing price increases. In China and India the crisis comes in the shape of higher inflation, food prices, and huge stock market declines, along with the housing declines, and lower economic growth as China shifts from an export model to domestic consumption letting a third of the low cost factories in Guangdong province close down. Look for serious effects and global economic slowdown from a series of intertwined crisis housing credit and in Asia stock markets.

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As the August 1 deadline approached first the Japanese and then the Europeans who held out till the end sometimes treating the US with disdain and ridicule, realized that the US was dead serious about tariffs. Even the US business community tended to treat DJT tariffs with disdain not realizing that the tariff battles were first fought against Japan by Deputy USTR Robert Lighthizer under Reagan in the 1980's always to get a fair deal for the US. The recalcitrance of the Europeans and the Japanese can be understood by the non tariff barriers Japan placed on US products and the 10% tariff on US autos the European Union had in place for decades when the US only had a 2.5% tariff on German car imports.  The media in the US and Europe has utterly failed to tell the US side of the story. Here at Lyrarc we remain committed to bring out all the facts so that readers can better understand both sides. Initially the EU adopted an adversarial approach as shown in this report in WSJ by Kim Mackrael and Brian Schwartz. How is it that the Europeans and the Japanese took such a position when since 1980 there was no level playing field for the US on world trade clear for all to see? Not till late May as negotiations dragged on did Japan and the EU take stock of their own positions, DJT having to say US would impose a 50% tariff to get the EU to understand, saying "our discussions with them are going nowhere." In the end in Scotland Leyen and Sefovic for the EU accepted 15% tariff on EU imports to US. Akazawa of Japan had accepted this the week before. ...

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Polls on Deutchland opinion trends show Merkel has gained support with her careful handling of Brexit, and the AfD has lost support. Only a month ago media reports covering the immigration issues had put AfD in the light of gaining using this issue. The infighting in the Conservative Party and the lack of any plans of ministers in the British government favoring Brexit for leaving the EU have Germans questioning this kind of politics compared to Merkel's promise of a "calm and composed manner" in dealing with issues of people's lives and the future of Europe. The extensive coverage in Germany of the vote for Brexit, the EU referendum in Britain, increased awareness in Germany of the benefits of the European Union. Merkel and other leaders offered their assessment of how the European Union has brought peace to Europe and improved the lives of the people during the pre Brexit media coverage. Now Infratest Dimap polls show the popularity of Merkel has increased to 59%. Compared to a June poll before Brexit things look better for Merkel-  the AfD Alternative for Germany has lost 3 percent of support dropping to 12 percent, the Christian Democrat party of Merkel is up by 2 percentage points to 34 percent in popular support, the Social Democrats also increasing support by 1 percent to 22 percent.The vast majority of people said the European Union provides security (74 percent) and prosperity (79 percent). Germans are skeptical about the value of referendums on such major decisions as EU membership because of swings in popular opinion such as that on immigration that swayed British voters- 49 percent saying parliament does better in these situations than a referendum, 42% saying referendums are better. For voters who said Germany was hindered by membership only 11% supported that proposition and 52% said the EU is beneficial for Germany. Over 75% actually favor more cooperation on refugees, data policies and energy, setting the prospect for a stronger European Union. Also proving the importance of responsible politics, and honest, flexible leadership, responding to people's concerns yet not pandering to swings in opinion for temporary advantage. A separate piece in the Guardian by Yonge points out that Cameron actually won only 23 percent of the eligible voters for Conservatives in the 2015 elections in Britain, reflecting a two decade slide. Brexit only made this failure widely visible, and did not escape the attention of the German people.   ...

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To correct misgivings in many quarters about Syrian refugees not finding a haven in Gulf states, this letter from the Cato Institute points out that the population of Syrian refugees living in the Gulf states including Saudi Arabia has gone up by 1.1 million by 2013 from the beginning of the civil war. He cites World Bank data showing 241,000 Syrians living in the Gulf states before the civil war. By 2013 that number is 1.4 million. For Saudi Arabia the figures are up from 111,000 to 1 million.

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The pandemic and ensuing lockdowns, unemployment in the US separated workers from their jobs just long enough to give them a chance to rethink how bad their jobs, incomes, and working conditions were before 2020, says this expert in the NYT. The aid to unemployed workers through long term unemployment benefits, moratorium of rent payments, direct money to households, gave workers enough financial room to make the choice not to go back to poor paying jobs with huge contact risks from coronavirus in the restaurant, fast food franchise, travel and entertainment industries, related industries.  With the Biden administration investing in child care, maternity leave, care for elderly leave, new opportunities for relocating and looking for work were opening for women, and for men who had stuck to old jobs and put up with lousy conditions because of a lack of alternatives. Biden administration's Families and Workers Plans, the effects of the pandemic, helped to shape a new culture of what was possible for workers- a sense that dignity in the workplace was part of culture in America. Restored by FDR/Truman and now again by Biden after two tech booms in the 1920's and the 1990's. A similar situation of a change in culture respecting the dignity of workers and of work is taking place in European Union as stated by SPD leader Olaf Scholz in his election campaign in Germany. Scholz is now incoming Chancellor replacing Merkel. European Union countries have better laws and rules in place for worker retention, and also better worker protections so that the great resignation that happened in America took place in a milder version. ...

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Negotiations between European leaders, especially Germany's Merkel and the Obama administration on climate change at G8 meeting. The U.S. and Europe try to work out differences. The U.S. is vague about some language such as the starting year against which emissions reductions will be measured, and has resisted the European pressure to set strong goals over the next 10 years. Europe wants 1990, while the USA, Australia and Japan prefer 2005. Europe wants to see language in aformal document that is being developed for the G-8 meeting, which also includes developing countries, for limiting the rise in global temperatures to 2 degrees celsius, or 3.6 degrees Fahrenheit, above pre-industrial levels.

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Krugman on the ECB President Trichet's support for austerity programs in European countries facing debt crises, and the loan programs for Ireland, Portugal and Greece that require large cuts in spending. The austerity programs lead to lower growth in these countries, further reducing their ability to repay these loans. The reluctance of the German government and other European leaders to consider debt restructuring even though it appears Greece is unlikely to be ever able to repay the loans extended, shows that EU has not grasped the reality of the situation. ECB officials warned against any restructuring effort in late May 2011, saying that if a restructuring were to take place the ECB would not accept the Greek bonds as collateral for ECB loans. This leaves many to question the ECB's thinking. And to question the German government's resistance to provide aid for troubled European economies even though the current rescue programs were made to protect German banks from losses in loans made to these countries....

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German regulatory authority takes a tougher stance in 2014, as the time when regulatory authority passes on to the ECB approaches. In the past BaFin has been seen as too supportive of Deutsche Bank.

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As German chancellor Merkel pointed out at the EU summit, all central European states and Eastern European staes are not doing the same. Czech Republic and Poland are doing relatively better, Hungary, Romania and the Baltic Countries are in serious crisis. And smaller Slovenia and Slovakia are part of the core countries in the EU which use the euro. The Baltic countries are looking to Sweden to help and the Swedish Finance Minister has said it is the political responsibility of Sweden to help the Baltic countries, which Sweden should consider as part of the home region. Romania is looking to a reluctant Germany for help. And voices in Europe are asking if it isn't the political responsiility of Western European countries like Germany to help, and if not what does it mean to be part of the European Union? The Eastern European countries caught up in this crisis with their currencies losing value and large loan repayments to western European banks, feel they embraced the liberal capitalist model without any knowledge or experience with its fluctuations and crisis prone nature, as part of the integration into a united Europe. Now they are left they feel, to drift on their own. The recent emergency European summit meeting in Brussels saw the Czech prime minister Topolanek, who holds the rotating presidency of the EU, say that no member would be left in the lurch, and the need to avoid a dividing line in Europe that North-South or East-West. The Hungarian prime minister insisted on a special European Union fund of upto $241 billion to protect the weakest members, and circulated a paper saying that Central Europe's refinancing needs for 2009 were $380 billion. So far the governments of the EU have already spent $380 billion in bank recapitalizations and put up $3.17 trillion to guarantee bank's loans and to get credit moving again. And the European Bank for Reconstruction and Development, the European Investment Bank and the World Bank have promised $31.1 billion to Eastern European countries....

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U.S. president Obama invited NYT's columnist Thomas Friedman to the White House for an interview on Saturday afternoon April 4, 2015. Here Friedman gives president Obama's response to his questions, and Obama's concerns about the heated rhetoric in the U.S. and Israel on the negotiations with Iran detracting and distracting from his key goals of protecting U.S. interests and Israel. On the Sunni states, Saudi Arabia and Egypt, Obama points out that there are some tough conversations needed about changes inside their societies which pose a greater threat to the governments than Iran. Obama says he understands perfectly that Israel and the Jewish people after their experience of the last hundred years are determined to not let Iran develop a nuclear weapon, and their right to be concerned that the agreement could let Iran clandestinely develop one. Obama says the verification is extensive and covers any facility in Iran, any suspicion about secret facilities, yet it leaves the subsequent decisions if Iran created difficulties, to a international body over which the U.S., UK, France, have no control. This is a principal issue for critics of the negotiated agreement. No mention is made of why Iran simply discarded the option of sending the atomic material to Russia to be processed into nuclear rods for the Bushehr nuclear plant built by Russia only a few days before the final outline was developed. And why the U.S., with allies Germany, France, UK and Japan, did not offer the Iranians an economic aid package if needed in return for the billions Iranians invested for that atomic material, to ensure that the atomic materials are shipped out of the country- to create a nuclear agreement that would be credible to all parties. The economic aid would benefit Iran modernize its oil industry, including refining operations, meet basic import needs, and provide tangible proof to the Iranian people of our best intentions for the future, that president Obama strongly espouses in the interview. The interview does show the quandary president Obama faces in Iran for strong action, that is a result of failed policies with Iran since the Eisenhower administration's intervention 1953 during the Cold War that displaced the elected government of Mosaddegh in Iran and setup the Shah's regime in 1956, the support of Saddam Hussein in Iraq in the war against Iran, which Obama mentions in this intervew. In the light of the repeated failures of the U.S. policies a Democratic party leader faces increasing reservations for taking strong action against Iran's development of nuclear weapons capabilities, preferring to exhaust every diplomatic channel, and take risks in the hope that time will give the Iranian people an opportunity to to reintegrate in the global community and pursue the peaceful development of nuclear energy. This strain in president Obama's thinking is evident throughout the interview with Friedman. Other aspects of president Obama's policy in the Middle East shared in the interview are about supporting the Sunni states in some areas, and Iran in some areas, at the same time as the nuclear issue is "put in a box" and separated from the regional conflicts. Friedman presents this as the Obama doctrine, yet it appears to be coming after a series of improvisations in foreign policy following a failure to act in 2011-2013, when the "once in a lifetime" opportunities presented by the Arab Spring were not taken up by the Obama administration, leading to the region's current disintegration....