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Italy's prime minister, Monti, says he will submit his "irrevocable" resignation, after about 1 year in office, following the withdrawal of support from Berlusconi's People of Liberty party. He told president Giorgio Napolitano he would make an effort to pass the budget and a financial stability law to defer "the consequences of a government crisis" before turning in his resignation.

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Kessler in the WP corrects Obama's claim that he created 800,000 jobs. He says this is clever arithmetic as it takes a low point in Feb. 2010 following the financial crisis. Kessler points out that according to the Bureau of Labor Statistics, U.S. manufacturing jobs were 12.56 million in Jan. 2009 when Obama became president. In Nov. 2016, early estimates show there were 12.26 million manufacturing jobs, a loss of 300,000. This loss does not reflect the problems in the U.S. auto industry and older industries in the midwestern states as a result of trade and globalization that speeded up with the rapid industrialization of China. And led as Greg Ip pointed out in a recent WSJ report to a rapid acceleration of job losses in a decade that did not happen in the same scale during Japan's industrialization and urbanization in the sixties. This aggravated the situation in Michigan, Ohio, Wisconsin, Indiana, and Pennsylvania, and was met with a feeble response from Democrats. Even a economist like Krugman favoring the Obama administration's efforts came to the conclusion that TPP did not add much to gains from trade as most of the gains had already been realized. More of the gains went to tech and IT in California, at the expense of the auto industry based in the midwest. A report in WP show a president too close to IT in California and failing to grasp the situation in the midwest. Voters punish whoever is in power, regardless of being Conservative or Liberal, in Canada the hollowing out of manufacturing under Harper in Ontario and Quebec led to the win by Trudeau's Liberals.  ...

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Note this comment by the head of the U.S. National Highway and Traffic Safety Administration in the Bush Administration. NHTSA Administrator Jackie Glassman says the average mileage for the fleet today is 30 miles per gallon and raising the current standard of 27.5 mpg for an automakers passenger fleet by 2.5 mpg won't put much pressure on automakers. The Bush administration- and the prior Clinton administration- has not committed to making major improvements to the national mileage standards, with the current standards of 27.5 mpg not having changed since 1990! Glassman says the NHTSA starts with the manufacturers product plans and then sees whether it can get additional fuel savings with these plans. This suggests an NHTSA that is more follower to the auto industry rather than a leader in setting the standards that the auto industry then tries to achieve to reduce the U.S. dependence on foreign oil. Also note that it takes 2 years for things to change, as it will take months for rule changes, and 18 months have to be given to automakers to implement the new rules. By 2008 the fuel efficiency based on market competition and Toyota focussing on hybrids and higher fuel efficiency across the whole car lines, might well exceed any new standards that are watered down, especially if crude prices hold up. Lawsuits by attorney generals of different states and the Lugar-Obama bipartisan bill pushing the adminsitration to mandate higher standards are intended to put pressure on the Bush administration to come up with new higher standards. The failure of Democrats and Republicans in the Clinton and Bush years to raise standards and require the auto companies to use new technology to meet these standards with government assistance is one of the significant failures. This will affect the prospects for the U.S. economy in the years ahead....

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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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Jac Welch gives Obama an A for leadership. Mind you he says he doesn't agree with all the President's policies. He is talking about leadership. He scores Obama in four areas, Vision and Team Building, Speed and Authenticity, and he finds him at an A in all areas and gets an A in authenticity with alittle help from Michelle with her warmth and personality. There are 2 more traits on which the test is still going on he says, that of resilience and the wherewithal to champion unpopular causes.

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Jens Weidmann, president of the Bundesbank, says central bank "independence is lost when monetary policy is tied to the wagon of fiscal policy and then loses control over prices." Weidmann and Merkel emphasize their continued opposition to euro-bonds. Merkel tells the German parliament on Dec. 14, 2011, euro-bonds "aren't suitable as a rescue measure." Italian prime minister Mario Monti, tells the Italian Senate: "the Italian government insisted heavily on euro bonds, which are not a back-door way to allow fiscal laxity but will boost growth." Monti says the euro bond proposals will be on the agenda for the EU summit in March. Italy auctioned its 5 year bonds at 6.47%, as German two year bonds had a yield of 0.29%, showing the widening divergence between the bonds of the two countries.

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Italy's National Reform Plan shows a forecast of GDP contraction in 2012 of 1.2%, up from an earlier forecast. Italy will show a budget deficit of 0.5% of GDP in 2013. Italy's Deputy Economy Minister Vittorio Grilli poitsed out that in structural, cyclically adjusted terms Italy will post a budget surplus of 0.6% of GDP in 2013, that fiscal policy was tightening. This was confirmed by the IMF which said that Italy will achieve structural balance in 2013- which means that if the economy were operating at full potential Italy would have a balanced budget.

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The IMF predicts GDP decline of 1.9% in Italy in 2012.

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This Journal editorial says both Hollande and Sarkozy fail to address the issue of competitiveness in the French economy. Much of the election campaign in April 2012 has focussed on taxes on higher incomes and too little on measures that would improve competitiveness. Some of the action taken in recent years such as raising the retirement age to 62 from 60 are being opposed by Hollande, which gives the electon a fairy tale quality says the Journal.

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The number of unemployed in Spain reaches 5.6 million people in April 2012. Finance Minister Guindos said the only bright spot was exports and a drop in the current account deficit which shows Spain's improving competitiveness: "This shows the Spanish economy is competitive, unlike some other European economies, thats the most important element of optimism for the future." The Spanish cabinet approved a Stability Program Report to be submitted to the European Union showing GDP growth of 0.2% in 2013 and 1.4% in 2014, following contraction of 1.7% in 2012, and unemployment falling slightly to 24.2% in 2013. Spain's government debt level is shown at 82.3% of GDP in 2013 declining to 81.5% in 2014.

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European banks have been slow to get rid of risky assets such as collateralized debt obligations, subprime mortgages and other risky assets after the 2007 financial crisis. As a result sixteen top European banks hold 386 billion euros of suspect credit-market and real estate assets, according to Credit Suisse analysts. The Royal Bank of Scotland has 79.6 billion of assets dating from the 2007 financial crisis. Over the three year period since the 2008 financial crisis, the top three U.S. banks shed 80% of this type of risky assets, compared to 50% for European banks. The four largest British banks have reduced these risky assets by more than 50%, and four French banks have reduced these assets by only 30%. At 29 billion euros, French bank Credit Agricole had the largest amount of such risky assets among the leading French banks. This adds to the difficulties facing French banks which also have large amount of loans to customers in Greece and Greece's sovereign bonds. Deutsche Bank has 20.2 billion euros in commercial mortgages and whole loans and 2.9 billion euros in U.S. residential assets including subprime loans. Mediobanca analysts estimate that Deutsche Bank's exposure to such assets is more than 150% of its tangible equity....

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With 816 Democrats losing office in state legislatures during the Obama years, more than under any president since Dwight Eisenhower, some Democrats say the Democratic bench is much weaker today.

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Raghuram Rajan, former chief economist at the IMF, and William White, former head of the economics department at Bank for International Settlements, both see the need to raise rates. But expert opinion on the other side sees the need for caution as the economic outlook worsens, and supports ECB and US Fed's efforts to counteract a deteriorating economic situation.