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Hype and sales tactics by banks in sovereign bond issuance is coming under scrutiny by the International Capital Markets Association (ICMA). In one deal, a "covered bond" issued by Spain's Banco Santander SA in June 2011, with the collateral being Santander's loans to Spanish local and regional governments, this was clearly the case. The deal was managed by HSBC, Societe Generale, Commerzbank and Santander. One or more of these banks told investors they already had orders of 1.5 billion euros, which exceeded the original size of the 1 billion euro offering. After this deal found no buyers because of fears about Spain's debt situation, it became clear that the claims about orders were hype. The underwriting banks had to buy the bonds worth hundreds of millions of dollars.

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About $229 billion, three fourth of Greece's debt, is now held by the European Central Bank, the IMF and the European Commission. This is taxpayer money and the governments are making sure that they get back bailout loans in the form of interest payments. About two thirds of the $177 billion given to Greece as bailout loans since May 2010 actually came back to the ECB, IMF, and the EC, in the form of interest. The ECB is keen on recovering taxpayer money. The money route has been setup with an escrow account in Greece for bailout loans so that interest payments get paid, and this money cannot be used for any other purpose. Banking experts say this is a practice in risk management, and with Greece's poor record in finances the controls have been put in place to recover money the ECB invested in Greek bonds in an effort to calm nervous financial markets and now gets about 10% in annual interest payment. Under earlier debt restructuring for private creditors to Greece a haircut of over 50% on Greek bonds was taken, with the ECB insisting on receiving full payment. If Greece were to repudiate the loans under a new elected government losses would have to be taken by the ECB, IMF, and EC, and by private creditors. The ECB has Greek bonds in the range of $44 billion to $69 billion, and the European Financial Stability Facility $88 billion, by some estimates. Greece's exit from the euro would result in losses on these bonds .for the ECB and the EFSF, ultimately European taxpayers. It would also make the new bonds to private creditors under the restructuring of little value which is why European banks would not favor that outcome. Greece's tax receipts at some point, possibly 2013, would exceed basic operating expenses of the government, at which point a future Greek government might decide to exit the euro and stop interest payments on debt in its best interest....

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The increasing likelihood that Greece will exit the eurozone. This happens as the New Democracy party fails to form a coalition and the other parties are offered a chance to form a coalition. The other opposition parties gained far more votes than New Democracy and Pasok in the elections and some parties favor Greece exiting the eurozone. New elections will be held in June if no government is formed. The current government of Lucas Papademos says it needs an extra year to complete the privatizations, public sector layoffs and improvements in tax collection, giving Greece till 2015 to get the job done. As a senior advisor to Papademos, George Pagoulatos, put it: "There is a sense that Greece has passed its pain threshold... Greece needs some oxygen to breathe." Both the Ifo Institute's Sinn and John Taylor see the exit from the eurozone as the best option for Greece, as interest rates on Greek debt have been reduced and Greek banks recapitalized with the March 2012 bailout. John Taylor, WSJ, Feb. 22, 2012, A Better Grecian Bailout/ WSJ, Feb. 17, 2012, Interview: Ifo's Sinn: In Greece's Interest to Leave the Eurozone.This may already be the preparation the IMF, ECB, EU, and the Greece government has laid out as an option if the voters in Greece overwhelmingly rejected further austerity. This now appears to have happened and far more quickly than politicians in Athens, Brussels and Berlin had anticipated....

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The startling truth about health "reforms," - they won't control spending, and without that the whole system of health care will rapidly become unaffordable and unsustainable. Obama's Council of Economic Advisors points out in new report that since 1975 annual health spending per person, adjusted for inflation has grown 2.1 percentage points faster than overall economic growth per person. At this rate health spending which was 5% of the GDP in 1960, and is 18% of GDP today, would grow to 40% of GDP in 2040. Medicare and Medicaid would increase from 6% of GDP now to 15% in 2040, or equal to three fourths of federal spending. Employer paid insurance premiums for families which grew 85% in inflation adjusted terms from 1996 to $11,941 in 2006, would increase to $25,200 by 2025 and $45,000 in 2040. This would force employers to reduce take home pay. Samuelson says the uncontrolled health spending is singlehandedly determining national priorities, reducing discretionary income, raising taxes, widening budget deficits and squeezing other government programs, while it is producing large amount of waste in medical spending. See the link to Prof. Tyler Cowen of George Mason University in NYT, 6/14/ 2009, who cites the habit of doctors to write many expensive tests as one of the prime culprits in the wasteful spending. And in the process it delivers higher cost for lower overall quality of health for the American people. This at a time when many European countries provide live examples of doing it in a better way- lower cost, better health. The serious problem with the Obama health reforms says Samuelson is that it talks about restraining spending but may end up increasing spending. Its talk about controlling spending he says is good intentions, but based more on hopeful thinking, public realtions and risks becoming cosmetic reform. Because to really control spending will require coming to grips with its fundamental cause- hospitals and doctors are paid mostly on a fee-for-service basis and reimbursed by insurance, private or governmental. Such a system encourages doctors and hospitals to provide more services, expensive tests, favors heavy use of expensive medical technologies to increase profits, and for patients to expect them. Samuelson puts his finger on the root of the problem - there is no incentive and every disincentive for all the players in this game , doctors, hospitals and patients to seek reform of this system. For doctors and hospitals the hope would be that this cosmetic "reform" would leave the system basically unchanged, and patients to continue with a lifestyle and expectations that do not not acknowledge the fact that a lot of healthcare does not come from spending but from preventative care, education, good eating and exercize habits, and healthy lifestyles. And the uninsured are no exception, they would simply start consuming the expensive care for lower quality of overall health like everyone else. With this kind of situation confronting us, the views of Samuelson, and Professor Tyler Cowen of George Mason University, as welll as a growing chorus of informed public opinion on this subject, is that insuring the uninsured is a good idea, but doing it within the bounds of the present system, can only increase the costs. And too much is at risk, to rely on what Samuelson calls a scattershot of measures to control costs made up by Congress such as "evidence -based guidelines," "electronic record-keeping," "bundled payments to hospitals, to give the illusion of progress that won't make a serious difference. A sweeping restructuring of health care is needed, that would overhaul "fee-for-service" payment and reduce the fragmentation of care. It will also need what has not even be touched on adequately in the debate. This is the massive need for education in the schools about nutrition, eating, exercize, healthy lifestyles. It would also require opinion leaders in each field from sports and other fields to lead by example and with constant public presence, the media, and companies to form a partnership with private institutions to change existing eating habits and lifestyles that encourage obesity, smoking, fast food eating habits, large portions in restaurants....

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Comparative effectiveness research will be conducted to evaluate what is the best treatment for any ailment or disease or health problem under the $1.1 billion allocated for this in the Stimulus Plan. What are the alternative methods of treatment, what is the effectiveness of each treatment, what are the comparative costs and so on. Is it better to treat neck pain with surgery or acombination ofphysical therapy, exercize and medications? If there is ablockage of arteries in the lower leg and leg pain, how does drugs and watchful waiting compare with surgery? For chronic heart failure how does home monitoring of blood pressure and weight and exercise in addition to medications provide an alternative route as opposed to just medications. Dr Fisher of Dartmouth Medical School cites these as examples of questions that can be asked in comparitive effectiveness research. The money will be available to the Health and Human Services Department and will be used over several years. About 15 federal employees will form a council to coordinate the research and advise President Obama and Congress on how to use the money. In 2007 the US spent $2.2 trillion, or 16% of GDP, on health care, and the Congressional Budget Office says it will grow to 25% of GDP at the rate its growing by 2025 if left to its own devices. ...

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Of the people asked the question "what issue do you see as the most important for health care" 44% in a NBC/WSJ poll said they considered Cost as the biggest issue, and 37% said that they considered the Uninsured as the biggest issue, 11% said quality of care was the biggest issue. The President is focussing on cost as he develops the health care plan. He is also saying that to provide health care for all and cover the uninsured without controlling costs would break the bank. Another thing that the White House shows it has learned from previous failed attempts, is that it is doing this with an open Health Care Forum with participation of different sides in the health care discussion. Clinton's effort in 1993 ran into problems because it was developed secretively, and without much discussion, and little effort to get different people's views. The previous attempt also waited too long after the election, and this time the President is moving quickly when he enjoys large popular support. Its also true now that there is serious concern especially in this downturn of what a threat spiralling costs of health care are becoming to the future prosperity of the American people. This time the leaders in Congress are setting an aggressive schedule to get health care palns legislation on the floor by June and get a floor vote in August 2009....

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Zalmay Khalizad, a former diplomat to Iraq, reports from Iraq after discussions with prominent Iraqis, describes the state of U.S. relations with Iraq under the Abadi government. He says the Ayatollah Sistani in Iraq prime minister Abadi, and Iraqi public opinion, now favor improved relations with the U.S. following the sectarianism promoted by prime minister Maliki and Iran's expanded role in Iraq. Other reports show Iraqi opinion in transition as the U.S. withdrawal promoted by Maliki has led to 2 million refugees, and huge dislocation of people with the expansion of Islamic State from Syria into Iraq. The change in opinion is also towards promoting better relations with Sunni countries. People in the region do not see a bright future with an increase in religious tensions that only lead to more destructive behaviours and increase in refugees. Towards the end of the Bush administration there was some hope that Iraq would see a bright future, only to see this reversed under Maliki's sectarian policies. U.S. public opinion has shifted away from any involvement following the failure of the people in the region to resolve differences and live peacefully. The cost of the wars with little gained as a result of the failure of the people in the region to work together in the common interest is a part of the public debate in the U.S. presidential election of 2016. Sectarianism in the region is the root cause of the growth of the Islamic State and the expansion of the war in Syria, and this has not only worsened the situation for the people in the region, delayed economic development given large oil resources, and left the region worse off than before. It has also led to the refugee flow into Europe worsening the situation in the European Union, adding to tensions in European societies such as France, Germany, Denmark and Sweden, following terrorist attacks and political parties promoting fear of immigrants. What started as a U.S. response to terrorism originating in this region in New York, followed by the war in Iraq, has led to more convulsions in this region, a huge number of refugees, whole country populations displaced, and requires a fresh rethinking about what people in the region can do to live and work together and promote the peaceful participation of people in their own development and growth, before Western societies consider further involvement. The statement about lost to Iran in the title also suggests framing of statements in the old way that are the root of the problem. When the dust settles years from now Iranians, Iraqis, Saudis, Yemeni, Turkish, Pakistani, Indian and other Muslim societies may want to look back at this period as reflecting the dangers of getting caught up in the geopolitics of world powers, letting religious sentiment override calmer thinking, and reflect on the brighter aspects of the common Islamic heritage in Iran, Turkey, India, expressed humanly as it is always is in different ways and forms. They can also take hope and confidence in the fact that European societies have struck the same rocks and emerged calmer, wiser, and better than before....

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So far the Italian government has already recovered $15 billion for 2011 in its fight against tax evasion. The fight includes an advertising campaign depicting tax evasion as anti-social activity and vigorous enforcement by tax officials and the financial police. Italy has already banned cash transactions to reduce possibilities for evading taxes. This problem is severe in Italy because the underground economy is about 17.5% of GDP. An estimated $150 billion is lost to the Italian treasury from tax evasion. As a result Italy has a chronic budget deficit problem and is not able to make necessary investments in improving competitiveness to keep up with other countries. This may be one of the lasting achievements of the new administration of Mario Monti, along with its efforts to change the way the public thinks about other issues including labor laws that place large burdens on small companies in hiring practices. Italians sense the need to change the way they think about taxes because this is one way to reduce the burden of austerity measures- higher tax revenues could enable lowering taxes. It would also enable investing in improving competitiveness that would the economy grow and provide the jobs to reduce the high unemployment rate among young workers. One of the lasting positive aspects of the eurozone crisis is the change in the way the people and society think about many issues....

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Austin Goolsbee says the overvalued currencies of Italy, Greece, Spain and Portugal and the lack of growth under austerity plans proposed for these countries create impossible odds for resolution of the financial problems in these countries. The German position is that profligate spending and irresponsible accounting in Greece, and structural issues in Italy ranging from entitlement spending to tax evasion, need to be resolved.

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Efforts by Greece's government officials in October 2011 to meet demands from the IMF, The European Commission and the ECB- collectively referred to as the "troika" in Greece- for 30,000 public sector job cuts. The first step was putting together layoff lists, and effectively create a special labor pool at reduced pay for 12 months, after which those not finding new jobs would be layed off. There is considerable difficulty doing this, as heads of departments are reluctant to do this. There is a constitutional provision that protects public sector workers from layoff in Greece. The troika is insisting on the lists, or across the board cuts in the event lists are not prepared. The 30,000 job cuts are part of job cuts in the public sector which would be a total of 100,000 by 2015.

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The Economist says British prime minister David Cameron's negotiations with the European Union during the recent summit talks were a failure. The diplomacy of the Cameron administration is described as inept and is seen as damaging British interests severely. It leads to an isolation of Britain in Europe. In this negotiation French President Sarkozy is seen as coming out ahead. The inept efforts to protect Britain's financial sector are unlikely to benefit the sector.

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To get the agreement of the 27 countries engaged in the talks to set new banking rules, the new Basel III banking rules are being phased in over a protracted period. Some changes go into effect in 2013, but others will be put into effect by 2019. The focus on the new rules is how much capital, or "common equity" banks will be required to hold as a cushion to absorb losses in a crisis like that of 2008. Large banks will be required to hold 7% of their assets in common equity. By 2015, banks will have to begin building a 2.5% buffer of capital, which must be in place fully by 2019. No action was taken on issues such as requirements for banks to have access to ample liquidity, what systemically important banks should hold in capital, and establishing a counter cyclical capital buffer.