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The U.S. and the EU join together for stronger economic sanctions on Russia. The sanctions affecting large Russian banks ability to raise capital in financial markets are likely to affect the Russian economy. Russia was suspended for export credit and development finance. VTB Bank was one of three more Russian banks added to the list of banks with economic sanctions. The EU took similiar action against Russian state owned banks and imposed an arms embargo in July end 2014.

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Greek leader Alexis Tsipras of the Syriza party, the Coalition of the Radical Left, talks to Angelos and Granitsas of the Journal. He says it is in the interests of the European Union to continue funding to Greece, but if the EU stops the funding Greece will stop paying its debt. It will then use the funds going to the debt burden for paying retirees and workers. And it will also tear up the loan agreements signed earlier, and scrap plans for layoff of 150,000 workers in the government services by 2015. He would also reverse measures to lower private sector wages. He also looks favorably on nationalizing banks to better channel lending to where its needed. In his view it will be difficult for Greece either way. Even with funding Greece's GDP is expected to fall 5-7% in 2012, following several years of declining GDP.

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New Democracy has 22% and Pasok 18% in polls before the Greece elections. A New Democracy-Pasok coalition is one possible outcome of the election. New Democracy leader Samaras sees a coalition government as tying his hands for policy actions, and feels he can win another election if it took place later this year. By then the thhinking goes Greeks will have vented their anger and will be looking for a stable government. Both parties have seen supporters shift to fringe parties with 22% unemployment and rising taxes.

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GDP growth for the 17 eurozone countries showed a 0.2% decline in the second quarter of 2012, according to Eurostat, the EU's statistics agency. The German econonomy showed GDP growth in the second quarter 2012 of 0.3%, France showed zero growth for the third consecutive quarter. Italy and Spain showed negative 0.7% and negative 0.4% growth during the quarter. The ZEW indicator of sentiment in Germany fell to its lowest level reflecting German manufacturers reluctance to invest in new equipment. As the eurozone economic growth remains flat and declining for longer period, German business sees this affecting German exports. Analysts at Commerzbank and Dutch Bank ING see a further slowdown in the German economy in the second half 2012. The German economy showed GDP growth of 0.5% in the first quarter 2012, compared to the prior quarter, before declining to 0.3% in the second quarter. Further decline is now expected.

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The former CEO of GE (General Electric) says why he is skeptical about the decline in the unemployment rate to 7.8% as shown by the household survey of the Bureau of Labor Statistics. He says the economy has to have grown at breakneck speed for unemployent to drop from 8.3% to 7.8% in 2 months. The dozen companies he is working with are seeing third quarter 2012 results worse than the second quarter. The labor force participation rate declined to 63.5%, the lowest since Sept 1981- fewer people looking for work accounts for the drop from 8.3% in July to 8.1% in August 2012. Other numbers that look implausible are the BLS figures of federal state and local governments adding 602,000 workers to their payrolls in Aug and Sept 2012, the largest 2 month increase in 20 years. And the BLS figure of overall 873,000 workers being added in Sept. 2012, the largest one month increase since 1983. All this he calls implausible. Part of the problem is the way the data is collected because someone who for example says he got a job baby sitting for from anywhere in the range of 1 to 34 hours is a parttime worker, so that working 1-2 hours would be counted as employed parttime in the BLS methodology....

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India's inflation rate declined to 4.4% in Nov. 2014 and 5% in Dec. 2014. Price pressures are moderating throughout the economy. With lower oil prices in 2015 and long term trend for lower prices the outlook has improved for controlling inflation. The central bank governor Rajan cut rates by one quarter of a percentage point in Jan. 2015 and indicated further rate cuts are ahead to boost economic growth. The financial markets reflect a 1% decline in interest rates and the stock markets were up 2% in Jan. 2015

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Nawaf Obaid, a fellow of the Belfer Center for Science and International Affairs at Harvard University's Kennedy School of Government, is also senior fellow at the King Faisal Center for Research and Islamic Studies. Here he describes the events leading to the Saudi turndown of a seat on the UN Security Council. The Saudi foreign policy establishment made this decision after several weeks of debate in Jeddah considering the U.S. and Russia's effort to make only a muted criticism of the use of chemical weapons in Syria in the Security Council; and the U.S. effort to have the British, French and Saudis give up on demands for firm language in a Security Council resolution on action to be taken against the use of chemical weapons. For the Saudis, says Obaid, better not taking a temporary seat on the UN Security Council, than to be left a docile member without its own voice and the voice of others in the international community being heard. Obaid also points out that this is the beginning of Saudi effort to exercize its own influence in the Middle East, as it faces three separate developments in 2013- the Iranian rapprochement with the West under new president Rouhani, the Arab Awakening and the new consciousness in the Middle East, the U.S. policy under president Obama of not taking leadership in the Middle East. This also comes as the Saudis parted ways with the Obama administration on the role of the military in Egypt, and has differences with Turkey and Quatar on support for Islamic groups in Egypt and Syria....

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France's finance minister says the government will focus on growth and set deficit targets that will support growth. There is a feeling in the business community that France has reached the limit for tax increases. The government has given up the goal of reducing the deficit to 3% of GDP in 2013. The government says the deficit will be about 4.1% in 2013 and 3.6% in 2014. Economic growth is expected to be only about 0.1% for 2013, and 0.9% for 2014, lower than earlier forecasts. Muscovici has said the French are fed up with higher taxes, and he is looking for savings in spending. About 15 billion euros of savings are planned in the 2014 budget from ministry expenses and healthcare spending. Extra taxes of 6 billion euros planned for the 2014 budget will now be cut to 3 billion euros. To increase growth it is necessary to stabilize taxation and give business a clear picture for 2014-2015.

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Most Americans pay less in taxes, including state, local and federal taxes, today than in 1980 in inflation adjusted dollars. The taxes have gone down by 2-3% for incomes in the range of $50,000 to $150,000, and gone down by 3-4% for incomes between $150,000 and $350,000. Taxes have gone down over 7% for incomes above $350,000. The main reason is the decline in federal income taxes.Tax rates increased in the period to 1990 and declined from 1990 to 2010. The Democratic party and president Obama are pushing for increase in taxes for incomes above $250,000. Republicans are resisting the changes citing disincentives to investment and growth for small business which generates a large proportion of new jobs created in the U.S. economy. The New York Times study shows the percent of the U.S. population that makes between $200,000 and $350,000 almost doubling in the period 1980-2010 and at the same time its share of the U.S. income remaining the same - many small business owners who hire employees would fall into this income category. Republican's response is for tax reforms that reduce loopholes, deductions and other tax expeditures that disproportionately help the wealthy. Democrats say this cannot create enough revenues to address the deficit, when mortgage deductions, charitable deductions are excluded. The back and forth is leading to stalemate but also opening up discussion for the first time on whether the mortgage and charitable deductions make sense in today's environment. A significant portion of revenues lost in the mortgage deduction goes to affluent households, subsidizing larger borrowings to build larger homes than otherwise, according to the Brookings Institution. Politicians have resisted changes that would go against powerful lobyying groups in the past, yet the impasse has opened up new thinking outside the box because of the pressing need to come up with a solution....

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As Mr. Maliki resigns from the premiership in Iraq, a former aide says of his eight years as prime minister that Maliki never battled to preserve the state, only to preserve his own premiership. And other colleagues says he thrived on demonizing the Sunnis and the regular crises under his leadership. The new prime minister Mr. Abadi is also from the same Shiite Dawa party that Maliki belonged to, and it is not clear how is leadership will turn out. The final push for Maliki's ouster came from Ayatollah Sistani of Iran. The U.S. and western allies also pushed for a new leader. The use of sectarian Shiite militias by Maliki to fight the Sunni insurgents from ISIS in 2014 further aggravated Iraq's religious divide.

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The EFSF is downgraded to AA+ from AAA by the credit ratings agency S&P on Feb. 16, 2012.

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Rached Ghannouchi of the Islamist Ennahda party, says the Tunisian model is to create a broad base of support by bringing together moderate Islamist parties and moderate secular parties. To do this Ghannouchi has promoted consensus in drafting a new constitution and a legal framework for elections. In contrast to Egyptian Islamist party leaders, Ennahda has agreed to lighter wording for Islam as the religion of Tunisia, the focus being on justice liberty and equality as Islamic values. In an intervew with Carlotta Gall of the NYT, Ghannouchi says it was not important that there is no mention of Shariah law or an Islamic state in the constitution. The assasination of Tunisian secular party leader Brahmi by extremists created a period of tension in Tunisia, and the Ennahda leader says he recognizes the need to work even harder for consensus based government.

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Bill Keller compares the situation in 1940 with that of today. He sees isolationist tendencies in the U.S. today similiar to that which prevailed in the U.S. in 1940 when Roosevelt faced the Nazi invasion of Europe.

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Yannis Stournaras, economcs professor at the University of Athens becomes the finance minister in the new administration of prime minister Antonis Samaras. He holds a doctorate from Oxford University in economic theory and policy, lectured at St. Catherine's College, Oxford and at the Oxford Institute for Energy Studies. He was special advisor on monetary policy to the finance minstry and Greece's central bank. His public official positions include vice chairman of the Greek natural gas company and board member of the public debt management agency. He is well qualified to lead the effort for Greece to remain in the European Union with modified terms that extend the achievement of deficit targets by 2 years to 2016, and offer tax cuts and other growth oriented measures to get the Greek economy back on the path to recovery and growth after 4 years of declining GDP. He also brings a sense of committment to the EU, because he was chief economic advisor to Greece's Finance Ministry in 1994-2000 and took part in the negotiations that led to Greece's joining the eurozone in 2001. His strong views about changes needed to Greece's overregulated economy which favors special interests also coincide with the moves for labor and other reforms taken by the Monti and Rajoy governments in Italy and Spain. ...

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The Venezuelan government provides gasoline to people in the country at a few cents a gallon- almost free. Even Saudi Arabia, the Emirates and Kuwait which have way better financial balances and dollar reserves do not provide gasoline at such prices. The result is chronic shortages of basic parts and other imports because the government does not have enough dollar reserves for imports. Venezuela devalued its currency by 32% recently, making imports more expensive and pushing inflation up even higher to 28%. The problems it creates are excessive and wasteful use of gasoline, and free gasoline that then provides consumers money to pay for surging cost of everyday imported products. Nullifying any real benefits when shortages, inflation, dilapidated infrastructure and lack of development and jobs, are taken into account. The lack of capital to invest in the oil industry has led to declining production making the situation unsustainable. Yet neither party of Maduro or Capriles in the upcoming April 14, 2013 election, following the death of Chavez, supports ending this subsidy. Efforts to end the subsidy by president Carlos Andres Perez in 1986 led to riots and about hundred deaths in police response, and a coup by Chavez, then a military officer, a few years later. Under Chavez the subsidy was extended to the level at which gasoline is about 4 cents a gallon. Compare this with the price in neighboring Colombia at $4.72 a gallon, and Brazil at $5.40 per gallon. Consumption per capita in Venezuela is excessively high, about seven times per capita than neighboring Columbia. The investment in infrastucture is hobbled by lack of capital, the capital Caracas dilapidated, and no major infrastructure projects taken up by the government. It costs Venezuela 8.6% of GDP or $27 billion to pay for the excessively high subsidy, compared to 3.2% of GDP going to healthcare spending and 5.1% for education. In comparison Indonesia, another developing country, uses 2.5% of GDP or 21 billion for its subsidy for a population of over 200 million. It is not that a fuel subsidy is provided, but the entitlement to free gasoline that makes Venezuela the lone exception. There is a reason why prices in Brazil and China, large developing countries, price gasoline to motorists at over $4 a gallon- to discourage excessive and wasteful use, and release scarce capital for infrastructure development, building dollar reserves for imports of machinery and equipment, and other uses in industrializing economies. Compare Venezuela with Bolivia under the socialist government of Evo Morales. In 2010 Bolivia increased its price of gasoline by 80%. The price in 2013 is about $2.00 per gallon. Morales cushioned the increase by increasing salaries in the health and education sectors, armed forces and police by 20%, and increasing prices of locally produced wheat, corn and rice by 10%. Morales said he did this to reduce state subsidies of $380 million for $660 million in gasoline imports, of which $150 million was siphoned off by smuggling gasoline to neigboring countries. Incentives were provided to oil companies to produce gasoline in Bolivia to reduce imports. ...