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Former U.S. president Geroge W. Bush in retirement years spends time in Dallas, with time spent on his passions for painting, golf, and mountain biking. He stays out of the discussion of current issues even though many of these issues relating to fairness in economic policy, immigration, security surveillance and the Middle East go back to the time when he was president. Friends say he has simply left behind concern about legacy and moved on focussing on living. Privately he has expressed concern about the Tea Party and America's isolationist tendencies in world affairs. He is also skeptical about the new Iranian government's offer of negotiations on nuclear policy.

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Spain's central bank says the Cajas savings banks have 217 billion euros in exposure to real estate and construction companies. Of this 100 billon euros is "potentially problematic." The Cajas have provisions for 38% of this. The government approved rules for minimum capital requirements. The capital ratios are set at 8% for all banks and higher for the Cajas. It said all banks will need to raise 20 billion euros by a September deadline. Barclays estimates this at 46 billion euros, twice the government estimate. The government will extend the deadline on a case by case basis, so that banks have until December 2011 to close sales of stakes to private investors.The government will then take stakes in the banks by September through the Fund for Orderly Bank Restructuring or FROB. After a 3 billon euro bond issuance in January 2011, the FROB has 4.5 billion euros on hand and a 3 billion euro credit line.

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Haruhiko Kuroda, 68 years old, a senior finance ministry expert who ran the ministry's currency policy as vice finance minister for 4 years in the early 2000's, is prime minister Abe's nominee for central bank chief. He lectured at Hitoshibashi University for two years before becoming the head of the Asian Development Bank. His book "Success and Failure in Fiscal and Monetary Policy," is critical of the Bank of Japan for mistakes in being first too accomodative in monetary policy to set up the 1987 crash, and then tightening too quickly leading to the deflation and recessions of the last two decades. By choosing an expert with a long experience in the field of monetary policy and a vigorous advocate of getting things right to shake off the deflationary trends, Abe is sending a strong signal to financial markets. Kuroda says he is looking at a shorter time frame to achieve a 2% target for inflation- about two years. In essence Kuroda is taking a page from the policy book of a small group of MIT trained economists, Bernanke at the U.S. Federal Reserve, Draghi at the European Central Bank, and Mervyn King at the Bank of England to boost domestic economies in the context of increasing global growth. The yen weakened to 94.77 to the dollar on Feb 25, 2013, after the announcement. Abe's nominee for one of two deputy governor appointments is Kikuo Iwata, a 70 year old economist who was also critical of Bank of Japan monetary policy since the 1990's. The Abe administration has also carefully communicated this message. Speaking at the Centre for Strategic and International Studies in Washington D.C. Abe said Japan's goal was to increase exports, but at the same time it will increase imports which should benefit the U.S., China, India and other countries. He described a recovery in Middle America from the Dakotas to the Carolinas and sees something like this happening also in Japan. Even the appeals to nationalist sentiment are also coupled with the message to China and S. Korea of not climbing up the escalation ladder and seeking good relations to promote mutually beneficial development. Abe's focus is on building the U.S.- Japan relationship....

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Heidelberg, in southern Germany, and smaller cities like Freiburg and Tubingen are seen as "green cities" in the sense that the people there have an open international outlook, are well educated, look at new ideas, and are idealistic. The Green party is in power in the southwestern state of Baden-Wurttemberg since 2011, where these three cities are located. Greens have about 20% support in elections here compared to 8% nationwide. Here Dr. Franziska Brantner, the representative in the Bundestag describes the orientation of people in the state. Heidelberg was able to handle the 600 refugees coming at the peak of the crisis very easily. Heidelberg's university, the oldest in Germany was founded in 1386. Students make up a quarter of the population of 156,000, and most of the Green party voters have university degrees, more than any other party according to Die Welt.

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The logjam continues between the French and German banks- represented by the Institute of International Finance and its negotiator Charles Dallara- and the governments of Germany and Greece, supported by the IMF. The position of the Greek government is that the interest rate on new bonds stretching out over a long time period that woud be exchanged at 50% face value of existing bonds should be set at rates well below 4%, because Greece faces a growing deficit and rapidly worsening economy. The German government which is faced with the prospect of providing additional funds to Greece supports this. The IIF position is for an interest rate of between 4-5%.

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As part of the effort to become more competitive with Asian automakers, VW is using new strategies with labor to reduce costs. VW made a one-off payment of about 6,300 to each of 80,000 employees at its western German manufacturing plants. In return VW secured union agreement to change work schedules at the plants to 33 hours a week from 28.8 hours, without having to make a pay increase. This is part of concessions being made by labor as Germany tries to improve its competitiveness. VW's second largest shareholder is the German state of Lower Saxony, and VW makes many automobile parts in its German plants in addition to automobile assembly, making employment a major issue for industry, labor and government.

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Lagging growth in GDP per capita, productivity growth, in Italy, with small family business unwilling to take risks for growth, and bureaucratic hurdles for business. To get an idea how Italy has lagged severely behind other countries in Europe, consider that GDP per capita increased by 28% in Spain, and 22% in France, compared to only 8% in Italy during the 20 year period 1993-2013, according to the Conference Board. Productivity growth measured by GDP per hour worked for Italy showed growth of only 13% in that 20 year period, compared to 30% in France and 23% in Spain. Since the 2008 global financial crisis the Italian economy has shrunk by 9% and growth is barely 1% in 2014. During 1993-2003 top performers Germany showed 31% increase in GDP per capita and 32% increase in productivity growth, the UK showed 44% increase in GDP per capita and 38% in productivity growth. Because of slowing population growth GDP growth has to come from productivity increases in Europe. France is the strongest in terms of productivity with $59 of GDP per hour worked, UK $51, and Germany $57. Italy at $45 has fallen behind Spain at $50. Conference Board statistics show GDP per capita in inflation adjusted, purchasing power adjusted 2013 dollars at $35,847 for France, $40,868 for Germany, $30,145 for Spain, $39,904 for Britain, and Italy lagging behind at $31,386. Most of the gains were made before 1993 for Italy, whereas Spain surged in the period after 1993 only slowing after 2008. The struggles in the U.S. auto industry showed how well meaning changes for labor in the early postwar period if not adapted to changes in the global economy decades later can lead to sharp decline before adjustment is made. In Italy well meaning labor laws in the early postwar period not adapted to changes in the global economy decades later, combined with cultural behaviour of entrenched group interests, and a bureaucratic government, have stifled growth and productivity....

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The Saudi government announced sharp cuts in spending and subsidies to cut the deficit in 2016. The deficit in 2015 was about $98 billion or 367 billion riyals , according to Al Arabiya Saudi news channel. In 2016 the budget is designed to cut the deficit to $87 billion or 326 billion riyals. The 2016 budget is for 840 billion riyals, compared to 975 billion riyals in 2015. Saudi Arabia's foreign exchange reserves of $640 billion could be exhausted at this rate by 2020, experts say. Actions being taken by the government include increasing the price of some grades of gasoline sold domestically by 50%, as subsidies are being cut. The drop in oil prices to about $35-$40 is hurting Russia, Saudis and Venezuela. The Saudis have increased defense spending for conflicts in Yemen, and in other areas, as they oppose Iran and Russia in the Iraq- Syria conflict.

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The terms of the Greece bond deal with private bondholders of March 2012, in which Greece's bondholders (mostly French and German banks) took about 53.5% loss from the face value of exisiting bonds. The deal was accomplished through a swap of new bonds with extended maturities of 10-30 years for bonds with shorter maturities and by reducing the face value of the new bonds.

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Francois Hollande, Socialist candidate for president in France, has led the Socialist party for many years. He started his career as a junior politician in the Mitterand government, and regards Mitterand his mentor. Another mentor is Jacques Delours, who was president of the European Commission. He has many years of training, and has persevered thorughout with a certain sense of humility in the midst of colleagues and politicians in France with larger egos. That inner strength and courage has emerged in the recent campaign appearances and the final debate with Sarkozy in April 2012. He has shown this in the recent campaign by not overstating expectations as he looks at the long term, and at the same time not understating when courage demanded a stronger statement. He has taken timely and effective positions in the current debate of austerity vs growth, or growth coupled with restraint in fiscal spending vs austerity, that is raging in Europe. He was quick to call the situation in Greece, a failure of governance in Europe, as well as a failure of governance in Greece. With the new voices of Premier Monti in Italy and ECB president Draghi from Italy, pushing for growth coupled with fiscal responsibility, a president Hollande in France, would add another voice to European aspirations for growth in the debate with Angela Merkel's Christian Democrats in Germany. ...

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Moody's Ratings company downgraded banks in the U.S. and Europe on June 21, 2012. Morgan Stanley, J.P. Morgan Chase, Goldman Sachs, Citigroup were downgraded two notches. Morgan Stanley managed to stave off a three notch downgrade. Credit Suisse was downgraded three notches. Bank of America was down one notch, and Wells Fargo which has only a small trading operation was not reviewed. This is the first time since 2007 that Moody's has conducted a sweeping downgrade of banks. About 100 banks were reviewed by Moody's. Banks being downgraded have large trading operations or investment banking business that is subject to higher risks. Greg Bauer, a managing director of global banking at Moody's said in his statement: All of the banks affected by today's actions have significant exposure to the volatility and risk of outsized losses inherent to capital-markets activities." For Moody's the main issue was that the capital bases of banks are maintained, considering that government support is less likely than before, according to Mr. Wassenberg, Moody's managing director for European banks. The impact on banks will be fewer opportunities for trading revenues for some banks, and will raise borrowing costs for banks. Moody's also cut the ratings of large European banks with significant trading operations. This includes Deutsche Bank, Barclays, HSBC, RBS, BNP Paribas, Credit Agricole, Societe Generale, UBS, and Royal Bank of Canada....

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U.S. commercial oil inventories cover about 164 days of net imports by Jan. 2015. Excluding net imports from Canada and Mexico this reaches 279 days of net imports from other countries. When strategic oil reserves are included this goes up to 450 days, which will put pressure on oil prices in 2015 as the price of oil drops below $50. The surge in oil production in the U.S. by 1.2 million barrels a day contributed to this buildup.

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Greece defaulted on a loan payment to the IMF for 1.55 billion euros ($1.73 billion) on June 30, 2015.

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Elelven of twelve Fed Governors support the U.S. Federal Reserve's decision to keep rates low till unemployment falls below 6.5%, as long as inflation remains subdued at 2-2.5% and inflation expectations are low. Only the Fed governor of Richmond expressed a dissenting vote. The Fed in its policy statement said it was addressing the problems of the last three years in housing and joblessness. Charles Evans of the Chicago Fed put it this way in a Sept 2011 speech- suppose the inflation rate was 5% when the target was 2%, then central banksers at the Fed would have acted as if their hair was on fire to tackle inflation, then why shouldn't the Fed do the same for unemployment. He succeeded in convincing Bernanke, Yellen and other Fed governors. Bernanke emphasized the enormous cost in human potential and productive capacity of the U.S. economy from high unemployment and people dropping out of the labor force.

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Shigeru Ishiba was reappointed LDP party secretary-general in Japan. Ishiba served three terms as defence minister, is popular with the rank and file and the public. He has a good grasp of security issues. He will be the No. 2 person in the cabinet after prime minister Shinzo Abe. Ishiba was the first LDP official to give a specific trading range for the yen by publicly calling for a range of 85 to 90 yen to the dollar. The yen closed at about 85 yen to the dollar on Dec. 25, 2012. Two women join Ishiba and Abe in the leadership positions. Seiko Noda is now chairwoman of the party general council. And six term parliamentarian Sanae Takaichi is policy chief for the LDP.

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This editorial deserves an award for best editorial on international economic matters in 2011. The editorial, goes right to the point, when it says the French, the Germans, and the European Central Bank are deluding themselves if they call this weeks resolution of the Greece debt crisis a realistic solution. It is anything but a solution. The Journal calls it a French deception. It is unworkable because the main problem, the high ratio of Greek debt to GDP -which is now 155% and is expected to reach 170% by the end of 2011- is sure to get worse under the arrrangement designed in the interest of French and German banks. Under the arrangement French and German banks and other creditors will get to double their return from 4-5% today to an effective interest rate of 10% if Greece grows by 2% a year, on 49% of the bonds they hold. These bonds will be converted into 30 year bonds. This effectively doubles the interest cost for Greece in servicing this debt. On the other approximately 51% of the bonds the French and German banks would redeem the bonds for cash and a triple A, sovereign zero coupon bond. The Journal asks what is the point of making Greece's debt problem worse than it is now and calling it a solution. The austerity cuts are already expected to lead to a deep recession, something that is also happening in Portugal, leading to a worsening of the debt situation. Creditors are not sharing in the losses under this arrangement, as Germany and the Netherlands have insisted. As the Journal points out they are instead taking out half of their investment and doubling their return on the remainder. And the fears of contagion for Spain are not lessened, as financial markets can clearly see through this for what it is- unworkable and unrealistic. ...