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Germany recorded 9% growth, in the second quarter of 2010. Martin Wansleben, managing director of Germany's Chamber of Commerce and Industry, says the recovery pace is too fast and unsustainable. The spurt in growth may be shortlived and was mainly a result of a surge in exports to Asian markets. The countries that benefited from this growth are in Northern and Eastern Europe. France recorded 2.5% growth, Austria and the Netherlands 3.5% growth. Eastern European countries that help Germany export also did well, with Slovakia at 5% and Czech Republic at 3% growth. By contrast Southern European countries, Greece, Portugal, Spain, and countries like Ireland have not benefited. German growth has not resulted in markets for other countries as German consumer spending is tight. See the link to the expansion of the low-wage sector in Germany and the downside of this; with average wages actually falling in Germany in recent years.

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After 16 months of talks political leaders from Dutch language Flanders, French speaking Wallonia, and multilingual Brussels, historically at odds with each other, come up with a new arrangement for running the country in 2011. Belgium will move closer to being a confederation like Switzerland, with powers and funds shifted to the regions. Of particular significance is the resentment by the Flemish people in the north of an administrative arrangement that was setup along French lines. The new devolution of powers gives autonomy to the Flemish region. In the past frequent coalition governments have added to the political instability.

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Fact checking Apple CEO Tim Cook's statements on the EU Commission ruling for $13 billion in back taxes, shows that CEO Tim Cook's statement that "we never asked for, nor did we receive any special deals," is not true. Ireland let Apple determine what it would pay in tax, and Apple had the benefit of loopholes in Irish tax laws, the fact check by experts shows here. Apple's Cook also says it would hurt investment and jobs in Ireland. Another NYT article showed that the entire healthcare budget of Ireland would be covered by the $13 billion, and 66% of its budget for social support services to the public. Apple has 22,000 employees in Europe and 6000 in Ireland in 2016. Based on the $13 billion owed in taxes, for every job in Ireland the cost to Ireland is 2.17 million euros, and for every job in the EU the cost is 590,000 euros. Apple could turn around and locate in some other place, other than Ireland, in which case Ireland does not get the 6000 jobs. This is Ireland's incentive to give Apple tax benefits. Only if all EU countries had common tax laws would it be possible to avoid this situation, and generate much needed tax revenues at a time of cuts in public spending in healthcare, education, and social services, and invest in infrastructure, worker retraining. The alternative is for the EU to look at other remedies. This is what the EU Commissioner Vestager did when she announced that this was a state subsidy and illegal under EU rules. Because the appeal by Apple goes to the EU Courts the appeal is difficult say legal experts. The EU courts look at the legal aspects of the ruling, was it justified, not at the overall aspect of the ruling by Vestager, as EU Competition Commissioner. This may be why there is so much outcry from Apple, and other digital companies.  ...

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Polls after prime minister Papademos assumed office show nearly three fourths of Greeks see his appointment as a "positive" step for Greece. The popularity of the Socialist party of Papandreou has suffered the most in public opinion. One poll shows only 11% of Greeks would vote for the Socialist party, compared to 21% for the New Democracy party. The New Democracy party has widened its lead over the Socialists.

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Brazil's debt at 57% of GDP which is not likely to decline in 2014, is a concern for analysts at Moody's. Heavy spending and lower tax revenues with high interest rates will increase the deficit to 3.7% in 2014 from 2.48% in 2012, according to central bank estimates. Inflation is about 5.98%. Trade surplus is lower at about $2.6 billion for 2013. Brazil's foreign reserves are much higher than Argentina at $359 billion, ten times short term debt, Argentina at 109% of short term debt and Turkey at 84% of short term debt- which protects Brazil compared to its reserves in the 1997 financial crisis.

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Rising wages and rising production costs for Chinese exports of low tech products like shoes, clothing, toys, clothing, furniture, means a lot of these factories will shut down and move to lower wage countries like Vietnam and India or elsewhere. Elimination of rebates on more than 2000 export items raises cost of manufacturing 14-17% according to Guangzhou based American Chamber of Commerce in South China. And the the tough new labor law enforcing worker rights would increase manufacturing costs by 40% according to the Textile Council of Hong Kong. Additional costs would be incurred to meet tougher environmental controls and anti pollution laws and stricter enforcement. As a result of this Adidas wants its suppliers like Taiwan based Apache Footwear with 18000 employees in Guangdong to move as fast as they can to India where it opened a second factory. This process will unfold over several years till India and Vietnam bercome the new sources of cheaper goods because of the large supply of manufacturing labor for lower value added products, as it will take years to build the logistics and infrastructure for these plants in these countries. But because wages will also rise in India and the laws in India are more likely to be enforced than they were in the atmosphere in China where the Communist led government may have turned a blind eye to enforcement and worker rights in the interests of growth, the export of deflation to the west in the way of cheap Chinese products may be a thing of the past. China is doing this as a planned move it appears. Why? On the surface it makes sense that the heavily polluting factories making lower value added products like shoes, clothing, toys, furniture, would not receive rebates from te state and to improve living conditions and promote consumption at home the government woud pass tough new laws to ensure employee benefits and collective bargaining rights, and employee job security. It also reduces trde tensions at a time when the US economy will be in poor shape and jobs lost become a political issue in the 2008 presidential campaign. But there may bigger pressing concern and urgency in these moves after so many years of this being discussed and this may be that China finally may be at a moment when it is confronted with a sober fact that the US consumer is heavily in debt and may not support China's export growth model much longer and with it China faces a really significant slowdown in its growth rate from 11% to maybe half that if China does not develop its own domestic markets for growth. The old foreign investment model may not work anymore. See the link to Ireland where growth is falling off quickly. Higher wages and longer term jobs with benefits would enable a large middle class to develop from this huge manufacturing worker base especially as China moves to more value added products where even higher wages would be paid. This in turn creates a domestic market over time that would insulate China to some extent from the winds that would be blowing from a US economy suffering from a deep recession that may last several years. This may be evident in the words of the Governor of Guangdong when he says that the government is not abandoning the exporters but that selling domestically is good for the country and good for the people. Something deeper is at work here and one would expect an about turn in policy where instead of workers not receiving back wages and lax enforcement that went on freely in the last decade we would see an effort to build the kind of middle class that would provide the market for Chinese goods that would sustain growth at a more modest but sustainable pace. Which means in the short term all those workers at factories that make toys, shoes, clothing and furniture in provinces like Guangdong would be jobless. Some of these factories may move to provinces in the interior like Sichuan and Hunan provinces which may pickup employment. A report by the American Chamber of Commerce in Shanghai written by Booz Allen says that a fifth of the companies surveyed are considering relocating outside China, and that over half of foreign manufacturers surveyed think that mainland China is losing its competitive advantage to places like Vietnam and India....

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IMF economist Oliver Blanchard, says the euro's depreciation vis-a-vis the dollar "would be a good thing." Because "in a way Europe needs it more than the U.S., and the U.S. could probably offset it in some way." The IMF forecast is for a 0.3% contraction in the eurozone in 2012 and growth at 0.7% in 2013. Blanchard says a drop in the euro exchange rate of 10% would normally boost growth in GDP by 1.4%.

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Land prices went up by 500% during the last decade and developers went on a building spree in Spain. 800,000 units were built in 2007 alone. Many of these developed areas are now ghost towns. Coastal villages were turned into residential areas for vacationing Spaniards and for retired people from other parts of Europe. At the peak of the boom in real estate the construction sector accounted for 12% of GDP, double the level in Britain and France. Spain's deputy finance minister, Jose Campa,says that the adjustment in housing prices has already taken place. Yet housing prices are down a modest 12.8% from the peak according to the Bank of Spain. And that leaves plenty of skeptics. The estimates of the central bank, the Bank of Spain, are that banks in Spain have $280 billion in "problematic exposure," on their books, out of $580 billion invested in real estate and construction. With the lack of adequate disclosure it is hard to estimate the real exposure of Spanish banks. To improve investor confidence, the Bank of Spain is forcing banks to make more disclosures and to acknowledge bad assets faster....

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Charles Dallara, managing director of the Institute of International Finance, which represents large global banks, describes the deal that was reached by eurozone leaders for restructuring Greece's debt in July 2011. He was one of the key negotiators. He says the agreement helps prevent contagion to Spain and Italy, and helps increase confidence in banks. By showing the losses are better understood and seen as manageable conveys a message that builds confidence for the banks and for the EU. And the effort to create the conditions for growth in Greece will make all the difference, he says. The Institute of International Finance estimates the deal will cost the banks and other investors $54 billion. Dallara says the turning point in the talks came in mid-July when European governments agreed to a plan for banks to swap Greek debt for new securities, backed by collateral.The focus then shifted to shaping the details. Josef Ackermann, chief executive of Deutsche Bank and chairman of the International Finance Institute, used his skills to pull the package together with European leaders. Dallara has experience going back to his days working on the negotiations for the Brady deal for Latin American debt in the 1980's. The Brady deal was also designed around banks swapping the old bonds for new ones with longer maturities and reduction of principal, and lower interest rates. In return the banks were given guarantees of repayment removing uncertainty- through 30 year U.S. zero coupon bonds- and making it possible for banks to start anew. The reduction of principal in the July 2011 eurozone agreement is around 20%, the Brady reduction was much larger, around 30%. This suggests eurozone governments are putting up more of the funds in this situation with the weaker condition of banks which may need to be recapitalized at some point, and the preservation of the euro itself at stake....

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Not a very flattering picture of the chancellor. She has already lost 1.3 million CDU voters to the Greens, and about 260,000 to the far right AfD party. In all about 4.3 million CDU voters have shifted from Merkel's CDU to other parties on the right or the left and to the Greens, between the general elections of 2017 and the European elections in 2019, according to Infratest Dimap. It had 33% of the vote in 2017, now it polls at 27%, down 6 points. The Greens come next at 22%, in recent Politico poll. Merkel's sentiments may have overtaken the reality of how much Germans wanted to integrate war and economic refugees from Africa and Asia. She has since revised her judgement that it was a decision made at the time based on what happened at that time without enough time to prepare for the sudden influx of refugees from Budapest. A new party the Alternative for Germany AfD emerged from the migrant crisis in the eastern part of Germany that had 13% of the votes in 2016, building on discontent from reunification, depopulation of the east, and a sense of drift and neglect. Even a sense that the affluent western part of Germany was more concerned about refugees than its own economically insecure countrymen in the east. After being in power since 2005 Merkel's period shows signs of aging. Her record on investment infrastructure and health, education and child care is also found to be weak. The effort to maintain austerity for so long following the financial crisis of 2008 by profligate banking and bad accounting by member states in the EU including Ireland, Spain and Greece, has hurt parts of the middle and working class stuck with low wages and inequality in the EU and in Germany. The migrant crisis and refugees have split her party and German opinion adding to the problems of the economy in the EU and Germany.  ...

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The euro approaches parity with the U.S. dollar by November 2016, with the surge in the dollar following the U.S. presidential election of 2016. The euro closed at $1.058 on Nov 17, 2016. It was down 4% following the election. The euro was down in early 2015. This time it is chiefly down against the dollar. This time both monetary and fiscal policy is expected to diverge with the EU, and inflation expectations are up in the U.S. Analysts expect parity to be reached in 2017. 

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The IMF commmittment to troubled European economies is large, at $320 billion, 40% of its theoretical financing capacity, and exceeds its role in the 1997 Asian financial crisis. Concern that the IMF is now helping politicians protect the eurozone. And fears that the lack of the option of devaluing currency leaves too much of the burden on cutting spending in the midst of a recession. Deficit reduction in the current situation will take years to happen.

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Portugal showed growth in GDP of 1.1% in the second quarter of 2013 from the prior quarter, according to Eurostat. Higher petroleum exports and better prices were part of the reason for the improvement in exports. At the same time Portugal's business leaders and mid sized businesses are improving competitiveness and exports as a way to create growth. Here the NYT's Raphael Minder shows the progress in exporting olive oil at a midsized olive producing farm business in the Alentejo region of Portugal. Morais de Almeida and Miguel de Almeida shifted direction to export to Brazil at this 127 year old olive farm business called Herdade de Manantiz. Manantiz had to use European and Portuguese rural development subsidies for 40% of the cost to put in its first irrigation system, as banks have reduced credit. The Almeida family tapped into family savings for the rest of the funds. This investment of 197,000 euros will help quadruple production at the 529 acre olive farm and generate exports. Brazil took in 524 bottles, and buyers are being contacted in Sweden and Japan for the oil produced from galega olives, unique to Portugal....

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The IMF report on Italy in July 2012 says Italy faces another year of recession. Debt as a percentage of GDP is expected to reach 126% in 2013. One bright spot is that Italy is expected to post a primary surplus by 2013- that is government revenues will cover promised services, excluding interest payments on oustanding bonds of $2 trillion. Because of the recession small shocks could change the outlook says the IMF, and it emphasized the importance of the changes being made to the labor market and for improving competitiveness. These changes need to be implemented early because of elections expected in spring 2013. A key concern is borrowing rates which are near 7% for Italy and Spain. The European Stability Mechanism, the rescue fund, was authorized to make purchases of Italian and Spanish bonds in the June 2012 summit. The ESM becomes operational in the summer of 2012, after the German Constitutional Court makes its ruling about it being legal and after ratification by national governments....