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The economics situation in Eastern Europe is looking much better now after the recovery of confidence in the USA and Western Europe with stimulus measures and other steps to ease credit, and the decision at the G20 summit in London in early 2009 to provide a strong line of credit to emerging market economies struggling in this crisis. The European Bank for Reconstruction ad Development sees a 5.2% drop in GDP in 2009 over 2008, and the IMF 4.9% for Eastern European economies. The region varies country by country, with GDP decline forecast for 2009 over the prior year by the IMF showing a modest decline of 0.7% for Poland which is doing well, Czech Republic 3.5%, Hungary 3.3%, Bulgaria 2%. Other countries Lithuania 10%, Ukraine 8% and Russia at 6% decline in GDP for 2009 are hit hardest but thing there are also improving compared to last quarter. The stock market in Poland went up by 40% since the low in February 2009, Hungary by 50%, and Russia by nearly 90%, reflecting this increased confidence. A big difference is in the way the IMF under Dominique Strauss Kahn is operating. WIth the new mandate to help emerging market countries and the new funds from western countries, China and Japan, the IMF is working in cooperation with the European COmmission, the banks, and the national governments in Eastern Europe, to lessen the effects of this crisis. This is afirst for the IMF and aremarkable change. In May 2009 the IMF gave a$21 billion credit line to Poland with no strings attached , the kind of loan it made to Mexico, as aproactive measure to restore confidence. IMF told the Ukraine that a deficit of 4% of GDP was realistic when it released a $2.8 billion tranche recently. Latvia was allowed to run adeficit of 7% for 2009, with a committment to bring this down to 4% in 2010. Another change is that more aid is now given to western banks with souring loans in eastern Europe, so that these banks do not cut back severely or pull out of Eastern European economies. The EBRD has raised $24.5billion to lend to banks and other companies in the region. And $590 million went to UniCredit Italia, an Italina bank heavily exposed to Eastern Europe. Ther EBRD is looking at investing in 12 other western European banks. The Swedes have national schemes too to help the Baltic countries. The political situation is improving also, as the transition to new administration as aresult of voter discontent is being managed wisely. In the Czech Republic acompetent tranisiton government is headed by Jan Fischer, chief statistician, till elections in October 2009. In Hungary the transition government is run by an economist Gordon Bajnai, till an election next spring....

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  A new German party called BSW,  Bundnis (Association) Sarah Wagenknecht, means Germany nationally could see a smaller Social Democrats party in parliament making way for the socialists who want to keep out migrants. Across East Germany a new party is challenging the AfD from the socialist side getting the protest vote against pro-migrant policies.The socialist BSW party is taking votes from the SPD and DIe Linke Left, from Free Democrats and Greens in the state parliamentary elections in East German states of Thuringia, Saxony, Brandenburg. Nationally SPD may be 15-20%, BSW 10%, and CDU 30%, AfD 10-15%, FDP 10%, Greens 10% in a new shape for German parliamentary representation. The AfD and far right in Germany is challenged by the BSW with both parties opposing policies that led to large scale migrant flows into Germany of Angela Merkel.  BSW is the socialist party of Sarah Wagenknecht which is opposed to migrants entering the country as it distracts from tackling the problems of the working class in Germany and burdens public services when needs are greater among the local communities.  It sees the ruling Christian Democrats, Social Democrat and Free Demcorats, Greens, as out of touch with the problems of working class Germans struggling to make a living. BSW also opposes the wars in Ukraine and Gaza for the same reasons as it takes away resources that are better used to tackle problems at home. The AfD party also opposes migrants but is seen as feeding on the grievances of people of old east German communist state who feel left behind by the reunification of Germany. As a socialist party BSW is for addressing problems of inequality and poverty, childcare, cost of living action, housing, and many of the problems of the working class. Mette Frederiksen Danish prime minister has combined socialist ideas with anti-migrant position in Denmark. A similar position is being taken in the US by the Biden Harris administration in the US by closing the Border with Mexico.  Who is Sahra Wagenknecht and the BSW? Bundnis Sarah Wagenknecht or Association of Sarah Wagenknecht is a socialist party that grew out of Sarah Wagenknecht's own experience growing up in the socialist state of the German Democratic Republic during her formative years in East Berlin.  Born to a Iranian father who disappeared in Iran, and a German mother she was raised by her grandparents. She was active in the socialist parties Die Linke group in parliament since 2000. She received her bachelors degree in philosophy and New German Literature at East Berlin Humboldt University. Followed by MA at Groningen University in philosophy of Marx-Hegel and a doctoral degree from TU Chemnitz in Economics. She was member of parliament in the Bundestag and leader of the Die Linke group. The twin 2009 financial crisis by banks pursuing excessive leverage profits and unethical dealings, the euro crisis that followed of state actors misrepresenting their finances, the rent seeking attitudes of finance, pharma, tech monopolies and other industries has led her along with Italian economist Mazzucato to question the existing system. ...

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The U.S. trade agreement with Mexico is for 16 years, to provide business with a stable rules environment to operate in. It includes a clause for review after 6 years. The content made in the U.S. is increased to 70% from 62.5%. This has to be made by workers earning at least $16  an hour. Aluminium and steel going into the cars has to come from the U.S. helping push U.S. steel plant capacity utilization to 80%. Labor collective bargaining is strengthened in Mexico through new provisions, a provision supported by new Mexican socialist president Obrador. Free trade in agricultural products is maintained. $4.7 billion was added in help to U.S. farmers as aid for the effects of China's tariff retaliation. New rules are set for textiles, chemicals, and steel intensive products that set requirements to qualify for tariff free import into the U.S. This is intended to help bring more jobs and investment in these industries in the U.S.     ...

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The LDP's landslide victory in the Dec. 2012 elections is not seen as a mandate for Shinzo Abe, the new LDP prime minister. Abe acknowledged this when he said: "We recognize that this was not a restoration of confidence in the Liberal Democratic Party, but a rejection of three years of incompetent rule by the Democratic Party." The LDP won 294 seats compared to the 308 seats won in the landslide win by the Democratic Party of Japan three years ago. Abe campaigned on a stronger stance in Japan's disputes with China. Yet he is committed to maintaining relations with China, a key trading partner. On China Abe says: "Our goal is to stop China from making these challenges, but we do not intend to allow an overall worsening in relations." Osaka Mayor Hashimoto's Japan Restoration Party was expected to do well but his campaign lost momentum after joining with Shintaro Ishihara, a nationalist politician. The Tomorrow Party which campaigned on the nuclear issue and anti-nuclear sentiment petered out after voters sensed the impact of electrical shortages and prices. The LDP is pro-nuclear and plans to reverse some of the anti-nuclear steps taken by the DPJ. The Democratic Party of Japan gained only 57 seats, and the former DPJ prime minister during the earthquake and tsunami, Naoto Kan, lost his parliamentary seat. Just as the PRI, a party that held a long monopoly of power was returned to power in Mexico in 2012, the LDP is returning to power, but very dependent on voters aspirations for good governance and its performance in office....

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Instead of killing the NAFTA trade agreement Trump and his advisors prefer renegotiating the treaty. Priorities for the Trump administration are reducing the U.S. deficit with Mexico of $61 billion. Trade with Mexico and Canada is worth $1.1 trillion and the complex supply chains works such that product components cross borders more than once to become finished products. Mexico promotes its auto and other industries as duty free access to the U.S. for foreign investment. Special tariffs would reduce the trade deficit with Mexico and firms that moved production to Mexico would pay additional taxes. A provision that allows Mexican and Canadian companies to challenge U.S. regulations would also be removed. Rep. Brad Sherman (Democrat) says he supports the renegotiation so that duties of 4% are imposed to reduce the deficit to $25 billion.

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Questions about whether the emerging market countries are looking ahead at a period of lower growth in the next decade. If the slowdown in 2013 is structural then these countries have to to make changes in economic policies that will help them return to higher rates of growth. If the slowdown is cyclical then this is temporary and emerging market countries will return to higher growth rates. Countries such as Brazil, Mexico and India need to improve infrastructure and educational systems, and invest in research and development to generate more growth. Turkey and India depend on foreign capital, which puts limits to growth, creating a need to boost domestic savings and investment for long term growth. Lower rate of about 7% compared to the 9-10% of the last decade in China are because the wave of investment in construction and infrastructure building through huge state investments is now slowing, says Peter Aslund of the Peterson Institute of International Economics. It is a positive prospect for China, according to Kalpana Kochhar, a deputy director of IMF, because of the asset bubbles developing in real estate. It is seen positively by China's new government as it tackles problems created by a rush to industrialization of widespread pollution of the environment, and lack of balanced development without attention paid to healthcare, worker wages and social security. Stephen Schwartz of BBVA bank, says urbanizaton will drive further gains, especially in India, which has lagged behind the gains made in China and is likely to follow the rapid urbanization seen in China. New elections in India in 2014 are likely to lead to more growth oriented government policies. A pause in the U.S. Federal Reserve's policy of withdrawing economic stimulus gives emerging markets, especially India, and opportunity to come up with new economic policies to restore growth....

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With the increasing unpopularity of the PRI party government, after corruption scandals and othe problems, the turnout in the midterm elections is expected to be low. In the state of Nuevo Leon, with the capital at Monterrey, the business establishment is backing a independent candidate Jaime Rodriguez, as an alternative to the PRI candidate.

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Google's Eric Schmidt on how new technology can provide an innovation advantage in the fight against organized drug trafficking gangs in Mexico.

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A shift in priorities and focus of the three candidates away from the drug war, to reducing the level of violence.

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Juarez, the city across from El Paso, has done well in the last 10 months with 27,000 jobs added in the maquiladoras. These foreign owned factories continue to attract business interest even with a drug war raging in the background. The reason is that Juarez connects straight to American Interstate highways and this makes it possible to deliver goods in 3-4 weeks in some cases from the time of order compared to 10 weeks for China. And wages can run as low as $4.21 an hour. Companies get incentives in the tax treatment and worker training is supported by the local government.

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The period when Lopez Obrador was Mayor of Mexico City shows his pragmatic bent to gradually work for his goals. He increased social spending and setup an old age pension, yet governed with fiscal conservatism. The new president of Mexico is likely to do this as president, working pragmatically to achieve goals for social programs to improve living standards of workers in Mexico.

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The situation in 2010 in Monterrey, Mexico's third largest city after Mexico City and Guadalajara, which produces 10% of the country's economic output. Many Americans and affluent Mexicans are leaving Monterrey as two drug gangs the Zetas and the Gulf cartel launch a war in the city. Even the U.S. consulate is taking steps to move out children from the city. Long term resident expatriates are also leaving. Many leave for Texas. Local police forces are corrupted and this leaves the drug gangs free to roam in the city especially after 10 pm and often in broad daylight. So many executives from Cemex, headquartered in Monterrey, are leaving the city that CEO Zambrano is calling those leaving "cowards."

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David Luhnow and Jose de Cordoba interview Luis Videgaray, close economic advisor for Mexico's leading presidential candidate, Enrique Pena Nieto. Elections will be held in July, 2012. Videgaray answers question about the policy agenda if Nieto is elected, covering changes in the oil industry, education, social security, the fight against organized crime.

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Felipe Calderon's offers a strong defense of his policy to fight organized drug trafficking in Mexico on the Presidential website, and shifts some of the blame for the violence to the U.S. and previous administrations that allowed the problem to grow.

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A report by the U.S. Senate Foreign Relations Committee on the best approach to tackle drug related violence in Mexico and new approaches to ensure public safety. The report says it may take ten years, or even a generation to reform Mexico's poorly trained, ineffective and in many cases corrupt police and courts. The new focus on police and courts and training comes as it is reported that only 2 percent of reported crimes in Mexico lead to convictions. Some reports point to middle class fears of taking cases to the police because of corruption. This report in the U.S. comes as a new president takes office in Mexico with a different approach to the drug war.

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Middle class Mexicans moving to the cities of Mission and McAllen along the border with Texas as crime surges in Mexico.

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The Post's Lally Weymouth interviews Enrique Pena Nieto, leading presidential candidate in Mexico. Nieto discusses the war on drug cartels. He says his government is commited to continuing the fight, but says Calderon's strategy has not worked, and the need now is for reducing the rising level of crime. Nieto's priorities are to open up the economy to competition by reducing the power of the monopolies and oligarchs, reduce poverty by providing social security to all Mexicans, increasing private investment in Pemex, and increasing the taxpayer base to finance new investment and programs.