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Antonis Samaras continues his efforts to get the EU to agree to a two year extension for deficit targets agreed to in the March 202 bailout. He meets Merkel in Berlin, Aug. 24 and Hollande in Paris, Aug. 25. Merkel's coalition partners the Free Democrats oppose an extension. The opposition Social Democrats leader Steinmeier tells the Frankfurter Rundschau newspaper "its not very smart to abandon all conditions for aid over an extension of 12 months." Samaras tells the Sueddeutsche Zeitung newspaper: "our economy shrank 27%. Greece is bleeding, It is really bleeding." And German finance minister Schauble tells Germany's SWR2 radio that its too early for Greece to come back and say the agreed aid is insufficient considering that its ony 6 months since the March 2012 agreement. Merkel and other leaders in the Christian Democrats say they will wait till a report from the troika (the EU, ECB and the IMF) in October 2012 before responding.

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Greece's political parties negotiated through the night of Feb. 9, 2012, over the details of the 130 billion euro aid package from the EU and the conditions laid out by the troika of the EU, IMF and ECB. The political leaders Papandreou and Samaras agreed on wage cuts -with a 22% cut in the minimum wage- and public sector job cuts, but resisted deep cuts in pension benefits which would leave a 300 million euros shortfall in 2012 budget targets. This is part of 3 billion euros in austerity measures set by the EU finance ministers as a condition for further aid. Another sticking point was the serious consideration given by the EU, according to EU economics commissioner Olli Rehn, that the 130 billion euros be placed in a special escrow account so that Greece's private creditors would be paid from the account before money was taken out for the Greek budget. This was seen by Greek political parties as an infringement of Greek sovereignty. The EU is requiring all the main political parties in Greece give written pledges agreeing to the program and the Greek parliament voting to approve it. The language used by Greece's finance minister, Evangelos Venizelos, as he put the choice to Greece, shows the difficult choices facing Greece, Venizelos said: "If we see our future and the salvation of the country in the euro zone, in Europe, we must do what we must do in order for the program to definitely be approved...If our country, our people prefer another political decision that necessarily leads out of the euro zone and therefore outside European integration, we have to say this clearly to ourselves and to our compatriots." Because the agreement is designed to get Greece's debt to 120% of GDP by 2020- it asks for a decade of austerity measures. Some experts say Greece is better of defaulting like Argentina and going back to the drachma to recover export competitiveness. Another factor complicating this is the rapidity with which the Greek situation is deteriorating and the lack of political consensus on austerity measures, with all poltical parties enjoying less than 25% support in the country making political party pledges meaningless. Elections are due in April 2012. The EU and Germany may be too focussed on getting through a March 20 deadline for a bond payment of 14.5 billion euros- because of nervous financial markets- and not able to gets its hands around the problem of long term unemployment and deteriorating economic situation facing Greece. Greece's unemployment rate increased from 18.2% to 20.9% in just one month from October 2011 to Nov. 2011, according to Elstat, the government statistics agency. Another difficulty is that the EU ministers may see the achievement of European unity as progressing without any pauses and corrections of course, as if in a straight line, when achievements of a vision of this kind take many years and problem solving; where even a Greek withdrawal from the EU could be a temporary step towards eventually rejoining in a better EU framework. ...

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Ireland went off the cliff by taking enormous unregulated loans. The banks lent money freely and the regulators simply ignored the bubble that was developing through the last decade. The speculators, developers, bankers and regulators all let the bubble reach astounding proportions. One developer got a $6.3 million loan on a personal guarantee without meeting his banker. One 1000 square foot Dublin carraige house went for 3 million euros in an auction. One of the developers, Simon Kelly, says that everything was funded by the Germans through the European Central Bank. The sale of the Jury's hotel in 2005 resulted in the amazing price of 60 to 70 million euros per acre. Ireland's GDP which was $25 billion in the 1980's, reached $267 billion in 2008. The boom that was initially based on export competitiveness and the low corporate tax rate combined with an educated English speaking workforce, was followed by a speculative boom in real estate financed by Irish banks, where regulators simply looked aside and placed no controls on lending. To get an idea how the government looked at anyone who raised a red flag, look at this quote from Bertie Ahern, prime minister of Ireland from 1997 to 2008, who said at a trade union conference: "sitting on the sidelines cribbing and moaning is a lost opportunity. I don't know how people who engage in that don't commit sucide." And this coming from an Irish politician who helped in arranging the Irish peace accords with the help of Bill Clinton and Tony Blair. The risks of such uncontrolled speculation in real estate was lost on regulators, the government, and politicians. And the bankers stopped paying attention to their loans, with everyone wanting to lend money to 10-15 deveopers who were able to drive the market. The regulator at the central bank simply didn't pay much attention to the reports he received every quarter about the lending. Now the average household in Ireland owes 132,000 to the banks, according to David McWilliams of the Central Bank of Ireland, and unemployment is at 14%. If the Irish had completely lost track of the picture, what about the German and British banks that loaned money to Ireland? Why was money being made so freely available to Ireland. One Irishman says getting a mortgage in those days was like getting cupcakes. With prices haveing reached the stratosphere at 60 million euros an acre, were the European banks also pushing money into Ireland beyond the ability of a small country like Ireland to repay? According to the Bank for International Settlements based in Basel, Switzerland, Ireland owes $139 billion to German banks and $132 billion to British banks. Easy money was also available from US banks for countries such as Argentina which suffered similar crisis in prior decades. Banking crises ocurred in Asian countries in the 1980's. Much of this experience was lost in the manner German, British and other European banks loaned money to countries such as Iceland, Greece, Ireland and Portugal. The Asian banking crises of the 1980's are being followed by European banking crises over two decades later. The ...

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With 57% of Italy's sovereign debt owned by Italians, a lot depends on Italians continuing to invest in Italian government bonds. With the higher interest rates on the bonds Italians have one more reason to continue to do so.

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The Greek government received 25 billion euros from the European Financial Stability Facility. This money will go to recapitalize Greece's banks. The four largest banks, Piraeus Bank, Alpha Bank, National Bank of Greece, and Eurobank EFG, will get the money by May 25, 2012. About 16% of loans made by Greece's banks in 2011 have soured, compared to 7.7% in 2009, according to the chief economist at Alpha Bank. There is a vicious cycle in effect with depositors withdrawing money and less money availble from bank financing for midsize business leading to businesses closing. The effect is little demand for loans and banking coming to a standstill. For the 8 months to March 2012, an estimated 23 billion euros have been withdrawn by depositors, of this 700 million euros in the period May 6- May 22, after the May 6 elections.

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The private sector ignores health insurance. And state coverage in China is inadequate. More than two thirds of China's 1.3 billion people have no health insurance at all. If you have insurance you still pay up front in cash, if you do not have the cash up front you cannot get a surgery, treatment of any kind or any drugs, even if the insurance will later reimburse you. The Chinese health care system is dysfunctional and in a crisis because of the way it is structured, and the faulty policy incentives. It caps prices for basic drugs and procedures at below market rates, yet it lets hospitals profit from everything else from advanced drugs to sophisticated diagnostic tests. So hospitals invest heavily in technology and expensive testing. and drug sales account for 45% of revenues. And enforcement is lax. Doctors in Shanghai make monthly incomes of about $400, about what a taxi driver makes, so they supplement their income with bonuses earned by prescribing more expensive tests and drugs. There is no utilization review so the state reimburses for whatever the hospitals charge regardless of whether the test was needed or not. So the system is dysfunctional and lurching towards a crisis. In fact heavily burdening the middle class. The private outlays and burden of total health care spending has increased from 20% to 60% of total health care spending from 1978 to 2003, as the the health care system got the same dose of unfetterred capitalism as the rest of the system. The Government's share of total health care spending has dropped sharply. In addition there are design flaws that push expensive care and build in incentives for expensive care at the expense of good medical care. The government recognizes this problem and sees it as athreat to social stability. It has committed to increase spending on healthcare. ...

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Austin, Texas and growth in "middle skill" jobs which offers ways to increase jobs growth in the U.S. in 2012-2015.

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Rising food prices in China have pushed China's consumer price index to a two year high of 5.1% in November, 2010. Rising prices of cooking oil have hit Chinese who live on small incomes the hardest. Food represents about one third of the CPI, but it accounts for 75% of the index's rise. Chinese housing prices have gone up significantly making it hard for new homeowners, now that food and fuel prices are following. The National Developmment and Reform Commission announced a 3.77% rise in retail gasoline prices, to about $3.50 a gallon, an increase of 11% in about one year. Wholesale soyabean oil rose 23% in 2010 to about $1451 a metric ton, with most of the rise since July. China's government response was to impose price controls, asking the largest producers to cap retail prices through March 2011. It also quintupled the fine to 5 million yuan, or $750,000. And the government auctioned off millions of metric tons from its strategic national reserves in Xinjiang and Shandong. But price controls are discouraging production. One mid-size producer in Shanghai, says he has deactivated half his plant, instead off maximixing output ahead of the Lunar year in February. His warehouse is filled with 20,000 boxes of unsold oil, with the production date Nov 23, around the time price controls went into effect and a large grocery distributor halved his order. Edible oil is the third biggest packaged food outlay for ordinary Chinese, after yogurt and milk, and it has a big impact on the lives of the average family....

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The air quality around Chinese cities is worsening because of coal fired plants and increasing demand for energy, and because of exhaust from automobiles filling the highways. The air quality around Beijing violated the WHO standards more than 80% of the time during the fourth quarter 2008 period. China's Ministry of Environmental Protection says in a report that more than 25% of China's rivers, lakes and streams are too polluted to be used for drinking water. And acid rain is a problem in 200 of 440 cities it has monitored. Efforts to control the exhaust pollution from cars by putting driving restrictions in Beijing are not as effective. One report says that even after 20% of private cars are taken off the road each weekday, the 250,000 new cars that were added to Beijing's streets in the Jan-April 2010 period, have left things as bad as they were before.

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Pollution on China's Tai lake, near Shanghai. The lake pollution just as bad as before the cleanup effort. The sense that China's anti-pollution efforts have suffered after the 2008 financial crisis. Things have moved backwards as the focus on economic growth and jobs again assumed top priority at the expense of other goals. The costly cleanup effort China faces after three decades of such growth that ignored environmental damage. The personal cost of activists supporting social goals in today's China. It also points to the impact of runaway growth in developing countries, in the areas of pollution, corruption and the misallocation of resources. Misallocation of resources through crony capitalism and low productivity of capital led to the Asian financial crisis of 1997.

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The different approaches of presidential candidates Hollande and Sarkozy to reviving France's economy as they contest the elections on May 6, 2012. Sarkozy proposes a value added tax and has called for broadening the mandate of the European Central Bank to stimulate growth. Hollande proposes higher taxes on the wealthy, and hiring more teachers and making no cuts in the civil service. Hollande opposes the austerity measures being pushed by Germany and adopted in eurozone countries.

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Street protests in Brazilian cities with economic growth slowing to about 1% in 2012 and inflation at about 6%. Street protests in Brazil reflect public disconten over corruption, overspending on the World Cup and Olympics, and lack of good education, health and other public services. Increase in bus fare and police response against small protests using tear gas set off the large scale protests of tens of thousands in Brazilian cities. President Rousseff's sees her popularity ratings drop 8% percentage points from the March level to 57% in June 2013, according to polling firm Datafolha. Ths includes high popularity in poor northern states. Rousseff's popularity in more industrialized southern states declined by 13%, and by 16% among college educated youth.

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Japan has coped with its long period of low growth by increasing the temp workforce. Loss of nontraditional workers jobs was 158,000 between October and mid February and accounted for much of the 220,000 jobs lost in the October to January period, according to the Japanese Labor Ministry. During the years that EU countries liberalized their labor markets allowing the hiring of temporary workers. During the 1990's Spain, Italy, Greece began allowing the hiring of temporary workers and workers on shortterm contracts. Germany allowed temporary workers and loosened labor laws earlier in this decade. By 2007 17% of the workers in the EU countries which share the euro were temporary workers. Many of these are young people or immigrants. But the labor laws in the EU for permanent employees remained the same and the worker protections were in place, including unemployment benefits and severance. This helped bring the EU unemployment rate down to 7.2% in 2007 during the upturn years. Now this whole process is going into reverse with the young and immigrants hit hardest. In Germany it costs 11,927 euros to layoff a permanent employee according to the Cologne Institure of Economic Research, and zero for laying off a shortterm employee. Now as the economy deteriorates the shortterm workers are being laid off first in large numbers. BMW has laid off 5000 shortterm workers. And short term contracts usually last only 4.7 months on average in Germany, about 12% of temp workers in Germany get hired as permanent workers. To get full unemployment benefits the workers have to have worked steadily for at least 1 year in Germany. ...

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How inflation is affecting people who thought themselves to be in the middle class like postal workers and teachers and public sector emplyees. Wages are stagnant in many parts of the European economy as inflation picks up and the price of basic necessities like bread and fueling the family car cost more as the year progresses. A study by the German Institute of Economic Research in Berlin finds that the broad middle of the German workforce defined as workers earning 70 to 150% of the median income shrunk to 54% of the population in 2007 from 62% in 2000. Something is clearly going on with wages not keeping up with inflation and it does not look good just as a global slowdown that started in the USA is affecting the rest of the world. In Britain striking teachers closed schools as proposed wage raises of 2.5% were not enough to meet the rising cost of living, with food up 7% and oil up 20% since this time last year. German workers have already staged a series of strikes for a greater share in the increased wealth after years of making concessions and the mood in Germany is that a lot of the senior business people are making too much at the expense of workers who are being asked to sacrifice too much....