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The Russian economy had GDP decline of 2% and was relatively not affected by the shutoff of imports of oil and gas from Europe in 2022. Gas exports to Europe began declining in the summer. The EU ban on seaborne oil from Russia and price cap went into effect in December 2022. Russia made a huge stimulus of 4% of GDP in 2022. The result is that only now in 2023 is the full impact being felt on the Russian economy.  WSJ reports that in January and February Russian exports of oil and gas revenue which makeup half of the budget fell by 46% year over year, while state spending jumped 50%. Analysts estimate that it would take a price of $100 for Russia to balance its books. Yet the Group of Seven price cap on Russian oil has brought it down to $50- the price the Ministry of Finance says Urals crude sold in February. This is a deep discount to the $80 price of Brent Crude, the US benchmark.  A bigger problem is the downward trajectory the Russian economy faces in future years. Worker shortages are severe for industry and a shift to wartime production does not add to productivity or productive capacity. The cut off from access to western technology and western financial markets will have a severe impact in the productive capacity for the economy, for oil and industrial production in the years to 2030. Russia needed to protect against the gradual shift away from fossil fuels to fight climate change by shifting the economy in a new direction using its access to western technologies not just China's technologies. Instead it now finds itself in a period of 1 year in 2022 when oil revenues surged with prices jumping from the war, and then a steady slump in all the inputs of development- supply of labor, capital and technology declining rapidly after 2023 as the costs of the Ukraine invasion are absorbed into the economy. As this report points out it is the social contract that similar to China's social contract of growth and improvement in standards of living that led to people having a large measure of confidence in the government. It was not fully grasped but it was the access to American and European Union plus Japanese technology, manufacturing, capital and markets that made this possible. With this absent the situation changes to put Russia, and China to a lesser extent as long as it trades with the west, on a different trajectory.  ...

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This report by David Sanger of the NYT shows how the Russia sanctions that president Putin hoped to remove are likely to remain in place and somewhat expanded. Russia's economy has seen slow growth of 1% as a result of a fall in foreign investment. This is likely to continue, says Sanger. American investment in privatization will be restricted to not more than $10 million, and the investments in Nord Stream pipeline are affected. Russia needs foreign investment in its economy, and this is affected. Sanger points out that even if president Trump and Secretary of State Tillerson preferred the option of having presidential authority to lift sanctions to improve relations with Russia, this now runs into Congressional opposition. At the Aspen Security Forum in mid July, Dan Coats and Mike Pompeo, senior intelligence officials in the administration, said that there was an effort to influence the U.S. election. The problems started with the opposition movement in Ukraine, leading to the collapse of the government in 2014. Before this Russia- U.S. relations followed the trajectory set early in the Putin first  and second term of improving the economy by forging better relations with the EU and the U.S. This resulted in a stronger economy and more foreign investment. Things deteriorated after the Ukraine issue came into prominence. For the U.S., the EU and Russia, an inability to come to a better understanding and resolve differences on Ukraine has created a downward trajectory, that has not benefited any of the countries involved.   ...

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Changes that president Biden is making to make certain that students who took out a loan of $30,000 for college do not end up paying for two decades, and be still owing $60,000. WSJ explains that the original student loan law written decades ago does not take into account the realities of today as young people are forced into long repayment plans and still cannot complete payment. President Biden has stated that no student loan borrower would be expected to pay more than 5% of his or her income for student loan payments each month. This helps student borrowers across the country and makes college education affordable. Most Americans have failed to realize the importance of higher education and its affordability for the US economy, the US ability to compete with China, India and the EU, and the damage done to US education by outdated laws. The general failure to support education and its affordability has come at a great cost to the US economy and its strength in the world, similar to the damage done by the neglect of manufacturing and communities across America that depend on good manufacturing jobs. The failures of laissez faire theory under Reagan and it becoming part of exiting culture leading to lack of government support for education, manufacturing, and infrastructure has weakened America and neglected communities across the country. ...

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Forget Macron who is simply following French policy in the manner of De Gaulle, says Greg Ip in WSJ. The European Union has already set its policy to decouple its relationships in the supply chain from China, it just calls it something else -"de-risking." The EU he says is even tougher about this than the US. The EU's Leyen has stated: "The Chinese Communist Party's clear goal is a systemic change of the international order with China at its center... We need to ensure that our companies capital, expertise and knowledge are not used to enhance the military and intelligence capabilities of those who are also systemic rivals."  Mikko Huotari, the head of the Berlin based think tank Mercator Institute for Chinese Studies says that the US and the EU arrived at this through a process that went on in parallel. In fact the Scandinavian countries such as Sweden and Denmark, and the Baltic countries came across this much earlier before Biden became president because of acrimonious relations with China. This is also true of countries in Eastern Europe such as Czech Republic.  Germany's position is based on finding a transitional period for decoupling to reduce the impact on its economy. And even China is aware of this situation and looking for a transitional period for decoupling. More significant is the attitude of companies says Greg Ip- companies such as Tesla, Apple and even Airbus that have continued investments in China with little change. And it is this that president Biden is seeking to change with US policy positions. Another less observed aspect of this is the realization of both the US and EU, that the clear and obvious mistake of overconcentration of the supply chain in China was made under Merkel and the Bush-Obama adminstrations. China too realizes that it would have been better off - less recrimination from workers in the US,  and less costly damaging growth that led to climate change- if there was not this much overconcentration of the supply chain in China. In short it benefitted no one, and happened simply because companies sought to take advantage of attractive offers of building in China offered by local governments in China with subsidies from the Chinese government, and the manufacturing capabilities that kept expanding in a virtuous circle as better infrastructure and logistics were built over time. It goes to show that unless governments are vigilant and aware of these risks the unintended can happen with different consequences including destabilizing the social fabric and the political structure of western democracies.  ...

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John Taylor looks one step ahead of the March 2012 Greece bailout and sets up the most plausible scenario for the future. He says the risks of contagion were always exaggerated from the beginning- a planned default or restructuring of debt such as happened in Argentina in 2001, does not have the contagion risks associated with a chaotic and unplanned default as in Russia in 1998. Predicability in policy makes a huge difference, says Taylor. The European banks which stood to lose from writedowns exaggerated the fears of contagion- a process that always occurs for people who are adversely affected by writedowns- resulting in top officials in the European Union delaying the unavoidable serious restructuring. It was not until Chancellor Merkel handed Charles Dallara, who negotiated for the European banks, a note stating a demand for 50% bondholder writedown, on October 27, 2011, at EU headquarters in Brussels, did any serious writedown of debt begin. Merkel told Dallara: "this is my last offer." The July 2011 summit by contrast had only a 10% bondholder writedown in the agreement, when insolvency not illiquidity was the real issue. Walker Forelle and Meichtry, give a detailed account of what happened in the Wall Street Journal, Dec. 30, 2011. The important thing for Greece, says Taylor, is for what the IMF calls "growth enhancing structural reforms" - greater reliance on private markets, incentives, rule of law. He says this bailout won't work because IMF growth forecasts do not reflect the rapid shrinking of the Greek economy. Antonis Samaras, leader of the major opposition party, is in favor of pro-growth measures and has stated his desire to change the agreement. The 130 billion euro bailout provides 90 billion euros for recapitalizing Greece's banks, and financing the budget. This puts Greece in a situation where the political leaders win voter support by discarding the conditions from the Northern EU nations and come with a plan that is better suited for Greece. The EU in this scenario would cut off further bailout funds to Greece. Taylor sees this as the better outcome for Greece than the current situation, which leaves Greece no hope for growth, and also for the EU by getting out of bailouts that have little prospect of working. It would be difficult but doable for Greece says Taylor, because interest payments would be low and Greek banks would be recapitalized after the current March 2012 bailout. ...

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Fairclough describes the experience of Poland inside the EU, but with its own currency, the zloty. Poland's per capita GDP measured by purchasing power was half the EU average in 2006, it is about two thirds in 2011. Growth is expected at 4% for 2011. Poland manufactures goods using lower to medium technological inputs, such as furniture, shoes, and processed foods. The zloty has declined in value by 25% since 2008. This gives Poland a competitive edge in exports. Additonal factors are cited by one manufacturer of furniture, Forte Manufacturing, as helping it remain competitive- ability to close one of five plants, investing in improved machinery to increase productivity, quality and just-in-time deliveries, computer guided machinery, and ability to run his plants on weekends. Central bank governor, Mr. Belka, points to competitiveness as a critical factor for comfort in the eurozone. Limiting budget deficits to 3% of GDP, and the Maastricht criteria isn't all it takes. Also needed is modernizing and improving the economy, and modernizing the banking sector, says Belka. Poland does not have the debt problems of some eurozone countries because of a constitutional limit on government borrowing and deficits. Belka says Poland benefits from having its own monetary policy, ability to adjust interest rates, the zloty able to depreciate against the euro, and not having to share in cost of bailouts. There is considerable opposition in neighboring Slovakia for having to bear the cost of bailouts. Recent surveys show declining support for adopting the euro in Poland- a Sept 2011 poll showed support at 29% compared to 38% in mid-2010, opposition increased from 47% to 53%, in a poll conducted by the Polish Finance Ministry. Risks for Poland are that 75% of the country's banking assets are owned by foreign financial firms, and the potential for a spread of the eurozone slowdown with lower demand. ...

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Financial markets and investors now see the uncertainties emanating from tariffs negotiations as temporary and unlikely to affect corporate profits and the US economy says this report in WSJ. When the EU requested an extension with EU president Leyen calling DJT on May 27th, Trump who had said the EU was dragging its feet on trade negotiations with the US, granted her request. Leyen promised to speed up the negotiations with the new deadline of Juy 9, 2025. Trump had called for an across the board 50% tariff on all EU products if the EU continued the lack of response. In this way DJT called the bluff the Europeans were playing seeking to portray the American tariffs negotiations in an unfavorable way.  How did markets respond? The S&P 500 increased by 2% on May 27th when it became clear that a trade settlement was likely to be reached in 6 weeks. Earlier DJT had met with Mark Carney of Canada another key trading partner and come up with an understanding on moving forward. DJT has shown flexibility with advice from Treasury Secretary Scott Bessent who has experience with and carefully followed financial markets. ...

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The only way the Conservatives can form a majority to govern in Britain is by getting the support of the Democratic Unionist Party with its 10 seats, and this would still give Conservatives 328 seats in parliament, with 326 required for a majority. This very thin 3 seat majority could lead to a fall of the government if a couple of Conservative party members defected. Here Davies points out that though the Democratic Unionist party supports Brexit it is of a very different nature. The party is based in Ireland and originated with Rev. Ian Paisley. With its Irish roots it wants free movement of goods and people across the border with Ireland which is an EU member, access to EU funding and protection for farmers. Ireland has shown serious concern about the Brexit vote, and Northern Ireland voters voted against Brexit 56% to 44% for Brexit. This open border and EU support is close to what is currently in place. As Davies points out this puts the whole Brexit negotiating process in doubt, with no coherent position for Britain at all, leading to a collapse of the talks and no deal with the European Union. Another reason the doubts about Brexit are likely to grow is that a large part of the UK Independence Party support has disappeared, with UKIP getting 1.8% of the vote compared to about 11% in 2015 election. The combined vote of the parties that see Brexit as a priority for Britain was in fact about 45.1%, combining Conservatives 42.4%, Democratic Unionist 0.9% and UKIP 1.8%. The parties that did not see Brexit as a priority for Britain won over 50% of the vote this time- Labor 40.0%, Scottish National party 3.0%, Liberal Democrats 7.4%, according to BBC. Davies says the increasing uncertainty is bad for the British economy. In coming months doubts are likely to grow about whether the referendum was a priority for Britain, and how this is a distraction from the other serious issues facing the British economy to ensure a better future. ...

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A Berlin based think tank, German Institute for Economic Research, says Germany could end its dependence on energy imports by winter of 2022. That is much sooner than mid-2024 as Economy Minister Habeck has stated.The issue has serious urgency as the war continues in April in Ukraine entering a new and more dangerous phase in the east. And every day oil and gas imports by European Union gives Russia $16 million for coal, $434 million for natural gas, and $489 million for oil, a total of close to $1 billion every day.  With new missile attacks on civilian buildings this is one way for European Union to shoulder some of the burden that it has not done so far. DIW think tank says this could be done with decreased industry and household consumption that could generate about 18-26% savings of the demand for Russian natural gas, suggesting that households turn down thermostats and use less warm water, and industry turn to alternative fuels such as coal and biomass. Another saving is from increased supplies from Norway and the Netherlands of liquefied natural gas (LNG). Increased supplies from Norway alone says DIW could cover 20% of current annual imports of gas from Russia. Instead of waiting to build new infrastructure, the new LNG terminals on the coast which face long construction times and eventually falling demand for natural gas which make them financially untenable, the best approach is to use existing infrastructure in LNG terminals in the Netherlands, Belgium and France to increase volume in EU pipelines. Such action would cover 25% of demand for Russian natural gas. Other action is get more efficient use of the European pipeline system to increase German gas imports from Algeria, Libya and other North African nations vis southern EU nations. ...

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Britain's prime minister David Cameron is having finance minister Osborne lead the negotiations with Germany and France on treaty changes for Britain to stay in the European Union, following his election promise to hold a referendum by 2017. The discussion about the prospects for changes show how difficult it will be for Britain to get the changes in the next 2 years. German chancellor Merkel supports Britain staying in the EU but only up to a point, and German public opinion does not show strong support for the kind of changes on immigration that Cameron is seeking. Support is also declining in countries like Poland because of the immigration issue. Merkel would like to see Britain in because of its open economy, free markets, and also because German contributions to the EU budget would increase significantly with the exit of Britain. Northern countries such as Sweden would also favor an effort to keep Britain inside the EU. On defence and foreign affairs EU without Britain would not carry the same weight and influence. Inside Britain Cameron faces problems with Euroskeptics inside the Conservative Party, and with the 13% popular vote that went to the UK Independence Party in the recent election. The uncertainty is not good for business and the economy of Britain, which is why Cameron is considering holding the referendum on the EU in 2016....

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Paul Krugman says in the long run Brexit is not catastrophic for Britain with a loss of 2-4% of GDP and affecting incomes. He compares it to Canada and the U.S. before the North American trade agreement, Canada's economy still functioned decently.  The problem is more in the short run as no border infrastructure is in place and this is where a bigger hit is feared in the disruption of the flow of goods.

Krugman also cautions people in the European Union who do not see the impact on the EU even though it is relatively smaller than the larger impact on Britain.

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Scott Bessent on restoring the mission of the IMF "brutally calling out imbalances" including China's surplus economy and unfair trading practices instead of "whistling by the graveyard"- in his address to the IMF, Feb 15, 2025. Bessent says the IMF and World Bank had mission creep and lost track of financial stability and were not asking the hard questions about China's focus on exports at the expense of the manufacturing capacity and jobs of America and Europe.  Hee are his remarks meant to show that Bessent is taking an all of the above approach on energy, knows climate change is real but cals for flexible approach, an approach he wants the World Bank to take. And for the IMF to focus on key issues that have led to deindustrialization of US and Europe essential for financial stability before getting into social and cultural issues that are not its mandate for which it is ill equipped to address. Bessent told the IMF and World Bank - "Instead, the IMF has suffered from mission creep. The IMF was once unwavering in its mission of promoting global monetary cooperation and financial stability. Now it devotes disproportionate time and resources to work on climate change, gender, and social issues.   These issues are not the IMF’s mission. And the IMF’s focus in these areas is crowding out its work on critical macroeconomic issues. The IMF must be a brutal truth-teller, and not just to some members. Instead, today’s IMF has been whistling past the graveyard. Its 2024 External Sector Report was entitled “Imbalances Receding.”  This pollyannish outlook is symptomatic of an institution more dedicated to preserving the status quo than asking the hard questions."  Some of these hard questions are about surplus countries- about China and their focus on exporting their way till they destroy the manufacturing sector of the rest of the world. ...

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An audit of Spain's banking system by the consulting firm Oliver Wyman, shows that Spanish banks would need 53.745 billion euros to be cleaned up if mergers and acquisitions underway are completed.The amount goes up to 59.3 billion euros if this does not happen. Bankia bank will need 24.7 billion euros to meet capital requirements. Three other nationalized banks need 21.5 billion euros, including 3.2 billion euros for Banco Popular. Of the 14 audited banks only 7 need capital infusions. The other banks considered healthy include BBVA, Santander and La Caixa. These findings are similiar to a preliminary finding by Oliver Wyman and estimates provided by Luis de Guindos, Spain's economy minister, that Spanish banks will need 51 billion to 62 billion euros of capital infusion. Spain's secretary of state for the economy, Fernando Jimenez Latorre, says Spain will soon request about 40 billion euros of the 100 billion euro bailout offer for banks negotiated by Spain in June with the EU. It is not clear whether the capital infusion will go directly to Spain's banks as Spain has argued, or go through the Spanish government. The audits were important to provide credibility through independent assessment of losses in Spain's banking system, and remove the fog of uncertainty that is pushing up Spain's borrowing rate in capital markets....

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John Taylor on the dangers of a loose U.S. monetary policy and the effects this had in fueling a housing bubble in Spain, Ireland and other EU countries. Taylor points to the bubble ocurring in emerging market economies from low interest rates. Taylor says the ECB's interest rate moves in 2003-2005 were affected by the Fed's low interest rates. He estimates the ECB set rates about two percentage points too low leading to housing bubbles in EU countries. A similiar process is taking place today with the Fed's near zero interest rate policy. Taylor points to interest rates in a group of 18 emerging market economies- including Brazil, China, India, Mexico and Turkey, which have held interest rates on average about 5 percentage points below widely used benchmarks fueling a doubling of global commodity prices between 2009-2011. The U.S. Fed's policies make it harder for central banks in emerging market economies to take aggresssive action against bubbles developing in these countries. Taylor says his does not mean that the Fed should not pay attention to the U.S. unemployment rate and long term unemployed, but should keep in mind the negative effects of slowing demand in emerging market economies and in the EU as a result of its monetary policy of keeping rates at near zero for long periods of time. This feeds back to the U.S. economy at a critical time....

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Some local governments in China are making vaccination mandatory. China is setting a goal of getting 64%  of the population fully vaccinated by the end of 2021. In European Union countries mandatory vaccination by country or region is now being put in place to fight new coronavirus variants that spread faster in the population. The reopening of economy, business and tourism is increasing the risk from variants in summer 2021. The mandatory vaccination is a way to increase the percentage of the population that is vaccinated. Getting younger people who lag behind to get vaccinated is important to protect the percentage of the elderly population that is still not vaccinated. There are risks also to the younger population as seen in previous waves of the pandemic. The initial hesitation to make health pass showing a person is vaccinated mandatory was because only a small fraction of the population was vaccinated in Europe. Now that over 50% are vaccinated in most EU countries and UK, that hesitation thinking that it is discriminatory to those people who did not have access to vaccines no longer exists. Ample vaccine supplies and the misinformation spread about vaccines are making action on health pass necessary to protect the overall population. National governments in France, Denmark, Austria, Greece, and local governments in Germany, Portugal and other EU countries such as Ireland, Italy, see the danger from coronavirus variants that spread quickly as too big to take any risks a second time. ...

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Xi Jinping is seen in this WSJ report as putting China on a course as a competitor of the US compared to other leaders such as Hu Jintao and Jiang Zemin, yet these prior leaders faced a enoromous gap in technology and capital to make it ludicrous. The shrinking of this gap is a result of free markets theory that took no account of the national interests of the US or of the European Union in shifting manufacturing lock stock and barrel to China.  A deeper look at China requires looking at it from putting oneself in China's situation since the period of the 1912 revolution and the 1919 May 4th movement for Science, Modernization and Democracy, to better understand its motives and realities. Jiang Zemin could not pose the question of competing with the US at the time because China's per capita GDP was less than $100 in 1990 and by 2000 during Hu Jintao's term still about a tenth of American per capita GDP.  Even today with population in North America of about 500 million in the economies of US, Canada and Mexico, China lags far behind in technology and capital resources. The Biden administration does not believe in this idea of free markets theory, wrong from the beginning that prevailed incredibly and puzzingly for too long, that it does not matter where you make as long as it is made at the least cost anywhere. It ignored what China and the US under Biden both believe for the US or China that the US is its people and the people is the country. For the US the Civil war itself as Lincoln said in rallying people to the Union, was fought because labor was more important than capital. When looked at the situation in China as stated by Xi at the party congress recently is for having made progress for the overriding goal of Modernization to build a moderately prosperous socialist economy. Huge problems in China remain hidden- ensuring self governance that is honest and accountable to the people, creating jobs and opportunities for hundreds of millions of young people even as supply chains shift after the pandemic in Europe and the US, India and other countries to their home countries for Made In USA, Made in Europe, and Made in India. China is not such a believer in the flawed free markets theory of the non existence of national interest to not grasp the natural aspects of the US and EU, India wanting to build their own manufacturing up again to the fullest. In this situation it also probably realizes the need for a pause to the rampant free markets type of growth that has damaged China's water, air and environment as much as it has damaged the world through climate change. Quality of growth is the new ethos and this gives the US and China, India, the EU and other countries a common frontier to shoot for. The nuclear aspect is also there and managing this well is a common interest for all countries exercizing responsible leadership. ...

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The contrast between Erdogan and a modest humble civil servant Kilicdaroglu is shown here in FR24. Kilicdaroglu is from the CHP or Republican party setup by Kemal Ataturk. Ataturk founded the party in Ankara after the colonial powers took over Istanbul by 1921 following victory in World War I and planned to breakup the Ottoman Empire. To resist this plan Ataturk responded similar to Japan by forming a new country based on the model of European nations and introduced a new alphabet to increase literacy. He took the country back to its European roots before the Ottomans in the 16th century and turned the Hagia Sophia into a museum. In the process rural people in the Anatolian heartland were not fully integrated by the 1960's and Erdogan appealed to these people, increased social mobility and incomes in Turkey between 2001 and 2018. In the period since then Turkey is faced with an economic crisis and rampant inflation that hurt ordinary Turkish people. The pandemic and earthquake made things worse. This is why Turkey is poised for a change and the Republican party hopes to build the Turkey of Ataturk with Turkey firmly seen as a European nation, with some changes that respect the right to wear scarves for women. For just the earthquake alone Turkey needs $90 billion for reconstruction and there are changes that are needed that would integrate the Turkish economy with the expanding economy of the US and the EU which can take place under Kilidaroglu and the new mayors of both Istanbul and Turkey who are deputy leaders of the CHP Republican party. ...

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It is important to know the cause of 0.3% contraction in first quarter 2025 for US economy. It is says WSJ because of a 5% hit from net exports, the difference between exports and imports, as importers rushed to import more before a tariff deadline. Imports by the US increased by 42% in first quarter 2025. Some include MIchigan Governor Whitmer who supports the tariffs as a way to take back America's industrial base, build factories in the US, say the uncertainty of the way tariffs were implemented is damaging confidence in the economy. For instance could the US have excluded the EU, Japan, UK, India as allies, and focused on China.  The problem with that approach is that it would single out China. It means other nations Japan, South Korea, Germany are not investing in the US, also have used trade for unfair advantage, are not called out. This would put China in an odd position. It is better to call out all who benefited from unfair advantage including China, Germany, Japan South Korea, Taiwan, because this has more credibility, giving all a honest and fair picture that they could then look at themselves in the mirror and correct. In the short run it looks messy, the tariff methods look erratic and back and forth increasing tariffs is also messy and unruy. Yet when every major trading nation knows deep inside that US is only saying it like it is asking only for fairness in trade, it will lead it to negotiate a fair trade agreement with US. ...

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There is a sense from Remainers and Brexiters in the Conservatives and in Labour that Brexit is "acting as a drag on UK growth and limiting its potential" after the pandemic and inflation. Senior members of both parties are meeting in Oxfordshire including David Lamy of Labour and Michael Gove of the Conservatives, and the heads of banks and large business. Gove and Boris Johnson led the campaign for Brexit, and Gove is now interested in ensuring Brexit is not viewed as a failure in the long term. The Office of Budget. Responsibility says Brexit will reduce Britain's per capita GDP  by 4%, over the 15 years from 2016. Labour sees it as a threat to any future Labour government to leave unaddressed the relations with the European Union. In a bipartisan effort what sort of conversation to have with the EU so that Britain's economy benefits? President Biden's effort in working with like minded Republicans for America's renewal may be seen by Labour and the Conservatives as reason for doing the same in Britain to ensure European recovery.   ...

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Daniel Yergin, expert on international oil markets, says the oil price cap set by the US and EU at $60 and the European prohibition on Russian oil imports after Dec. 5, means the end of the global oil market. That global oil market came into place with the collapse of the Soviet Union and the industrialization of China. In its place comes a partitioned oil market shaped by not only economics and logistics but also by geopolitical strategy, says Yergin. This means Russia no longer sends 4 million barrels a day to Europe. The price cap is a US strategy to prevent a price surge with Russia cutting production to raise prices. It is working. with a slowing world economy, and shipping companies reluctant to take on unknown liabilities from government penalties, the price of Russian oil is now at mid $40's, about 45% below the benchmark price and 33% below the $70 price of oil on which the Russian budget is based, says this report. This has an unintended effect of enabling India to support its modernization drive with oil imports at reasonable prices coming just after a pandemic. ...

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The Paris climate change agreement involved 195 countries. Agreed to on December 12, 2015 it was seen as a major step forward to limit global warming to 2 degrees celsius or 3.6 degrees Fahrenheit. Progress has been slow in taking action since then. Because of covid 19 the Glasgow conference was cancelled. Hope stems from the goals set for carbon neutral economy of Japan, the EU, UK, China, and the U.S. as it enters the agreement after withdrawing.  Much will depend on action taken as the pandemic has pushed economic goals of recovery to the forefront. As India has shown in renewable energy, particularly in solar energy targets and bold vision, there is a lot that can be done by each country acting on its own without the hype of the agreement. India now sees huge opportunities in solar energy because it is cheaper and pollutes less than coal. This is a game changer that comes from investing in new technologies and taking advantage of India's abundant access to sunny weather and the lower labor and other costs. ...

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Biden efforts to reduce the level of escalation in relations with China include a visit by Secretary of State Blinken to Beijing in June 2023. The US says it seeks "to responsibly manage relations with China." The visit of Blinken to China was planned for February 2023 but postponed after the shooting down of a Chinese balloon craft in US airspace. China's support of Russia in the war with Ukraine has further strained relations. A similar effort is under way to reduce tensions with Iran by approving 2.5 billion euros payment by Iraq for Iranian oil deliveries. China sees Biden's efforts for stronger competition with China as affecting its economic interests. It seeks economic ties in the face of a slowing economy preserving its advantages in manufacturing developed over 2 decades. The Biden administration seeks with the EU a new supply chain that corrects the errors of overconcentration of manufacturing in China. This is what China means when it refers to the Biden administration stoking "competition" with China, as affecting China's sovereignty and national interests.  ...

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The Waldorf was built in 1931 by Hilton Hotels founder Conrad Hilton. After a century of use it was outdated and needed major repairs. In 2014 Hilton decided to sell it and hired Blackstone advisors who said it would get about $1 billion. China had just allowed Chinese to buy foreign assets in 2014, and a Chinese founder of a regional insurance company Anbang Group offered $1.9 billion when Hilton knowing that China was keen in acquiring foreign assets priced it at $2 billion. In 2017 only three years later China decided to pull back from allowing private investments of this kind, Anbang's Wu was arrested for business practices. 2017 was the time when Xi at the 19th  Communist CCP Party Congress put forward his ideas for "Socialism with Chinese Characteristics" and made it part of China's Constitution, and launched anti-corruption drive against corrupt business practices. The Waldorf was taken over in this drive by Chinese government. For 10 years China held onto the property and built 375 900 square feet condos in the Waldorf for $6 billion and 375 hotel rooms by the time it reopened in 2025. Was it worth it? Even if China could get $3.2 million for each of 375  900 square foot condos this would generate $1.1 billion. It would take 8 years to generate the remaining $900 million of the $2 billion paid for the Waldorf by Anbang's founder Wu if the Waldorf's 375 rooms were rented out for $1000 a night for 300 days. China would still be at a loss for $6 billion. This type of extravagant business investments characterized Japan in the 1980's and 1990's leading to the gradual stagnation in Japan's economy as other countries caught up in quality control and other production efficiency practices using new IT technologies. China looks to be following the Japanese example with infrastructure overbuilding. The US and EU will catch up in the next wave of investment in America and Europe by 2030 and other Asian economies such as India will also catch up with China. Investment productivity will play a part, new technologies will play a part, and a return of manufacturing to the US and EU, a build of India's manufacturing and logistics will play a part. ...

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Boudreaux and Bjork of the WSJ interview Mariano Rajoy, prime minister of Spain, in September 2013. Rajoy says he used to look at an app on the iPad hourly for changes in Spain's borrowing rates at the height of the banking crisis and found it a bit stressful. He hopes the current improvements in the economy will not stall the progress towards a closer union and setting up the financial architecture for the euro which puts the financial strength of the EU countries behind EU banks. Rajoy would like to see a banking union. He sees Spain's banking system not needing a bailout in 2014 and the changes having improved transparency, and capitalization of Spain's banking system. Other signs of improvement are increase in exports, a historic high in tourism revenues as a record is being set for the number of tourists visiting Spain in 2014, lower labor costs, and a current account deficit that reached 10% of GDP now in surplus.The 3rd quarter of 2013 brought an increase of 0.1% to 0.2% increase in GDP. If maintained this represents an annualized growth of 0.4% to 0.8% in GDP. GDP has declined 7.5% in the last 3 years. Rajoy expects GDP to go up 0.5% to 1% in 2014 and jobs being created but the progress only gradual. The government will consider further improvements for a flexible labor market. Increases in pension payments will not automatically be indexed to inflation for Spain's 9 million pensioners in 2014 as part of expected changes. Electricity rates will also not be indexed to inflation. Rajoy's main worry now is that there is a shortage of credit to increase household spending and the dire need for job creation....

LyrArc Article Gist
For 2 decades now Estonia has followed the principles of Milton Friedman in freeing up its economy to be completely open. Now the economic downturn has to lead to a shft in policy. The infusion of $3.4 billion euros from the EU from 2007 to 2013 as cohesion funds to even out disparities between rich and poor countries in EU should help and some business people say Estonia could emulate Luxembourg or Swizerland by looking for its own niche say in high end technologies and knowledge intensive production and in design.