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About 30% of German bank debt will mature in less than a year, according to the German central bank, well above the long term average of 22%. In its annual financial stability report, the Bundesbank provided a warning that German banks have increased their dependence on short term financing. This is a risky practice if a bank is caught short when interest rates rise. Hypo Real estate, a German property lender had to be taken over by the German government, because it could no longer borrow at short term rates below what it was receiving in interest for its long term loans. Andreas Dombret, a member of the central bank executive board, said that new bubbles could form in certain securities markets as banks make "a renewed increase in the search for yield."

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Fears about a property price bubble in China bursting with the central bank not able to control the economy. Increasing fears that China may not be able to control the bubble. Other countries where bubble effects are taking place: Canada where housing prices are accelerating, Brazil with expected GDP growth of 5.8% and "hot money" pouring in, India where inflation has reached 15% and $92 billion of foreign investment in Indian stocks and bonds, Australia with its hot mining sector with trade connections to China, South Korea with growth approaching 5% and high rates of household debt. GDP and property prices increased by 11% in China in the 1st quarter of 2010. Many of these economies have connections with China, including Brazil and Australia with commodities sectors dependent on China.

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The cost to France of Greece's exit from the euro would be 66 billion euros, and for Germany 90 billion euros, according to the director of research at the IESEG School of Management in Lille, France. Greece would pay back some of its debt with the devalued currency, so the actual cost might be lower. This is closer to the estimate of 50 billion euros for France by the departing French finance minister, and the estimate of 125 billion euros for Germany by a German bank. IIF estimates are much higher but the IIF and Mr. Dallara will find the bonds issued by Greece under the restructuring of little value in the event of exit from the euro, which is why it would not favor an exit and present it in a different light.

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On the morning of Jan 15, 2015 the Swiss Franc jumped in value against the euro by 18%, and at one point up by 39%, following the Swiss National Bank's announcement of removal of the peg to the euro of 1.20 euros. Foreign exchange fluctuations of this scale are unprecedented. The peg to the euro was made in 2011 following the rise in the franc's value by about 44% in 2010-2011. The sudden rise in value in 2010-2011 hurt Swiss competitiveness and tourism, threatened to bring an onset of deflation, and recession. Part of the rise was due to external factors- the eurozone debt crisis led to decline in the value of the euro, and fears of a eurozone breakup led to money flowing into Switzerland as a safe haven.

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The Karachi stock index was up 49.4% in 2013 as the pro-business policies of the Sharif government are attracting foreign investment. From the beginning of May 2013 when Sharif was elected prime minister to the end of 2013, foreign investment flows into Pakistan reached $283 million, according to the Clearinghouse of Pakistan. Pakistan's government bonds are also attracting investors with yields declining from 11.69% on the ten year bonds to 7.54% by the end of 2013. Additional upswing sentiment comes from the government paying off $5 billion in debt that hurt investment in the energy sector. The oil and gas sector is about a third of the Karachi Stock Index. Total market capitalization on the Karachi Stock Index is $52 billion, and the largest company is Oil and Gas Development Company.

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Financing for Shanghui's acqusition of Smithfield Foods comes from Morgan Stanley, which will provide $3 billion. Morgan Stanley is the advisor on the deal and plans to sell debt to other banks, including Chinese banks. Shanghui has as its largest shareholder a number of Chinese private equity firms grouped together under CDH Investments, with 33.7% stake. This includes New Horizon Capital, co-founded by the son of China's former premier Wen Jiabao. Temasek Holdings of Singapore and Goldman Sachs private equity unit have ownership stakes. According to its website managers and some employees own 30% of the company. Shanghui sales were $6.2 billion in 2012, increasing from $5.5 billion in 2011, and has 60,000 employees. The sales are much smaller than Smithfield Foods but Shanghui has a much larger valuation.

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Britain's 2013 budget provides some benefits to home buyers. Chancellor of the Exchequer Osborne says the Bank of England will have more leeway with its inflation target to aid economic growth. Britain's Office of Budget Responsibility says growth will be down to 0.6% in 2013, and 1.8% in 2014. This is a result of weak exports to the eurozone and decline in consumer spending. The government now expects to borrow 240 billion pounds more than forecast for the 5 year period ending April 2016, as a result of the weaker economy. Debt as a percentage of GDP will not decline by 2015 as planned earlier, it will be 2018 before this happens. Osborne said: the plan "is taking longer than anyone hoped. But we must hold to the right track."

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Japan's vice finance minister for international affairs, Mitsuhiro Furusawa, emphasizes that Japan's effort to revive the economy is exactly what the IMF and the international community have been looking for Japan to do. The effort is designed with the primary objective of fighting deflation. The yen has declined by 15% since the new administration of prime minister Abe assumed power Dec. 26, 2012. It now is at 99 yen to the dollar compared to 80 yen to the dollar in 2012. At 80 yen to the dollar the IMF considered the yen "moderately overvalued." Furusawa assumed the new position recently. His previous position was IMF executive director 2010-2012. In that position he assisted IMF managing director, Christine Lagarde, in efforts to manage the sovereign debt crisis in the eurozone.

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Banks in Britain will be charged a 50% tax on 2009 bonuses of more than 25,000 pounds or $40,800. It will be imposed directly on the bonus pool at banks and will be paid by the bank. It takes place effective immediately and affects 2009 profits. The public in Britain is sympathetic to such a move and it comes in the midst of concerns about the British deficits similar in proportion to that of Greece, and of the Dubai debt crisis. Andrew Hilton, who runs CSFI, a research center focussed on financial issues put it aptly: "I think banking has become a truly parasitical business. Bankers these days borrow money at 30 basis points and lend it to te governmet at 300 basis points and then they go play golf."

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Risks to the economies of western Europe through the banking system and its lending to Eastern European economies are growing. The Easter European economies that are collapsing are Europe's version of the sub prime crisis in the USA. This may ricochet back to the United States as European institutional investors pull money out of the US stock market. Europan banks could suffer a further increase in nonperforming loans, and need further recapitalization from their governments, which are already hardpressed by demands for shoring up the social safey nets, stimulus spending and bank rescues. Big institutional investors in Western Europe, the banks, pension funds and insurance companies, hold large amounts of Eastern European debt, and further infusions of capital from western governments would put increasing pressure on the Euro.

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Mervyn King of the Bank of England and Ben Bernanke both were academics at MIT, and both share the approach they are taking for quantitative easing or credit easing. They are buying up assets like government bonds in the case of Bank of England to reduce the yields, and commerical paper, mortgage backed securities, and consumer debt in the case of the Fed, also to reduce yields and drive up prices. The idea is to act more decisively than the Bank of Japan did during Japan's banking crisis, and flood the system with cash so that there is real impact. There is less danger of inflation in this downturn, which is one of the calculations that the Fed and the Bank of England are both making as they do this.

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The failure of Basel 1 and 2 and the effects of the Asian market crisis in 1997 in creating a situation of current account surpluses in Asia and other countries that ended up in extra liquidity in the western countries where debt went out of control. The concerns about negotiations to enhance the role of emerging economies in the IMF, the Financial Stability Forum and other organizations, as these organizations play a larger role and need larger access to funds. The chance that with such a large agenda especially in the area of regulation and enlarged representation of emerging economies in international organizations like the IMF, the leaders of G20 may simply use this meeting and meetings in coming months to forward their own leader and country agendas, leaving these issues unresolved for now.

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Job loss nubers for 2009 from the Labor Dept are- February 681,000, March 699,000, April 539,000 as govt payrolls expanded by 72,000. About 8.9 million people work parttime, adding in the people who have given up looking for a job, the underemployment rate is 15.8% in April 2009.

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SCFG, a Japanese lending firm, filed for bankruptcy with $3.63 billion in debts. This is Japan's largest financial institution collapse this year. It has caused concern in Japan because SCFG lending went to smaller businesses. It shows the deterioration in small businesses and their loan defaults in Japan.

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Key Indian projects in Sri Lanka or Ceylon are the Kankesanthurai harbor in northern Sri Lanka and the Ind0-Japanses East Container Terminal at Colombo port. In Maldives it is the Greater Male Connectivity Port.With its expertise and leadership in solar energy India is also launching solar initiatives in Sri Lanka. India has focused efforts on developing human capital and employment intensive sectors. This contrasts with the non concessional loans that finance infrastructure projects often with Chinese labor that do not generate the jobs Sri Lanka or Ceylon so desperately needs. Earlier period of Chinese infrastructure projects led to the debt trap with building of Hambantota port and facilities which Sri Lanka could not effectively utilize, and led to buildup of interest on loans. Sri Lanka now has the opportunity to make a new beginning as part of the SAGAR (Security and Economic Cooperation for All). The whole range of intitiatives in many areas show India's long experience in working with Sri Lanka since 1900 when early development projects were initiated. India has a long list of projects to help Sri Lanka keep up with India in its development- two education tourism projects, ITEC Indian Technical and Economic Cooperation, and Technology Adoption Project. This opens a new path for Sri Lanka to make steady progress on a wide range of projects for the next 10 years for sustainable development. As India grows this will expand the range of possibilities for Sri Lanka that it could never achieve on its own. Many new projects can also be done with the economic cooperation and assistance of UK, U.S. Japan and India to broaden the range of possibilities and financing. ...

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Five rules the editors of the WSJ say should be followed when working on cleaning up the banking system. A clear no, as Krugman and other experts point out is for the government to make the rather imprudent move to take on all the debts of the banks as in Ireland. A second rule is not to underestimate the size of the problem and delay action till the problem gets much worse, when its harder to deal with. ECB president, Mario Draghi, pointed out the problem at Spain's handling of Bankia bank as a clear example, telling the European parliament recently: "There is a first assessment, then a second, a third, a fourth. This is the worst possible wayof doing things. Everyone ends up doing the right thing, but at the highest cost." A third rule is to set clear rules about banks, who gets rescued and who gets closed and why- so that its not left upto the discretion of officials. On this rule Spain's outgoing Zapatero administration gets good marks from WSJ for settting clear rules to the cajas svings banks. A fourth rule applicable to Europe is to first setup the expertise and conditions for a European banking regulator before setting up a banking union and direct injection of funds by the EFSF into banks of individual countries. A fifth rule is to avoid creating even larger mega banks by consolidating failing banks with large banks, and continuing the government's implicit guarantee of the bank because it is "too big to fail" and creates systemic risk- this is the situation after action by the U.S. Federal Reserve, regulators and the U.S. Treasury....

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As Tesla evolves into a mass manufacturer of automobiles it plans to turn to debt and equity markets for more capital. Tesla has about 455,000 net orders for the Model 3, mass market version of its electric car. The production line has to accelerate quickly from production of 2000 Model 3 cars per week at the end of 2016 to 10000 at the end of 2018. A steep jump which Tesla CEO Musk calls "production hell" that he has bought a ticket for.  Part of the problem is being short of capital for its ambitious program. In the past Tesla has planned to have cash on hand as reserve of $1 billion at the end of each quarter. Current plans call on spending $2 billion in cash in the second half of 2017 from the $3 billion in cash on hand at the end of the last quarter. 

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Cia Mexicana de Aviacion, Mexico's largest airline filed for bankruptcy protection in July 2010. The airline says losses amount to $350 million since 2007, and the debt is about $1 billion. Mexicana and Aeromexico were given government bailouts in the 1990's, later merged into one government run airline holding company called Cintra. In 2005 Mexicana was sold to hotel chain Grupo Posadas SAB for $165.5 million. The Mexican government is trying to introduce more competition in the airline industry and opposes another merger of the two airlines.

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Information provided by experts suggest that the government plans including the public-private partnership with $1 trillion committment to absorb the bad assets in financial institutions, offered as a general solution without specifics by Treasury Secretary Geithner, will be inadequate to cope with the growing bad debt. Nouriel Roubini at New York University says his analysis suggests that the USA financial institutions are already insolvent. The bad debts of banks he says now surpass bank assets. Roubini has been ahead of the curve in his estimates in 2008, and is respected for his prescient remarks about growing credit problems. In his latest report he says that total losses by American financial institutions and the fall in market value of the assets they hold will reach $3.6 trillion , up from his previous estimate of $2 trillion. Of the total he says American banks face half of this or $1.8 trillion, with the rest borne by other financial institutions in the United States and abroad. Mr Posen an economist at the Peterson Institute agrees. He says the liabilities of of American financial institutions far exceed their assets. The only qualification of this says Posen is whether this should be seen as a temporary panic, or whether the economic climate will improve and the value of bank assets recover from depressed values. Raghuram Rajan, of the University of Chicago graduate business school, agrees that if the banks had to sell these assets today at distressed prices then they are insolvent, but if there are calmer times say in ayear or so and values recover then banks may get anew lease on life. So much of this depends on market psychology, market confidence and the economic climate improving. The only problem here is that as happened in 2007 and 2008, the recognition, awareness and action has fallen behind the speed and accelerating manner of the downturn. The Bush administration, Congress, and the American public support, have all been lacking in providing the vigorous action needed, compared to the speed with which the crisis hit in the October 2008 to January 2009 period. The transition between administrations added to this effect. The total lack of any Republican support for the Obama administration's effort continues this effect. Now the Geithner plan with few specifics for a public private partnership for tackling the bad debt, and the lack of action on a bad bank solution with government takeover of certain banks as needed, continues this pattern. The constricted credit meanwhile continues to hit business with an additional hit from dropping sales, leading to layoffs across all industries, which simply worsens the housing crisis and growing foreclosures. So all across the spectrum government action is at worst very late as in the slow response to foreclosures, where the $50 billion proposed now should have come in early 2008, and the banks halting foreclosures and modification efforts proposed now should have come in early 2008 as proposed by Bair and Feldstein. And at best government is just catching up to the credit crisis as with the Fed and FDIC efforts to contain and stabilize it, with inconsistent results and the collapse of some financial institutions like Lehman Brothers. The lack of consensus in Congress and the inexperience of the new administration, means more valuable time will be lost in crafting an effective response in the manner of the bad bank solution. What all this means is that the overall response in 2009 as in 2008 will also lag behind, and the opportunity for a decisive solution is slipping away even as the cost of that solution is climbing, putting it further and further beyond reach. See the link to Hiroko Tabuchi's article titled In Japan's stagnant decade, Cautuonary Tale for America, February 12, 2009, NYT. Tabuchi touches on just this point, that the American experience in 2007-2009 is just like that in Japan where the response lagged the problem in strength and effectiveness till 2003, after years of wasted effort....

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Signs that the consumer credit boom in Turkey is reaching alarming proportions are evident from the surge in credit card use. Credit card debt has increased by 20% in 2011, after an increase of 23% in 2010. There are an estimated 3.7 million delinquent cardholders and 2.5 million cardholders who only make the monthly payments. The Turkish regulators are now requiring cardholders to payoff at least half of the balances before they can use ATM's for cash. Banks charge interest rates of about 29% and cardholders who are using credit cards for the first time -as more of the Turkish people are joining the middle class during the country's decade of high growth- do not understand the risks. Turkish banks, Garanti, Yapi Kredi, and Isbank, are in the list of top ten card issuers in Europe, according to Nilson Report. Card purchases average $3,500 per year, in a country with per capita income of $12,300. Turkish banks have pushed card use, with Garanti Bank's website giving users cash for frequent use of cards, and asking users to show the card even if they are buying an apple at the grocery store. The volume of personal consumer loans has doubled since 2009, because Turks use the consumer loans to pay off the high interest rate balances on credit card debt. Analysts at ING Group in London who follow Turkish banks say the delinquency rates will be above 9% in 2012. The IMF's Global Financial Stability Report of Sept. 2011 has identified the credit growth to GDP ratio as one of the key factors leading to an economic crisis. This was true for the U.S. before 2008, for Portugal and Ireland before the eurozone crisis. China's credit growth was up 29% in 2009 and Hong Kong's up 30% according to the IMF Report. Turkey and Vietnam also have high credit growth to GDP ratios according to the IMF. Turkey's high capital inflows can quickly reverse in a crisis increasing the risks facing the country....

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To make a dent in carbon emissions governments in Europe and North America need to support the use of low carbon solar panels in solar facilities installed there. This would enhance solar energy panel production in the US and Europe, India, other countries. Experts say the use of solar panels made using electricity from coal use in China creates more emissions in China while reducing emissions in the West. The result is that global emissions remain the same as if no solar panels were installed.  The global solar panel production is mostly concentrated in China because of the lower cost of electricity from coal used in production of panels- a critical factor in the lower prices of Chinese made solar panels. This allowed China to gain a monopoly in production of  world's polysilicon, an essential component in solar panel production, that consumes large amounts of electricity in the manufacturing process.  This use of coal generates twice the amount of carbon emissions in China than the solar panels made in Europe, say experts. As a result the governments and companies in Europe, US and India are shifting to local manufacturing of solar panels. ...

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ECB president, Mario Draghi, is interviewed by Wall Street Journal reporters Blackstone, Karnitschnig, and Thomson, at his offices in Frankfurt. The reporters press questions such as- are austerity measures going to work in Greece, what happens with Portugal, what is "good" and "bad" austerity, why aren't eurobonds the answer. Draghi sidesteps the Greece question by saying it will depend on implementation of the commitments in fiscal policy and structural change. He takes the discussion to the general situation in southern Europe, in Italy and Spain, with the high youth unemployment and inflexible labor markets, making the point that there is no alternative to fiscal consolidation considering the excessive debt to GDP ratios of Italy, Spain and other countries. Good fiscal consolidation is where the taxes are reduced and government expenditure is on infrastructure and capital investments. Bad fiscal consolidation merely raises taxes, leaves current expenditures as is, and reduces capital investments. From his experience with the situation in Italy- and a similiar situation exists in Spain- Draghi points to the ways in which inflexible labor markets for the protected part of the population leads to temporary work contracts and few job opportunities for young people. The unemployment rate in Spain for young people exceeds 50%. Draghi's view is that fiscal consolidation is contractionary in the short term, but leads to growth in the longer term as structural changes are made and the confidence channel operates. It is also necessary to be put in place first, so that there is time to put the structural changes in place. He sees the program in Portugal on track. At the same time Draghi is aware of the drying up of credit in Spain, Italy and other countries even after the Long Term Financing Operation, and will respond as the situation changes. On the point of eurobonds, Draghi says it cannot be accepted that you spend and I pay, countries spend as they see fit and then they issue bonds jointly. For there to be trust its essential that each country stand on its own, and this is also a condition for setting up a durable fiscal union. This aspect of his views are consistent with the views of German chancellor Merkel and the northern European countries, Germany, Netherlands, Finland. Draghi is not new to this job after being president of the ECB for 4 months. He was on the Governing Council of the ECB for 6 years and has a good grasp of decisions made in the past. When asked if there is more that he could do for growth, Draghi's response is that the ECB will do the most it can do for price stability in the medium term and at the same time within the terms of the Treaty to promote financial stability. ...

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In a speech at the Conservative Party Fall conference British prime minister Theresa May positions her party as an advocate for the working class against establishment views. She was critical of smug views that the current situation was acceptable for working class families concerned about immigration and jobs. She also pointed out that the policies of central banks including the Bank of England hurt working class families and savers." She pointed out the development that has also happened in the U.S. economy and other European countries as the Federal Reserve and the ECB cut rates to near zero. "People with assets have got richer. People without them have suffered. People with mortgages have found their debts cheaper. People with savings have found themselves poorer." Her response she said would be to "put the government at the service of those who found themselves poorer as a result of monetary policy." This follows May's first speech at 10 Downing Street where she referred to "the burning injustice."  ...

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Reports of ATM's running out of cash in India in 8 states. The government says this is a result of a spurt in demand and will ease in a few days. The government's policies are to increase the number of debit card and digital transactions to shift more of the transactions in an underground economy into the formal economy so that tax revenues to fund infrastructure can be generated. As a result fewer currency notes of Rs. 2000 or about $30 are being printed. This is aggravated by black market hoarders of 2000 rupee notes. Public confidence in the banks was shaken by some high profile scandals leading to people keeping extra cash at home increasing the demand. The government plans a bailout of $32 billion for bad loans at banks.

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Ezra Klein is pessimstic that there is enough time (only two weeks to August 2nd deadline for raising the U.S. debt ceiling) for the "Gang of Six" deficit reduction proposal to be adopted. He cites Senator Durbin, one of the "Gang of Six" U.S. senators who says the proposal needs to be formalized and scored by the CBO before it can be adopted, and it cannot be done by August 2. Considering the Republican criticism that a plan needs to have sufficient public scrutiny and deliberation before it is adopted more time is definitely needed. What it has accomplished is to focus attention on the Simpson-Bowles deficit commission plan, as the "Gang of Six" proposal has similiarities to the Simpson-Bowles plan. Simpson-Bowles adopts a widely accepted approach to limit tax expenditures in the U.S. tax code.