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Breakdown of negotiations between Greece and EU finance ministers led by Dijisselbloem of the Netherlands on February 16, 2015. Dijisselbloem says the best way forward is for Greece to take a 6 month extension of the current program, because more time is needed to work out the details. Finance minister Varoufakis of Greece says Greece should not have to make cuts that are clearly recessionary. The bailout ends on Feb. 28. Without an agreement reached Greece loses access to 7.2 billion in funds from the EU, needed to make repayments due in March.

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S&P downgrades France's credit rating from AA+ to AA. Government spending at 56% of GDP remains at the second highest level in the EU, second to Denmark. President Hollande has reduced the deficit mainly by raising taxes which is seen as having reached its limit. The French economic growth was at 0.5% for the second quarter of 2013 compared to the first quarter, unemployment is high at 11.1%.

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IMF Managing Director, Christine Lagarde says Greece should have 2 more years to achieve the deficit targets. Speaking at a news conference during the annual meeting of the IMF in Tokyo in Oct 2012, Lagarde said: "it is sometimes better, given circumstances.. to have a bit more time... This is what we advocated for Portugal, it's what we advocated for Spain, and it's what we are advocating for Greece, where I have said repeatedly that an additional two years was necessary for the country to actually face the fiscal consolidation program that is considered." A two year extension would add an estimated 20 billion euros to the financing cost for Greece, at the same it improves the chances for growth and means having a program that is more likely to work.

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The manufacturing purchasers index for the eruozone was 45.1, remaining at the same level as May, a three year low, according to survey firm Markit. The figures are based on a survey of purchasing executives. Index figures below 50 indicate contraction in the manufacturing sector. Germany was at a PMI of 45, Spain at 41.1. The PMI reports indicate a contraction of 1% at an annualized rate for the eurozone economies in the 2nd quarter of 2012.

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Serious problems facing Turkey's economy. Turkey takes on too many risks as exports cannot keep up with rising imports leading to a severe current account imbalance. Official statistics show the economic growth at 11% in the first quarter, with the growth coming mainly from the construction, retail and financial sectors, and a result of a surge in demand and rapid credit growth. Imports expanded at 42.6% , and exports at 11.7%. The Turkish manufacturing sector has not strengthening its competitiveness. And increases in manufacturing output come from increased imports- with 85% of imports being commodities and semifinished goods, according to an Istanbul economist who contributed to a recent 350 page strategy report commissioned by the Erdogan government. Fast economic growth comes from rapid growth in credit, and consumption demand, but the underlying manufacturing competitiveness and economic fundamentals show warning signs. The government of prime minister Erdogan- distracted by politics and efforts to change the constitution- appears not to have grasped the urgency of the situation it faces....

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"The best port in the storm," is how officials in Brussels described Greek prime minister Samaras in October 2012, as Samaras negotiated terms with the EU/ECB/IMF team for the next instalment of funds from the EU.

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Greece passed what prime minister Samaras called the last of the austerity cuts in November 2012 and called for action by lenders in the EU. The EU's Rehn says it is time to dispel the notion that Greece has not made progress in making the economic changes needed. Finance ministers of the eurozone meeting in Brussels agreed to give Greece two more years to reach deficit reduction targets. The cost of this to the eurozone will be 32.6 billion euros. A $40 billion payment to Greece is still on hold till Nov. 20, 2012. The cuts passed in parliament in November 2012 by the Samaras government will raise 17 billion euros over 4 years. The 2013 budget passed in parliament has cuts of 9.4 billion euros to salaries pensions and benefits, and raises the retirement age from 65 to 67. As of Nov. 2012 the bailout packages to Greece from the eurozone countries are at $240 billion.

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Yannis Stournaras, macroeconomics professor at the University of Athens, takes over as finance minister in Greece in June 2012 in the new administration of Antonis Samaras. He brings vast expertise and fresh ideas.

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This article in the Economist describes the different perspectives on the Greece crisis in July 2015 as seen inside Germany. It cites a poll showing German 51% to 41% favoring a Greek exit from the eurozone. About 85% reject further concessions in a July 1, 2015 poll, including 68% of the supporters of The Left, a post-Communist party. Social Democrats leader Sigmar Gabriel, said of the Greece timeout from the euro proposal by finance minister Schauble- that it was the appropriate thing to consider all options. And 78% polled see Greeks not keeping their side of the deal. Some experts see stronger sentiment about Greece after the events in July 2015, and the raising of the issue of the debt haircut given to Germany in 1953, because Germans see themselves as having gone to great lengths to build a strong Europe after their own troubled history in the 20th century. If the goal was to win German support in 2015, this has come across as poor tactics and poor strategy, considering how it has changed German opinion across the spectrum of political opinion....

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Voter sentiment changes in Italy for the Democratic party led by prime minister Letta, only a few months after the national elections. Under Letta who belongs to a younger generation of Italian leaders, the Democratic party which supports being in the EU and pro-growth policies, has staged a comeback in Italian mayoral elections for 67 cities. The party of Mr. Berlusconi lost ground, and the party of newcomer Beppe Grillo also lost ground. Voter turnout was 48.5%, after years of failed politics of the national parties in Italy. This is new reason for optimism for the future of Italy.

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Germany's Merkel and the Erdogan government in Turkey reach an agreement so that Turkey would accept refugees sent back from Greece. Both governments are under pressure to come to an agreement, Merkel facing populist pressures to stem flow of refugees, and Erdogan facing problems inside Turkey as well as an unstable border with Syria.

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Griff Witte describes the deep differences between the young people in Greece supporting Alexis Tsipras of the Union of the Radical Left and German chancellor Merkel's insistence on austerity measures. By placing flowers at a memorial to Greek resistance fighters killed during the Nazi occupation of the country as one of his first steps after being elected, Tsipras made a symbolic move that underlined Greeks view of austerity measures that have shrunk the economy by 25%. Other left and anti-austerity parties from Spain and Italy attended the gatherings in Athens. Tsipras said in a speech following the win that it "ends, beyond any doubt, the vicious circle of austerity in our country." Syriza's economist and the likely finance minister Yanis Varoufakis says the Greece "bailouts" are finished and the government will ask for "debt forgiveness." To get an extent of the frustration in Greece with austerity measures, Varoufakis put it in these terms "Merkel is not interested in Greece. They consider us to be insufferable grasshoppers."...

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A professor at the University of Texas, Yannis Varoufakis returned to Greece in 2014 to run for parliament at the request of Syriza leader Alexis Tsipras. He is the new minister of finance in 2015. Three professors lead the key enlarged economics ministry, foreign affairs, and finance.

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The new conservative administration of Mariano Rajoy is expected to cut spending to reduce the deficit from the 8.1% expected by analysts for 2011, to 3% in 2013. The deep cuts would worsen the unemployment rate of 20%. Spanish banks need recapitalization of 26 billion euros according to the European Banking Authority, about 2.5% of GDP. Spain's 10 year bond yields reached 6.34% on Nov. 15, 2011, close to Italy's 7.10%. With the situation worsening in Greece and Italy, the perception is that there is not much the Rajoy administration can do in the current situation to improve the economy in Spain. Rajoy's plans are to improve labor market flexibility, cut business taxes, and control government spending.

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France's president Hollande says about Greece during a visit by Greek prime minister, Antonis Samaras, that the Greek government must move forward with economic reforms, "while making sure that it is tolerable for the population." He also said he was "saluting the Greek people for their painful efforts of the last two and a half years." Samaras says in an intervew: "Greece is like a swimmer who is underwater for a long distance and needs to come up from time to time for some air, we need to be able to take a breath."

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France's finance minister says the government will focus on growth and set deficit targets that will support growth. There is a feeling in the business community that France has reached the limit for tax increases. The government has given up the goal of reducing the deficit to 3% of GDP in 2013. The government says the deficit will be about 4.1% in 2013 and 3.6% in 2014. Economic growth is expected to be only about 0.1% for 2013, and 0.9% for 2014, lower than earlier forecasts. Muscovici has said the French are fed up with higher taxes, and he is looking for savings in spending. About 15 billion euros of savings are planned in the 2014 budget from ministry expenses and healthcare spending. Extra taxes of 6 billion euros planned for the 2014 budget will now be cut to 3 billion euros. To increase growth it is necessary to stabilize taxation and give business a clear picture for 2014-2015.

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A statement by German Finance Minister Schauble that Germany would be able to accept inflation of between 2 and 3% showed the new flexibility of the German position after the election of Hollande in France. Schauble said on April 10, 2012, Germany would find inflation "in the corridor between 2 and 3%" acceptable. The ECB's target is 2%. Earlier the Bundesbank in statements to the German parliament indicated that higher inflation rate in Germany was acceptable if the overall eurozone rate remained near target. This would give other eurozone countries an opportunity to improve competitiveness. Schauble also indicated willingness to accept higher wages in Germany because of years of wage concessions by workers in Germany. France's major parties, unions and industry are in agreement on a plan for reducing wages to avoid layoffs. This gives the normal process of adjustments in free markets a chance to function to restore competitiveness and balance. It also addresses the concerns of workers in Germany who would benefit after a decade of wage concessions, and improve consumption in Germany, as demand for Germany's exports adjusts to a slowdown in the global economy....

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Money managers, including AllianceBernstein's Daniel Loughney, say months of difficult negotiations and brinksmanship on Greece have affected the euro currency and may appear negatively in the euro's future in the coming years. The euro declined at one point in the negotiations to $1.05 in March before going back up to its current value of $1.12 in June 2015. This compares to the value of $1.40 in summer 2015. Compared to 2012 the markets in Southern Europe and the euro currency are largely protected from the situation in Greece, as little of the Greek government debt is held by banks and the private sector outside Greece. Some money managers (Franklin Templeton Inc. and SLJ Macro Partners) are even saying Greece's exit from the euro may be a good thing. Extraordinary liquidity is available from the ECB's bond buying program started in March 2015, protecting the eurozone banks and markets.

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Spain's plan to reduce corporate taxes by 5% and individual income taxes by average 12.5% in 2015-2016, reversing earlier austerity measures. A similiar move in Italy.