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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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Michel Sapin faces the challenge of convincing the EU and Germany that France should get more leeway for tax cuts and other measures to boost the economy and lower unemployment. He has been through difficult situations before when following approval of the Maastricht Treaty the French Franc came under speculative attacks by investors betting France could not implement the Treaty. At the time he was finance minister in the Mitterand government. As labor minister since 2012, Sapin implemented Hollande promises in the elections- for government sponsored jobs for young people, creating contracts to bind young and older workers in the workplace, and reform of professional training schemes.

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Stewart points out that Japanese government efforts to prop up stock prices by buying stocks in 1992 failed after 2 years when the fundamentals did not support the government effort. Experts say that even if the stock prices recover in China in 2015 after government efforts to prop up prices, this will be temporary if the economic fundamentals do not support such high valuations. The Shanghai Stock Exchange has a P/E ratio of 37 and the Shenzen Stock Exchange has a P/E of 80, very high valuations. Earnings numbers from smaller companies in China are also unreliable increasing investor risk. Additional issues are the timing of the government's effort to promote a surge in the stock market in 2014-2015. It comes as real estate and housing prices are in a bubble and the economy is slowing rapidly.

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Speaking to Cadena Sur, a Spanish radio network, EU Commission Vice President, Joaquin Alumnia said the EC will have plans to monitor the restructuring of each bank that gets EU funds. He said: "Whoever gives money never gives it for free. There will be people coming to Spain to make sure the money will be properly used."

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A detailed account of the developments that unfolded for Bankia bank during and after the initial public offering of its shares, after it was put together from seven failing cajas savings banks with bad real estate loans made during the housing bubble. The procrastination and small steps taken to paper over the problems by the Spanish government and regulators during the last year of the Zapatero administration and into the first year of the Rajoy administration.

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As part of the effort to become more competitive with Asian automakers, VW is using new strategies with labor to reduce costs. VW made a one-off payment of about 6,300 to each of 80,000 employees at its western German manufacturing plants. In return VW secured union agreement to change work schedules at the plants to 33 hours a week from 28.8 hours, without having to make a pay increase. This is part of concessions being made by labor as Germany tries to improve its competitiveness. VW's second largest shareholder is the German state of Lower Saxony, and VW makes many automobile parts in its German plants in addition to automobile assembly, making employment a major issue for industry, labor and government.

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France's CFDT trade union says both Sarkozy and Hollande have shown agreement with a plan for workers to show flexibility in wages and benefits in return for preserving jobs. This comes at a time when France's trade deficit is widening. It was 69.6 billon euros in 2011. Hourly labor costs in France are 34.20 euros, 14% higher than in Germany, where similiar wage restraint was shown by the unions during the last decade to reduce high unemployment. It is 20% higher than the euro-zone average, according to Eurostat. Now France is looking to adopt some aspects of the German model to improve competitiveness and reduce unemployment.

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Reeves says Reagan ever the imaginative politician seized on the idea of "supply side " economics of a not so well known economist Arthur Laffer. Ideas that were simple and appealing- you reduce marginal tax rates and generate higher revenues. This worked for some time with higher economic growth for a number of years, but the arithmetic of higher spending and borrowing and lower taxes would eventually lead to large deficits at the end of Reagan's term, just as price controls worked for awhile and then led to a surge in prices at the end of Nixon's term. When Reagan became President the deficit was 2.5%, when he left office eight years later the deficit was 5% of the economy. Interest payments on debt jumped to $169 billion in 1988, from $69 billion in 1981. Reeves says American politicians know so little about economics, to which it could be added, winning presidential and congressional elections is always a big part of the picture when it comes to economic policy. Which is why Nixon even with Milton Friedman as an advisor shifted to Keynesian policies of higher fiscal spending in 1971, and why Reagan turns to intuitively appealing and effective in the short term policies of having it all- higher spending, growth, and lower taxes. During the years of the two Bush presidencies and the Clinton administration the success of Reagan policies leads to a general sense as Vice President Cheney put it referring to Reagan and Treasury Secretary Baker's belief, that "deficits don't matter." Which leads us to the current situation where 2012 presidential election politics again frame the terms of the debate on deficits and budgets, only now the deficit is much higher and on a unsustainable path. ...

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The European Banking Authority has lost credibility after two rounds of stress tests by the EBA failed to turn up the problems at Spanish banks that required a $125 billion recapitalization by the EU rescue fund. Now EU officials are turning to the European Central Bank as the eurozone's main banking regulator. The U.S. Federal Reserve is performing this role after the 2008 financial crisis, with the FDIC in charge of bank closures and resolution. ECB president Mari Draghi says, letting the ECB perform supervisory tasks, a decision made at the June 28 EU summit talks, is fully in line with the bank's mandate. Separate decisions will be needed for a bank resolution authority like the FDIC. The ECB will then have to hire hundreds of banking experts to make on site visits to eurozone banks and check their loan books and make independent assessments of bad loans, bank risks, and capital requirements. The important thing is an agency which is free of local and political interference to make the correct evaluations....

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China takes a different approach to the stock market declines on August 24-25, 2015, after the earlier failed interventions in July and early August called into question the transparency and integrity of the financial markets. The main Shanghai index opened 6% lower on August 25, and ended down 7.6%. This time the government let the market find its own level. Li Jiange, vice chairman of state owned investment company Central Huijin, wrote in his blog post that "The trade volume of the market can reach 2 trillion yuan ($300 billion) a day, which means if it collapsed no one could save it...The issues of the market should be handled by the market itself." In July and the early part of August Central Huijin was reported to have intervened to support the market. On Aug. 14, the China Securities Regulatory Commission (CSRC) stated achange in policy to intervene "only when the market changes dramatically and introduces systemic risk." It is important to note that even with the 40% decline in the market index since June 2015 peak, it is still up 35% compared to the prior year....

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France's union and business representatives reach agreement on improving competitiveness by providing new flexibility in labor rules. Unions agreed to cooperate with business in ways similiar to the German "kurzarbeit" program where workers work shorter hours but are guaranteed employment when demand is down. Workers on temporary contracts get health care benefits and incentives are given for businesses to take on more permanent employees.

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Uncertainty in China's stock market with the ban on stock selling by large institutional investors. Goldman Sachs estimates that $184 billion in shares could be put up for sale if the ban was unambiguously lifted. The price swings on the market would be accentuated say analysts because of a decline in trading volume.

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France's unemployment rate for youth 15-24 is over 25%. France's president Hollande has a plan to get companies to hire young workers on a permanent contract. The "generation contract" gives small business 4000 euros a year for three years to hire a young person on a permanent contract a the same time committing to keep an employee over 57 years in age. Companies with over 300 employees are required to set targets for hiring younger workers and keeping older workers or face sanctions. The program would cost France $1 billion a year and the government estimate is to generate 500,000 jobs in 5 years. A think tank OFCE sees this as generating about 100,000 jobs, because many companies would have hired anyway. The German approach is focussed on state sponsored apprenticeships and vocational training, which some French companies says is the right direction for France. German youth unemployment is 8.1%, with 2.6 million students at vocational schools, and 1.46 million apprentices. Beginning Jan 2013, Germany will support youth from other eurozone countries with language courses and travel costs to work in these programs in areas of Germany with shortages of workers....

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NYT reporters Lyman and Eddy show how the city of Weimar in Germany is coping with the arrival of about 900 refugees, and how well the integration efforts are working.

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Spain has so far in Sept. 2011 consolidated 45 cajas savings banks into 17. Some of the assets were sold to Spain's commercial banks. In July the central bank seized Caja de Ahorros del Mediterraneo, which had failed the stress tests. This Journal editorial says the Bank of Spain and the Spanish government approach is too slow to install new management, recapitalize the banks if possible and privatize the assets. Attention also needs to be given to minimizing taxpayer losses. The sweeping guarantees on the caja's losses , and 2.8 billion euro credit line to buyers of Caja del Mediterraneo does not look like privatization, because it simply hands private buyers the gains, with the government taking on the risks and the losses.

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Laurent Berger, head of the French Confederation of Labor, C.F.D.T., is a moderating force in France as president Macron leads an effort to make a revision to France's labor code. With a large parliamentary majority president Macron is expected to push for a shift to a Scandinavian version of "flexible security," that allows companies and the economy to adjust the work force, introduce retraining and create flexibility so that new jobs can be created. His union is now the largest, after surpassing the militant General Confederation of Labor. Issues in labor changes proposed by president Macron are- direct negotiations between management and employees bypassing unions, and a cap to compensation in unfair dismissal cases. Berger's view is that though the interests of labor and management conflict, there has to be dialogue instead of constant confrontation. He is willing to see some jobs lost if business creates new jobs with improvement in the economy. Macron has summoned labor leaders for marathon talks. ...

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Efforts by Spain's government of prime minister Rajoy to come up with credible estimates about the actual needs for recapitalization of troubled parts of the banking system, and which banks should be closed. Report out in June by consulting firms Oliver Wyman and Roland Berger relies on information from the Bank of Spain. A detailed audit examining the books of the 14 largest banks in Spain will be completed by audit firms by the end of July 2012. Considerable criticism in banking circles in Barcelona and London about the procrastination by Spanish banking authorites in coming up with credible estimates of the actual bad loans and losses in the Spanish banking system. This would improve confidence in financial markets that the problems can be controlled and a way forward planned.

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Of the 27 nations represented at the EU summit meeting on January 30, 2012, all except Britain and the Czech Republic agreed to the new measures for budgetary discipline. The new fiscal compact will come into effect after 12 eurozone countries have ratified the compact. This prevents one or two countries holding up the agreement. This provides the Merkel government in Germany an agreement on concrete measures for budgetary discipline- evidence of specific action to dissenters inside the Christian Democratic party and in German public opinion- which would enable it to support efforts by the ECB, the IMF and the EU to address the crisis, including the funding of the European Financial Stability Fund. The text of the fiscal compact makes it harder to block sanctions against countries that fail to impose budgetary discipline, while at the same time making allowance for countries with excessive debt such as Italy.