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At the height of the Eurozone crisis in December 2011, David Brooks points out that it is important not to forget what the Germans are saying in this crisis. They are arguing for truth in accounting, which the government in Greece failed to do, and which may have more to do with negative opinion in the media and with the public in Germany about Greece than any other factor. They are arguing against speculative excesses that enabled Greece to borrow recklessly. And they are making the argument that the only way to put the finances of the eurozone on a sound basis is to have the financial discipline that is necessary for a sound currency. Anthony Faiola pointed out recently that one estimate for tax evasion in Italy is $340 billion a year- Washington Post, 11/25/2011. Greece has a similiar problem, which needs to be addressed. This view has credibility and the backing of every principle of sound financial practices, irrespective of country or region. For ordinary Germans who have gone through years of wage restraint during the period of high unemployment, their attitude is captured in one German workers response to Greece's situation - when she said there are "poor children in Germany also." Years after reunification were a difficult experience for Germany, and left parts of the country still affected by the experience. The period of high unemployment is still a fresh memory, as the economic recovery is fairly recent. There is a feeling that the situation is precarious, depending on exports, as the 2009 downturn showed. These facts remain even when one considers the criticism levelled at Germany. Germany benefitted from the bubble in the economies of Southern Europe through surging exports- from a currency that was undervalued in relation to neighbors- because of the common currency. German banks lent heavily to Greece, Ireland, Italy, Spain, and Portugal, along with French and British banks, and bear responsibility for reckless lending and not doing due diligence for loans to Greece and other countries. Germany also carries the burden of memories of hyperinflation in the 1920's, and the sense along with France that partnership is necessary for peace in Europe. Germany's position on austerity measures also has one underlying weakness - if this leads to shrinking economies in southern Europe in the name of fianncial discipline, then the plan fails as tax revenues decline and budget deficits increase. Given this experience Germany faces the challenge of convincing neighbors of the need for good governance and sound spending practices for long term stability of the currency, even as it leads the effort for providing short term funding. In the short run this reaps criticism for Germany, including criticism for some members such as Greece having to leave the euro as a way to regain competitiveness and growth. Experts have suggested that this would be a better option for Greece than a shrinking economy after strong austerity measures, and the referendum proposed by former prime minister Papandreou on strict austerity measures is likely to have gone in this direction. ...

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Michael Getler describes the missed opportunity under President Obama for using one of America's most talented diplomats to engineer a peace agreement between the warring factions in Afghanistan- the U.S., the Pakistan army, the ISI and its support in the army, the Taliban, and the other parties such as the Haqqani faction and the Afghan government of Karzai. Holbrooke had used his experience for another President, with the same force of his larger than life personality, when he helped bring about the Dayton Accords in a similiar area of stubborn ethnic strife. Could Obama have tapped Holbrooke's skills and set aside the distractions of his personality as coming from an American with unique gifts, talent and achievement, is the question Getler asks. And is this a comment on the nature of the Obama Presidency and America's poorly invested hopes.

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Jenna Wortham asks the question do tech companies have undue influence in Washington especially when they are pursuing their own ecosystem expansion, citing an example from Facebook app Free Basics. There is another question that comes with the election campaigns of Sanders, Trump and Clinton, and issues of upward mobility. With this issue raised also by Janet Yellen of the U.S. Federal Reserve of the loss of intergenerational mobility in the U.S. at a conference in Oct. 2014. This question is whether the tech world in California can be sensitive to the problems of cities depending on manufacturing in the midwest and the eastern U.S. that are recovering from deep recession, because the environments are so different. Working in the tech world in California is so different from the rest of the country, almost a different way of life. It also has deep political implications, because the priorities are different. Sometimes as with the TPP trade agreement they may conflict- this includes an industry such as the auto industry that also is incorporating technology at an accelerating pace and which has employed many times more people than does the tech industry in California, and in many states. This leads to president Obama's support for the TPP trade agreement, an agreement which analysis by some experts shows is more beneficial to the tech industry in California than to the auto industry in the midwestern states. The NYT's Krugman says overall for the U.S. it is marginally helpful as most of the gains in free trade are already behind us. See Lyrarc using search terms-Trans Pacific Trade Agreement, Trans Pacific Partnership. Yet it remains a mystery why president Obama has made it a part of his legacy, when Hillary Clinton realizing the issues in this election has clearly stated she will not support it. It has other implications as well, as it has given rise to demagogic rhetoric in this election, where other issues far more significant such as the condition of western democracy are at stake. ...

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IHS Global Insight estimates that output in the US for the auto industry for 2009 will be 9.5 million vehicles, with capacity of 16.9 milllion vehicles this amounts to 56% capacity utilization number which is very low. Center for Automotive Research estimates that the sales began moving ahead of trend in 1996 and really accelerated after 1998. The easy financing fueled the boom. Now the 16-17 million sales years that were considered normal are seen as inflated and way above the trend. All this suggests that there is a lot of restructuring ahead for the auto industry.

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Barry Ritholtz lists the causes of the financial crisis, He says New York Mayor Bloomberg's exoneration of the financial industry is simply false- what he calls "the Big Lie"- even though Congress, regulators and the Greenspan Fed acted irresponsibly and created favorable conditions for the actions of the financial industry.

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The WSJ's Laurence Norman talks to Yukiya Amano, head of the UN agency, the International Atomic Energy Agency (IAEA), which has the responsibility of verification and inspection of Iran's nuclear development and facilities. Amano describes the issues raised by a 2011 report which outlined 12 sets of concerns to which Iran has to explain, a condition included in the final nuclear agreement. Iran has to respond by mid-August, IAEA then responds, and does work in Sept and Oct, and submits its report by Dec. 2015. Yamano says he has to fill in all the missing pieces in this jigsaw puzzle to get a full picture of Iran's nuclear development. Iran has denied access to military sites and Mr. Amano couldn't say if he has access to the Parchin military site. A concession that was made in the agreement is the long interval of three weeks before access to a particular site that arouses suspicions-the agreement gives Iran the right to appeal an IAEA request to visit such a site to a special commission. The U.S. and its European allies have a majority on the commission yet three weeks are allowed in which Iran could move material to some other location. For critics the question will be why such a concession was needed if Iran truly has decided not to develop nuclear weapons technologies. The U.S. president's response at a news conference on July 15, 2015, was that with the laws of physics the U.S. monitoring tools would detect nuclear activity at that site. The agreement also gives Iran an earlier than planned lifting of a ban on sales of arms and missiles and missile parts if the IAEA says Iran's nuclear activities are peaceful. Iran could conceivably wait till the ban is lifted and its economy in a much stronger position to withstand any future limited sanctions to pursue nuclear weapons development. This would have delayed development for a few years during which time the hope is that Iran has changed into a more peaceful nation pursuing economic development in its region, yet even if this is the case as as happened with India and Pakistan it could still pursue nuclear weapons development. The alternative is a status quo till a better agreement is reached with the leverage of tight economic sanctions and continuing dialogue during which time Iran continues to get closer to a nuclear weapon, or the use of force to prevent this. Iran added the arms embargo issue during the last weeks of the negotiation in June, a controversial move on Iran's part, as this may have complicated the picture with ballistic missiles technology exports to Iran approved after 8 years in the final agreement, compared to the agreement reached in April 2015 which made no mention of the lifting of the arms embargo. Iran played on the notion that if Zarif returned to Iran without an agreement hardliners including Khamanei would veto any agreement, yet this could just be the Iranian negotiating strategy. U.S. president Obama stated at the July 15, 2015 news conference that it would be hard to hold sanctions for longer. Critics might argue that China was already benefitting from the small easing of sanctions by increasing Iranian oil imports by 30% in 2014, and would have less incentive to withdraw from sanctions, as it is dependent on the U.S. and the EU, major markets for its exports and access to technologies. A WSJ/NBC poll in July shows almost half of the people polled in the U.S. saying they do not know enough to express an opinion, a steady 36% support an agreement, showing that the public has not been educated and taken along during the different steps in the largely secret negotiations....

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The government's rescue of Fannie Mae and Freddie Mac has so far cost $145.9 billon. According to the Congressional Budget Office its eventual cost could reach $389 billion. The federal government has put the companies on conservatorship and has a 79.9% stake in the companies. The federal governmet also provides a guarantee that investors will be repaid. By buying loans from banks and other companies that originate loans, Fannie and Freddie were ostensibly in the business of promoting home ownership. The implicit governmet guarantee of Fannie and Freddie's activities in the housing market had the potential to create a huge government liability if the activities are not run well, and this is exactly what happened. By pushing hard for increasing home ownership to unsustainable levels - setting a target in 2001 of creating six million homeowners by 2014 for instance way beyond what was sustainable for the finances of prospective homeowners- it only fueled speculation, easy money and a bubble in housing in the U.S. As investors get paid with the government guarantee, it is Fannie and Freddie that is ending up with ownership of foreclosed homes- one every 90 seconds in the the first quarter of 2010, according to an estimate. The two companies owned 168,000 homes in March 2010....

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Analysts see the likelihood of Greece exiting the eurozone at over 50%. The actions of the ECB under Mario Draghi to provide funding to weak banks through the Long Term Financing Operation have reduced the effect the effects of contagion from a Greek default spreading to banks in other EU countries. The fiscal pact signed in Jan 2012 at the EU summit with automatic penalties for countries lacking budget discipline provides Angela Merkel more room with her domestic political base to support the EFSF's capacity to help other eurozone countries. Greece with its deteriorating economic situation would then be considered a special case.

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The ratification of the European Union's Fiscal Treaty of Dec. 2011 will require a two thirds majority in both houses of parliament. The coalition government of Angela Merkel lacks such a majority. This means the support of the Social Democrats and the Greens party will be needed to pass the treaty in Germany. The Social Democrats parliamentary leader Frank-Walter Steinmeier, says he cannot "picture an approval of the pact without growth-boosting measures." The Merkel position of strict austerity policies in tackling the eurozone debt crisis has come under intense criticism for lack of growth boosting measures. Recent economic performance clearly in Greece and Portugal, and to some extent in Ireland, Spain and Italy, shows the decline in GDP with austerity cuts alone will worsen the deficits or lead to a prolonged period of economic stagnation.

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The Social Democrats leader Sigmar Gabriel is Economics Minister in the coalition government of Angela Merkel in Germany. He is sympathetic to French premier Manuel Valls effort to reduce austerity in the 2015 French budget now being reviewed by Brussels. Here he takes the initiative to call for discussion on the issue of growth and austerity facing the European Union, by joining French Economics minister Emmanuel Macron in asking two economists Pisani-Ferry and Enderlein at the Berlin Institute of Governance for advice on generating growth. The process started in late summer with the defeat of the centre right government in Sweden which supported Merkel's strict austerity policies for balanced budgets. The elections to the European parliament showed the dire situation facing Cameron in Britain and Hollande in France with the unpopularity of austerity policies, higher taxes and cutbacks. The Socialist Hollande government has the lowest public opinion ratings of any postwar government in France, at 18%, and it is unwilling to go further down the road with austerity. At the same time Valls has found a partner in Italy with the growing popularity of Matteo Renzi in Italy who won 40% of the vote in Italy for the EU parliamentary elections of 2014. ECB president Mario Draghi, has generated the debate by saying at a October 2014 Brookings Institution conference in Washington D.C. that countries that have fiscal space (referring to Germany) should use it. He added that governments that did not take action in the economic crisis facing the eurozone of no growth will be swept away by public opinion. IMF president Lagarde, a former French Finance Minister under Sarkozy, has also questioned policy of strict austerity. For the first time since the start of the eurozone crisis in 2010 there is an opportunity for open discussion on future policies for renewal in the eurozone....

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Ajami points out the risks of the deal secularists and liberals in Egypt have made in calling on the military to upset the elected government of prime minister Morsi. The liberals and the Muslim Brotherhood were both equally opposed to the military and police intervention in politics in the period following Mubarak's ouster. The six decade rule of the military in Egypt has little to show for it in the modernization of Egypt and improving economic conditions. Egypt has seen this script before, says Ajami of the Hoover Institution- in 1952 the military stepped in after corruption in the political parties and political violence. The results were dismal extending throughout the period of modernization in Asia and Latin America. It has left Egypt frightfully behind in most dimensions of education, healthcare, and technological progess. The lack of training in parliamentary and democratic governance, and in the institutions of democracy are painfully evident- the poor roadmap for democracy laid out by the military, followed by the election, the decrees and authoritarian style critics describe of prime minister Morsi in failing to incorporate liberal opinion in policy, and the flawed secularist calls for the military to overturn the elected government with only one year in office. These institutions will take a long time to build and require patience, flexibility and the gift of wisdom on all sides....

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The ruble goes from a low of 80 to the dollar in Dec. 2014 to 50 to the dollar by May 2015. The euro also strengthens against the dollar with weakening economic conditions in the U.S. leading to a reversal in the strength of the dollar.

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Krugman says France is getting a lot of attention, but it is Germany where attention needs to be focussed. German long term bonds are yielding 0.7%, a yield level associated with Japanese deflation. He says Greece's problem was a fiscal mess limited to a small country, and Italy has a problem of low productivity that is unique to Italy over several decades. Loss of French competitiveness is overstated, as France has only a small trade deficit, and some of that lack of competitiveness comes not from excessive growth in cost and prices but from policies pursued in Germany. He points to France's GDP deflator (the average price of French goods and services) since 1999 when the euro started, as rising 1.7% a year, and labor costs rising 1.9% annually. By comparison German price growth was 1% and labor cost growth was 0.5%. France is close to the ECB target of 2% inflation. Germany falls way short of the 2% inflation target.

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After the debt swap of old bonds for new bonds with private bondholders for an estimated 53% haircut, the IMF's March 2012 report on Greece says a lot remains unresolved. It predicts a "disorderly exit from the euro" without further help. The April 2012 elections may result in a dilution to committments to austerity policies in Greece, as these policies are highly unpopular in Greece. Greece is still "accident-prone." And competitiveness issues may take over a decade to resolve.

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The critical exchange between oil companies and auto companies about who is at fault for the energy crisis. In one ad that ran last year, Chevron argued that "if automakers improved fuel economy across the board by just 5 mpg, we'd save over 22 billion gallons of gasoline a year." The criticism is also sparked by the high price of oil which is hurting sales of pickups and large SUV's that the automakers depend on for profits. One ad by Exxon Mobil shows a cartoon of a large SUV filling up at a gas station and hints that the problem rests with the automakers who have failed to build the kind of highly fuel efficient vehicles that are needed. The ad says that the average fuel economy of new U.S. autos has not gone up much in two decades, the small gains have been offset by the increases in the size and weight of vehicles.

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Greece's national statistics agency Elstat shows data indicating a rapidly deteriorating Greek economy. The unemployment rate went up to 20.9% in November, up from 18.2 % the prior month, with the total number of unemployed at 1.029 million. Industrial output declined by 11.3% in December 2011 compared to the prior year. The unemployment rate is 48% for young people ages 15-24 for November 2011 compared to 35.6% in the prior year. For women the unemployment rate was 25.4% in November, compared to 17% the prior year. In the region of Attica, which includes Athens, the unemployment rate was 21.1% in November compared to 19.2% in October, and 13.9% the prior year. This creates new concern whether austerity measures will work and whether the Greek people can go through a decade of austerity programs, with debt still at 120% of GDP in 2020 under the program designed by the EU and the IMF, or whether there are other solutions that offer more hope of recovery.

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Thomas Sargent of New York University, the 2012 Nobel prize winner in economics, says the EU leaders can learn from the way the federal government in the U.S. handled the issue of state's debt when it came up in the 1790's and in 1840. In 1790 the federal government- under the leadership of Washington and Hamilton- saw the need to honor state's debt because of the contribution made by states in the war of independence and the U.S. assumed state's debt. In 1840 the U.S. refused to assume state's debt and states went into default. The result was beneficial because state's passed balanced budget rules and restrained reckless spending. Another benefit was that this preserved state rights to manage their finances and the federal structure setup under the constitution.

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Wall Street Journal reporters Walker in Berlin, Forelle in Brussels, and Meichtry in Rome, reconstruct the events during critical days after the indecision and failure to reach agreement during the July summit of eurozone countries. This took the form of intervews with leading players and over 25 policy makers. What emerges are accounts of how Germany's Angela Merkel, daughter of a Lutheran pastor, and protege of Eurozone founder, former German chancellor Helmut Kohl, handled the crisis. Merkel was widely criticized in the media for indecision. What emerges is an account of a leader who took decisive action at key moments in the crisis- leading to the formation of new governments in Greece and Italy taking action to improve finances, and negotiations with banks represented by the International Finance Corporation leading to acceptance by banks of a 50% loss on loans to Greece to reduce Greece's unsustainable debt burden. Merkel also worked with the European Central Bank's departing president Frenchman Claude Trichet and new president Italian Mario Draghi to resist French president Sarkozy's efforts to have the ECB assume responsibility for the crisis through large scale buying of Italian and Spanish bonds; which was opposed by German public opinion as a backdoor way of having German taxpayers assume responsibility for European debt. Shown are three critical moments when Merkel intervened. In October 2011, after Italian prime minister Berlusconi reneged on promises to make pension and other reforms to improve Italian finances because of political resistance. He survived a parliamentary no-confidence vote by one vote. Merkel took the lead on October 20, by directly calling Italian President Georgio Napolitano on the phone, to urge him to take action for forming a new government in Italy. The result was Napolitano talking with all political parties to form a new government, leading to the formation of a government by a non-political figure respected in Italy, former EU commissioner Mario Monti. A day earlier, on October 19, French President Sarkozy met ECB president, Trichet, at an event honoring him as departing ECB president in Frankfurt's Alte Oper concert hall. Trichet, Merkel and Sarkozy met in a side room. Sarkozy asked for decisive help from the ECB for large scale buying of Italian and Spanish bonds to lower yields, which had reached 7% on Italian bonds. Trichet responded that the ECB's charter did not allow it to finance governments, with the meeting ending in a shouting match between the two leaders. On October 21, EU and IMF inspectors warned that Greece's debt was reaching unsustainable proportions and austerity measures alone would not work, unless the bondholders, the European banks, took losses of 60% on their excessive lending to Greece. At this point France agreed to the German position arguing for this level of bondholder haircuts or losses, fearing the prospect of large future bailouts that would jeopardize France's triple AAA credit rating. The July 2011 summit accord had only provided for 10% in losses for bondholders. On October 27, at a meeting that went past midnight, Merkel and Sarkozy called IIF head Charles Dallara, who headed negotiating for the banks, to EU headquarters in Brussels. Merkel handed Dallara an agreement containing the 50% bondholder loss demand, and told Dallara- "This is the last offer." Merkel was saying banks would be left with nothing if they rejected it and Greece defaulted. Dallara called bankers and the IIF accepted Merkel's agreement. The final moment that October came on October 31, when Greece's prime minister Papandreou said he would call a referendum on the bailout provisions and austerity measures demanded by the IMF, the EU and the ECB. Bond markets reacted negatively to the announcement fearing a rejection and a Greek default. The Group of 20 leaders was meeting in Cannes, France on Nov. 2, 2011. Papandreou was asked to come to Cannes for a pre-summit meeting. Here Merkel told Papandreou- "the real question" for the referendum was, "Do you want to be in the euro, or not?" Days later Papandreou, lacking support in Greece from political parties and opposition inside his party, submitted his resignation. A non-political figure respected in Greece, former ECB vice president, Lucas Papademos, was appointed prime minister to head a Unity government. Polls after the appointment showed three fourths of Greeks said that this was "a positive step for Greece," with Papandreou's party getting only 11% support and the opposition led by Samaras about 20%. The criticism leveled at Merkel is that Germany should take responsibility for debt throughout the euro area through the issuance of eurozone bonds or the ECB buying large amount of bonds of Spain and Italy. Merkel faced strong opposition inside Germany and from the Bundesbank to this idea. The other criticism was based on austerity measures worsening the finances of Greece because of a lack of growth in the economy, which is true; yet Germany may see the situation in Greece as taking a long time to be resolved in any event because of excessive and faulty financial management. For Italy and Spain putting finances in order was a necessity, and austerity measures should lead to short term sacrifice but improve prospects for the long term by returning the economies to growth. Another criticism is the installation of governments that lack popular or electoral support. As the polls in Greece showed the Unity government there has far greater support and public opinion blames the politicians for the huge mess. In Italy, Berlusconi was widely seen as losing popular support when he resigned. And in Spain Mariano Rajoy, the newly elected prime minister, was elected with a huge majority in parliament following winning in local government elections. Merkel also held her own party, the Chrisitian Democrats together at the recent Leipzig convention. Mario Draghi, was elected with German support to head the European Central Bank. He has long argued for better management of Italian finances as head of Italy's central bank. Draghi was able to support Merkel with carefully planned and managed actions. First to reduce interest rates to support economic growth in a slowing eurozone. Following this with the ECB's Long Term Financing Operation in late December 2011, to provide unlimited loans to European banks at 1% interest for three years in exchange for a broadened list of collateral deposited at the ECB. In a final twist in this drama, Charles Dallara, who was a key negotiator for the U.S. Treasury in setting up the Brady Bonds- that converted bad Latin American government debt owed to U.S. banks in the 1980's into long term debt with large reductions in principal owed and lower interest rates. This was in exchange for guaranteed repayment with 30 year U.S. zero coupon bonds. Dallara was now a negotiator for the banks to reduce the chance of the very same bondholder haircuts that he had negotiated in an earlier period to solve the Latin American debt crisis. Other players in the drama were Axel Weber, head of the Bundesbank, Germany's central bank, who resigned after strong and outspoken opposition to the ECB's large scale purchase of bonds of Greece, Italy and Spain. Jens Weidmann, his protege, who replaced him. And Jurgen Stark, German representative at the ECB, who also resigned in opposition to Germany assuming responsibility for eurozone debt. ...

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Troops who served in Konar province near the Pakistan border saw some of the heaviest fighting in Afghanistan. Here they give their account of what they saw and why there is a big gap in what they saw and what military officers and President Obama are telling Americans. Fort Campbell is spread out over 100,000 acres on the Kentucky-Tennessee border. Tweny thousand troops from this base served in Afghanistan. Brigades of the 101st Airborne Division from Fort Campbell fought some of the toughest battles in the eastern part of Afghanistan even while the surge concentrated troops in the southern part near populated centers. What the troops remember is battles fought in remote valleys where troops came out of nowhere like "ghosts," in areas which were held only for a few months and abandoned with no idea what they had accomplished. This description also fits with the reality of the Taliban being both Pakistani and Afghan in the sense that the borders were defined by the British during colonial times, but the tribes of the Pashtun region are on both sides, in Pakistan and Afghanistan. To subdue the region would be to subdue the Pakistani side and the support they enjoy in large parts of Pakistan, with the large and mountainous terrain making movement difficult. Which is why these troops talk about "ghosts" turning up from nowhere and find the fighting to have lost meaning in terms of purposes it is supposed to accomplish and how this is to be done. The reality of the valleys and hills over a vast mountainous terrain of Afghanistan and Pakistan and the people and fighting there does not fit the speeches made by President Obama on Afghanistan, and say soldiers this gap is widening every day....

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Adly Mansour, a judge with the Supreme Constitutional Court in Egypt, is appointed by the military as president of Egypt. He was to take office as Chief Justice before the June 2013 protests in Egypt intervened to delay this. On July 3, 2013 he was sworn in as president before the Supreme Court. Mansour is one of two judges selected by president Morsi. He is a graduate of Cairo University, and studied public affairs and management in Paris before joining the judicial sytem in 1977. His decisions as judge went against both Mubarak and Morsi, showing his independent position as a judge on the Supreme Court. The judiciary is now taking an important role in Egypt similar to the role it has played in Pakistan, another Muslim country adopting democratic forms of governance after decades of coups and military rule since the 1950's. The larger Muslim countries in the Middle East, Turkey, Pakistan, Iran, and Egypt are faced with the challenge of balancing the demands of modernization with tradition, the demands of educated urban population with the more devout Islamist rural population, and creating stable transitions in democratically elected government. Islamists such as president Erdogan in Turkey who described western democratic forms of government as a train to get to a destination have still to take in to account the need to incorporate opposing secular views in governance. In this sense Turkey is not the model for governance as it once appeared for Egypt, Pakistan Iran and other Muslim countries. A new consensus in society needs to develop that respects all aspects of democratic governance including respect for the role of the opposition in a democracy, the role of an independent impartial judiciary, and the role of independent media. This will take time to develop just as it took time to develop in Europe and North America....