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U.S. President Obama's 2013 State of the Union address focussed on the problems facing the U.S. middle class, calling it "our generation's task" to tackle this problem. Economic changes have changed the patterns of economic growth and jobs, growth, income growth, that prevailed from the end of the Second World War to about 1989. But he offered few solutions beyond increasing the minimum wage to $9.00 from $7.25 to reduce poverty.

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The high cost of fines is likely to affect recapitalization of UK banks. Fines for Libor-rigging and compensations for customers on Payment Protection Insurance may cost the UK banking industry about 20 billion pounds, says Nixon. Other fines such as the $1.9 billion fine for money laundering activities of HSBC have to be added to this. This means less money for meeting stronger capital requirements and for lending to business and households. Higher compliance costs will mean higher costs in future years. HSBC estimates of the anti money laundering systems are about $990 million a year. The Bank of England has raised concerns about the need for additional capital to safeguard British banks.

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ECB president, Mario Draghi, is interviewed at his office in Frankfurt by the Wall Street Journal's Blackstone, Karnitschnig, and Thomson. Draghi quotes economist Rudi Dornbusch, who told him in the old days that the Europeans were rich enough to afford paying for it if everybody didn't work. Draghi, was head of the Bank of Italy, before becoming president of the ECB. He is acutely aware of the problems faced by Italy and other countries like Spain which have let labor markets become rigid, with extensive job protections and generous benefits for the unemployed. The result is that employers are reluctant to hire and young people face high unemployment rates- as high as 50% in Spain. For this reason Draghi sees the old social model in Europe as obsolete and already out. Draghi's sees austerity measures and spending cuts with the structural changes underway in Spain, Italy and other countries as the only way to generate economic renewal. On the Long Term Financing Operation launched by the ECB in Dec. 2011, Draghi says there was agreement within the ECB and the decision was unanimous. He makes it one of his objectives to achieve as much consensus as he can, to do what is right for Europe and to do it together with his colleagues in the ECB and the EU. That financing operation, and the binding deficit controls achieved at a recent summit of European leaders, he sees as all part of the pathway to fiscal union. ...

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Mercedes sales have seen asharp decline. May 2009 sales were down 33.4%% from May 2008 for the US region. Steve Cannon who heads Mercedes' marketing effort continues to believe that its performance, innovation and technology that will bring buyers back to Mercedes. The company's $75 million ad campaign in the USA for its updated E-Class Series cars, show tv ad spots with scenes of families admiring classic Mercedes cars at the Mercedes Benz museum in Stuttgart, Germany, and scenes of the car down a forested road. The car then bursts through the wall of the museum, and takes its place alongside other Mercedes cars. In contrast other manufacturers, GM, Hyundai, Honda and others are taking account of the economic downturn and lower consumer spending. Hyundai offers to help customers pay for the cars if they lose their jobs, which GM and Ford has matched. Honda is also keeping pricing emphasis. Mercedes only brings up the price at the end of its ad with the number $48,600 shown, a 9% drop in price for the updated E Class Series....

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A report by pharmacy benefits managing company Express Scripts shows a 13% increase in the price of branded drugs in the U.S. from Sept 2011 to Sept 2012. Generic drug prices declined by 22% in this period. The report also shows that growing spending on specialty drugs for cancer, MS and other diseases is a big reason for the increase in prices of branded drugs. This report is from a random sample of six millon Express Scripts members using prescription drug coverage. Prof. Schondelmeyer of the University of Minnesota, who manages the drug benefits program at the university and conducts a similiar price report for AARP, says the potential benefits for these specialty drugs are not that good to justify the high prices.

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Beppe Severgnini is a columnist for Italy's newspaper Corriere della Serra. Here he describes the rift between generations in Italy that is holding Italy back.

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There is overwhelming evidence of atrend to lower cost value oriented purchansing habits, and emphasis on essential purchases, that companies should pay attention to. Out of 46 economists surveyed by WSJ 43 agree that a fundamental change is underway, that will last for years, into the next decade and beyond, in the way consumers in the USA save and spend. And a couple of fundamental facts which won't just go away, are shaping things this way. American households doubled their outstanding debt between 2000 and 2007, to $13.8 trillion. In 2008 total debt went down for the first time since World War II. $13 trillion in wealth has been lost since the recession began. And this number will grow as the economy goes deeper into this downturn. The confidence in the capitalist system has been shaken. People want to get debt free. AlixPartners, found in asurvey, that Americans plan to save 14% of total earnings once this downturn ends. Two thirds of those surveyed say they plan to buy less in the future, and more than halfplan to buy less expensive things. There is a fundamental mood change from those who have been interviewed like Mr Bailey here in Boise, Idaho, a small business owner stuck with a lot of debt and no income. His goal: to get rid of debt and concentrate on making just enough money to enjoy myself and my family, and not trying to get rich anymore. So he goes out and sells his SUV to eliminate a $800 monthly payment and replaces it with a used minivan paid for in cash, he sells off a vacation home he built, sells another home to renters, cuts his staff to a handful. Many like Mr Bailey remember how their parents lived and heard the stories passed down from parents who lived through frugal times in the 40's and 50's, when America was still largely rural and peopled by families with modest incomes especially in most of the south and west. Its this change and shift in attitude and mindset from wanting to be rich to just wanting to be happy for themselves and their families, valuing the really important things, not piling up material acquisitions that the latest advertising is getting them to buy, in taking pride like their fathers and mothers before them in thrifty behaviours and saving, that may lead to a very different economy than seen before. Something like this is happening in Germany and Japan where consumers tend to save. ...

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Former U.S. Defense Secretary, Leon Panetta, says the attacks on Charlie Hebdo weekly in France were the result of an intelligence failure. The 2 brothers who conducted the attacks were already on a U.S. no-fly list. The U.S. has already alerted European authorites to about 3000 European citizens, about 1000 from France, who went to Syria to fight with Islamic State. Panettta says there is much room for improvement when it comes to tracking of individuals returning from conflicts in the Middle East, and making certain that the U.S. and Europeans are at the top of their game when it comes to security. Operationally the U.S. and Europeans need to be working together and being aggressive about individuals who have a history in these places in the Middle East.

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Bernie Sanders points out in this NYT op-ed the idea that Donald Trump could benefit from the same discontent among working class voters that helped the Leave campaign is a wake up call for the Democratic Party. He calls for global trade and a global economy that works for working class, middle class Americans.  Sanders is pushing for a Democratic Party that embraces the concerns of working class Americans, that understands the impact of factory closings and loss of jobs, of economic uncertainty, of declining incomes and shrinking opportunities.