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The hike in the interest rate by 6% by the central bank of Argentina brings interest rates up to 40%. This is part of an effort to stem the decline in the value of the Argentina peso. The peso has lost a fifth of its value against the dollar so far in 2018, with a run on the peso seen on May 4th. The problems started with the central bank loosening its inflation target to 15% from 12%, says this report in the Economist. Inflation has shot up to 25% in Argentina in the last 12 months. Raising interest rates to as high as 40% is a risky move because of the effect on economic growth. President Macri and his Cambiemos (we can change) coalition won the election in 2015 by 2 percentage points over the Peronista Kirchner led party which ran the country after the debt crisis on a policy of debt reduction (desdeudameinto). Argentina's current account deficit is at 5% and growing rapidly. A major problem is the huge dollar denominated debt issued in 2016 and 2017 by the government, local government and private sector. According to the central bank BRCA the dollarized assets in 2016-2017 are about $25 billion representing capital flight, with $8 billion going for debt interest payments, profits and dividends, and $14 billion for travel and tourism. For a total of $50 billion according to central bank BRCA going to finance debt service payments, capital flight, profit remittances abroad, and tourism as a result of the issuance of $100 billion in dollar denominated debt by Argentina's government (90%) and private sector (10%). This is the first time such a large figure of dollar denominated debt was created after the financial crisis in Argentina during the first 2 Kirchner administrations during which time the debt was substantially reduced. This has led to S&P putting Argentina on the list of 5 most fragile economies in 2017. Instead of a gradual increase in issuing debt to finance economic development and focus on limiting loss through capital flight, avoiding rapid growth in dollar denominated debt, the Macri government has repeated the mistakes of the past in managing the economy. ...

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This WSJ editorial says the Corker-Cardin compromise that requires the U.S. president to submit any nuclear deal with Iran to the U.S. Congress for debate, is the best option for both Democrats and Republicans who are skeptical of such a deal. It says amendments by senators Cruz and Rubio will not be effective. What the Corker-Cardin compromise developed by senators Corker and Cardin of the Foreign Relations Committee accomplishes, is letting the American people through their elected representatives get a full and complete debate on the merits and demerits of the deal. Democrats in the Senate are also concerned about their election chances after Mr. Obama leaves office, and will want to have a fair debate of the pros and cons before voting, says the Journal. This debate will bring more light to the questions that worry critics the most- how will compliance by Iran be secured, and can snapback sanctions work if China, Russia and other European nations go the other way. Congressional review puts a higher level of scrutiny for any agreement before it moves forward. A requirement that the government submit a review every 90 days on compliance to Congress also gives president Obama's successor a chance to reassess the situation....

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Friedman says the American voter basically said Obama did not get it right the first time but we are going to let you have a second chance. The voters did not have the same enthusiasm for Obama this time. The biggest challenge he says is the lack of enough well paying jobs generated in the American economy. The good wage jobs are declining in manufacturing and in other industries. These jobs have formed the core of middle class jobs in the years since the 1950's and are now endangered. The situation has worsened since the 2008 financial crisis. Zuckerman pointed to this in a recent op-ed in the WSJ, with most of the jobs generated since 2008 being in low wage part time work in retail and other related industries. It is a problem that needs solutions that go outside party ideologies- a new level of imagination says Friedman, educational reforms and collaboration in new ways between schools, universities, business and government.

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Munich Security Conference is being organized by Christoph Heusgen, the conference chair, who was an adviser to Angela Merkel and previous German  Representative at the United Nations. It will be held Feb 14-16 at the Bayerischer Hof hotel in Munich. JD Vance will be attending for the US with alarge delegation including Keith Kellogg US DJT envoy to Ukraine and Zelensky of Ukraine. German federal elections are on Feb. 23, 2025 with CDU's Merz holding a lead. Pete Hegseth Defense Secretary is not attending the conference. Hegseth has expressed views skeptical about Ukraine. Mark Rutte, the former Dutch PM is attending as Secretary General of NATO. The Munich Security Conference Report cites DJT and says- "Indeed, the notion of 'resource scarcity' has become a central premise of Republican foreign policy thinking." Germany barely spends 2% on defense. DJT wants to see 5%. DJT's comments are published in the Munich Security Report- "We were being ripped off by European nations both on trade and on NATO." "If you don't pay, we're not going to protect you." ...

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Election expert, Karl Rove, says following the win in the New York primary Trump has 845 delegates according to Associated Press, yet there are 950 delegates on the opposite side, putting the gap at 105 with the others. Trump has won 47% of the delegates upto this point, and needs to win 58% to get to the needed 1237 delegates for a majority. Rove, says Trump's threat to run as an Independent is an empty threat because of the filing date for running as an Independent for 12 states is well before the convention on July 18, 2016. By that date 12 states with 166 electoral votes will have already seen deadlines passed for registering as an Independent. The states include Illinois, Indiana, Florida, Texas. Michigan's date is during the convention. Registering as an Independent before the convention and some of the primaries would alienate his own voter base, says Rove. Another factor is that Trump would have to raise a significant number of signatures under the rules which is doable, but would create the impression of being in a spoiler role than a serious candidate....

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The New York Times editorial says the constitutional option looks better than the recession option, now that huge cuts in spending including Medicare and Social Security are planned in the budget talks between the Republicans and the Obama White House. The Times points to $4 trillion in defict reduction in 10 years, that is being discussed as part of a grand agreement in White House talks. It reminds the Obama White House that it is not likely to win independent voters if unemployment increases as a result. The constitutional option is for the President to to point to the 14th Amendment that the public debt cannot be questioned, in effect saying the debt limit cannot be controlled by Congress as it is today. See the piece by Krugman on the same subject in today's New York Times. Krugman asks why Obama's economic advisors have not cautioned him about the size of the cuts and the potential impact on unemployment in a fragile economy. And he points out that most of the senior economic advisors have left and it may be Obama's political team that is looking for a way to win points with independent voters for next years election....

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Romney received the vote of 6 out of 10 seniors, and a majority of the over 40 age group. He did poorly with the 18-29 age group. He received only 8% of the black vote, 29% of the Hispanic vote and 25% of the Asian American vote. Republicans did well in the 2010 elections for the House of Representatives showing that a decent support from minorities and a sense of caring for ordinary voters including younger women is part of the winning mix for Republicans. The sharp positions on immigraton taken by Romney hurt him with Hispanics. His work at Bain Capital and perceptions about caring may have hurt him further with minorities and young people, creating a skewed picture in the national contest compared to contests for the House, Senate, and for Governors.

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Gains by Syriza party in local elections in Greece in 2014.

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The Nobel Prize Committee's views on free expression of opinion in China, and the selection of Liu Xiaobo for the 2010 Nobel Peace Prize. Thorbjorn Jagland, chairman of the Norwegian Nobel Committee, points out that it is not an interference in China's internal affairs, because international human rights law and standards are above the nation-state, and the world community has a duty to ensure that they are respected. Jagland says the issue is universal human rights and the check on arbitrary majorities around the world. Even if the country is not a constitutional democracy, it is a member of the United Nations, and it has amended its Constitution to comply with the Declaration of Human Rights. The Nobel Committee chairman points to two other selections for the Nobel Prize, that of Andrei Sakharov of Russia, and of Rev. Martin Luther King of the U.S., as evidence that the Nobel Committee has stood up for universal human rights for a long time.

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A three judge special bench of India's Supreme Court led by chief justice Rajendra Mal Lodha, said the process of allocation of coal licenses by the coal ministry lacked accountability and openness. Lodha said: "There was no fair and transparent procedure, all resulting in unfair distribution of the national wealth. Common good and public interest have, thus, suffered heavily." A report by India's federal auditor in 2012 stated the improper allocation of 200 coal leases to private companies cost the government about $30 billion. Former prime minister Manmohan Singh of the Congresss party headed the Coal ministry for part of the period when the improper coal leases were given, leading to intense criticism from the media. This was an issue in the elections leading to the defeat of the Congress party by the BJP party led by Mr. Modi.

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Marco Rubio has shown an exceptional grasp of Latin America from his days representing Florida in the Senate, about a decade in the Senate when he has closely followed events and acquired a deep knowledge of Latin America. His answers at Congressional hearing were exceptionally good, and showed an ability and earnest desire to get good results for the Venezuelan people, sharing aninterest in the good for Latin America being a person of latin American origin who speaks fluent Spanish as a native language. Points made by Venezuela in answering questions from senators in the US Senate hearings- All of Latin America welcomed the US action to remove Maduro from Venezuela.  It affects Colombia and neighboring countries. Colombian rebel groups control parts of Venezuelan territory and operate from there.  Multiple administrations had deals with Maduro. Maduro kept none of the deals including the one with Biden for free and fair elections.  To be realistic in situations such as Spain, Paraguay, there were transitions before safe and fair return to normalcy and democratic government returned after decades of dictatorship. RUbio showed an exceptional grasp of the Latin Ameican situation and reminded senator Murphy that he had been in the Senate for decade and worked with the senators now on the other side to remove Maduro amd nothing had worked. Venezuela is a rich country , the most affluent in Latin America. It does not need money from the US. Before the Chavez dictatorship it was a country with democratic forms of government, and a country friendly to the US.  The action taken was a quarantine not a blockade. By controlling oil going out of Venezuela the lifeline for the country the US has control over its finances and the economy, budgets, the government finances. The immediate task was getting the oil out of the country as there was no place to put it and US had it sold at market prices not sent to China at a 20% discount for which Venezuela got nothing except paying off debt to China. The current authorites are cooperating with the US on the budget, they have to submit budget requests and the US approves it item by item and an audit agency is being set up including Ex-Im. Bank an other options to make sure the money is being spent on salaries and for the Venezuelan people. The money goes to an account for Venezuela at the US Treasury Department. In 4 weeks a lot has been accomplished. What happens in 6 months - for that actions are more important than words, it should be a marked improvement over today. Including setting up the US diplomatic presence in Caracas which means talking to the government on the ground, talking to civil society, talking to the Opposition.  ...

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Italy's prime minister, Mario Monti put it best when he said in a speech in Brussels in April 2012: "If a country becomes more productive and competitive, but there is no demand for its products domestically or around it, growth will not materialize." There is a new shift in opinion towards a balance of fiscal discipline with growth measures to get Europe back on track. The feeling in different parts of Europe is that the German view of austerity alone will not work for Europe. And the view is coming from the far right to the far left, from Marie Le Pen, far right presidential candidate in France, to the far right leader whose move to withdraw support to the government in Netherlands on the issue of austerity measures led to its collapse. Geert Wilders, leader of the Freedom Party in the Netherlands, said: "we don't want our pensioners to bleed just to meet the dictates from Brussels." The IMF has put out research that questions what is now called "the German hypothesis." The "German hypothesis," is based on the unique experience of Germany with the Hartz reforms under chancellor Schroeder which were based on wage restraint by workers, the German "kurzarbeit" program of government support for retaining workers with lower pay during cyclical downturns, improving competitiveness of German companies, and conservative budget practices. There appear to be two exceptions to this. One is that demand has to be strong outside or domestically for a country to reduce unemployment and improve productive capacity utlilization as it increases competitiveness. This was the case as Germany made the Hartz reforms under Schroeder. Wage restraint acts as a form of devaluing currency for reducing the cost of its products to improve exports. All leading parties and the unions are now in favor of wage restraint and lowering wages to preserve jobs to improve France's competitive position. Germany had the benefit of a decade to implement these reforms to reduce unemployment, because demand was not declining domestically or around it during its reforms. The situation is different in Spain where in all likelihood demand would shrink further with unemployment rising from 25% to higher levels, and higher sales taxes. This is why Francois Heisbourg, special advisor at the Paris based Foundation for Strategic Research, says about the current situation in Europe, that destroyiing Greece with strict austerity alone wasn't something the EU can look back at with the sense of having done the right thing, for Spain it appears misguided and lacking careful thought. The editors of the Wall Street Journal expressed the same sense when they described the March 2012 bailout of Greece as a tragic sideshow, because the main purpose was to buy time and insulate the other larger economies in the EU by giving the French, Spanish and German banks time to improve their financial position. The Journal called it bad for Greece leaving it with debt at 120% of GDP till 2020 and no economic growth, and bad for democracy as it was done against overwhelming Greek public opinion- The Tragic Greek Sideshow, Feb. 22, 2012. Volker Perthes, director of the German Institute for International and Security Affairs, a Berlin think tank, says the Germans have always viewed German leadership in Europe with discomfort, and would prefer a leadership where several states, France, Italy, Spain, and other countries in the EU coalesce around consensus positions. This is historically true for the German position since chancellor Adenauer. With the Free Democrats in decline, and the Social Democrats and the Pirate party doing well in recent German elections and favoring consensus in Europe, Merkel's Christian Democrats need to rethink their policy to give greater weight to economic growth for a consensus position in Europe. ...

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With heightened scrutiny of president Trump's interactions with Russia, and lack of detailed documentation of what was said at meetings, Mr. Trump told reporters - "I never worked for Russia." House Democrats are looking at whether there was an effort to limit documentation of meetings. 

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Edward Chancellor reviews the book by Greg Steinmetz on Jacob Fugger of Augsburg, Germany. Fugger (1459-1525) grandfather and brothers established textile factories in Venice and Northern Italy, and made money in the textile trade. Fugger added to this by loaning money to mine owners and buying shares in mines near Salzburg, and establising new mines in Hungary and other parts of central Europe for copper and silver. Augsburg was a free Imperial City and a center of trade with Italy. Hugger financed the election of Charles V of Spain as Holy Roman Emperor, and benefitted from the Hapsburg dynasty's dominant role in Europe made possible through strategic marraiges. This was a period of transition from feudalism to a period of free cities and merchants, of early stage of capitalism. Augsburg briefly holds a new role as the trade and centre of activity shifts from Italy and the Mediterranean to the Netherlands, Britain and the Atlantic. It is also a period of tumult in Europe as the Protestant Reformation and Luther are active in this period, the peasants are also staging revolts for their rights, and merchants are increasing their role through trade and finance....

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Based on certain criteria of the number of seats and number of states India's Election Commission says the Aam Aadmi Party in Delhi and Punjab gets status as national party. The Trinamool Congress or TMC of West Bengal, and the NCP of Maharashtra, the CPI, are no longer considered national parties. India's evolution as a modern industrialized country following the pattern set by Japan in the 1960's, South Korea in the 1990's, China by 2019, is at stake. The regional parties based in one state are a new phenomenon. Under Jawaharlal Nehru India lacked a pool of capital and techological resources large enough for this kind of industrialization similar to the situation in China under Mao. Non alignment under Nehru and Communism under Mao deprived India and China of the resources and foreign investment of the west including the absence of infrastructure and policies that would encourage foreign investment. China set about removing these obstacles. Yet one obstacle would not stand up against these efforts in China as it would in India. There was no prospect of coalition governments that would be indecisive and be built on various compromises damaging to rapidly building infrastructure. In India coalition governments would emerge because of the 22 language structure in its makeup and the language based division of the country that Nehru was forced to make by linguistic demands. As a result without a core philosophy of principles common to all parts of the country rapid development could not happen over a period 1990-2014 when the party of Nehru lost many northern states and when states in the south such as Tamilnadu, Andhra and Telengana, and states in the northeast such as West Bengal, Orissa, states in the west such as Maharashtra moved into language based regional identities and parties running these states. This is the significance of the changes since 2014 of one strong party in a number of northern states and in the west and northeast of the country that is making rapid industrialization and infrastructure building to attract foreign investment similar to China's experience happen. In India this core of common principles has evolved around the Ancient Path of Vedanta and Buddhism that has provided essential aspect of good governance and the discipline for finding a path to the kind of rapid infrastructure development that has happened in neighboring Japan and China. ...

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Meeting between prime minister Modi of India and prime minister Sharif of Pakistan is unlike anything that has happened between leaders in the region since independence in 1947. Sharif told NDTV: "I intend taking up threads from where Vajpayee and I left off in 1999." Modi says Sharif touched on some emotional things in his conversation. Sharif told Modi about his visits to his mother once a week, and how Modi's visit to his mother seen by Sharif when visiting his mother touched both of them deeply. Rarely has a visit been captured in poetry in the manner Sharif did in answering a question, when he recited an Urdu couplet: "cling to the tree and hope, for spring is in sight."