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China risks a steeper fall in the value of the yuan with capital outflows following its policy of gradually weakening the yuan in 2015-2016.

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Galston says the Republican establishment's support for Trump before the Republican primary in Iowa is shortsighted and a mistake.

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This Washington Post editorial says many Republican leaders have shown lack of courage to speak up against the anti-immigrant rhetoric, and other extreme positions taken by Trump. A separate op-ed piece by Robert Kagan, says this leaves him little choice as a Republican but to vote for Democrat Hillary Clinton.

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Internet penetration is about 30% in India, compared to 50% in China and 87% in the U.S., according to the World Bank. The number of internet users increased from 375 million in Oct. 2015 to 402 million in Dec. 2015, according to Internet and Mobile Asssociation of India. Growth of internet users is increasing with the falling price of smartphones and mobile data usage.

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A WSJ interview with Jose Socrates, the prime minister of Portugal. Socrates says he supports more European integration in economic matters. The context for this is the meeting of 26 leaders of European nations in Brussels on February 4, 2011. Germany is pushing for major changes in the way the European Union works so that economic integration is coupled with the political integration process. This is now thought to be the only way to make the EU work, and both Germany and France are pushing for this. This is also the price of German financial support to countries like Ireland, Greece, Portugal and Spain. In an earlier interview with WSJ, Spain's finance minister, Elena Salgado, offered her support to the German plan. Aspects of the economic coordination Socrates supports are pushing up the standard retirement age to 65, which Portugal has done. He is less supportive of de-linking wages to inflation. There he pointed to the 5% public sector pay cut to go into effect this year. Socrates says the challenge for Portugal is "not to be more competitive with lower salaries." He also provided statistics that show that " this is a modern country." Statistics on electronic government tenders, the ratio of computers to children, the percentage of energy from renewable sources. And said people are talking who have preconceived ideas and don't know anything about Portugal. ...

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German chancellor, Angela Merkel's advisor, Uwe Corsepius, briefed European Union ambassadors on the draft document for EU economic integration, prepared by the German ministry. This document identifies six priorities: abolition of wage indexation systems, agreement on mutual recognition of education qualifications, creation of a common base for assessing corporate tax, adjustment of the pension systems, establishment of a national crisis management regime for banks and new legal measures to force countries to commit to tough fiscal policies through a "debt alert mechanism." Under the plan countries will be assessed agaist economic indicators and tracked by the European Commission. Other steps Merkel is proposing are coordinating retirement ages across countries. See the interview with Portugal's prime minister Socrates, where he supports the coordination of the retirement age. Socrates does not commit to taking out the adjustment of wages for inflation in that interview. The leaders of 27 countries of the EU meet February 4 in Brussels, and this document will be discussed at the meeting....

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German chancellor Anglea Merkel selected her chief economic advisor, Jens Weidmann to head the Bundesbank, the German central bank. Weidmann replaces Axel Weber. Merkel prefers the quieter demeanor of Weidmann to the outspoken behaviour of Weber. Weber was Weidmann's tutor at the university, and at 42 is the youngest Bundesbank president. He headed the monetary analysis department at the Bundesbank and did a stint at the IMF, before joining Merkel's circle of close advisors. Weidman has a sense for markets and politics, and a close understanding of Merkel's policies. This would help Merkel as Germany sets the eurozone on a new path of reforms to build a firm foundation for the euro.

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On the surface Turkey's implementation of an IMF program to reduce its deficit in 2001 has lessons for Greece, but looked at closely the situation has some serious differences. Turkish tax collection was weak and this was corrected by the incoming Erdogan administration, salaries were capped and spending was reduced, taxes raised and state assets sold to improve the deficit. But as Tim Ash an economist at RBS bank points out, achieving GDP growth will be very difficult for Greece. For one thing Turkey's lira fell 54% against the dollar in 2001, spurring exports and increasing growth. Greece is part of the euro currency system and this won't be part of the solution. Also Turkey's debt approached 80% of GDP in 2001 (down to 46% of GDP now), compared to 115% for Greece in 2010, so Greece is in a much worse position than Turkey in 2001. Ash sees a restructuring of debt as the best way to restore growth in Greece.

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The European bank stress tests could trigger the restructuring of the troubled landesbank sector in Germany say German experts. The landesbanks do about 25% of the lending in Germany and are in severe financial stress. The landesbanks suffered hundreds of billions of losses in the US subprime mortgage securities. There has been no serious reform of the landesbanks. Even though the management of one of the landesbanks Bayerische Landesbank in Munich was under criminal investigation- the management made bad decisions that led to the losses in bad investments totalling 25% of the Bavarian state's yearly budget. A similiar problem is unfolding in Spain where the Spanish government has initiated action for the troubled cajas bank sector, the regional savings banks in Spain. In Spain the government and opposition came together to reach an agreemet to consolidate the cajas from 45 to about 20 and set aside a fund of 99 billion euros for this task. In Germany the landesbanks are controlled by German states and regional savings banks, so the German government has no direct control over this failing banking sector....

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China's central bank, the People's Bank of China, reduces the capital reserve requirement ratio for the largest banks by 1% to 18.5%, on April 19, 2015. This move is expected to free up $200 billion for new lending by banks. China's securities regulator also acted to curb margin financing, the using of borrowed money to invest in the stock market which faces bubble conditions. China's economy is reported to be slowing making it uncertain whether the 7% annual growth target can be met.

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New data from Pew Research Center in Dec. 2013 shows 89% of Hispanics support a legal path to citizenship for illegal immigrants. But when asked to choose between relief from deportation and path to citizenship, a majority 55% of respondents chose relief from deportation, compared to 35% preferring a path to citizenship. This shows the extent to which the Obama administration's efforts in deportation have affected the Hispanic community in the U.S.