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Iraq is Iran's most promising market for gas exports. Iraq needs the gas for its power stations now that Islamic State has been decisively cleared from Iraq. Yet Iraq is having difficulty making payments to Iran for gas supplies because banks are not ready to handle the payments with the reimposed tighter U.S. sanctions and restrictions. The deputy head of media at the Electricity ministry in Iraq, Sadoun Shehan, told WSJ that transfer of money by Iraqi banks is prevented because of U.S. sanctions. U.S. sanctions were reimposed by the Trump administration after they were lifted in January 2016. The new sanctions prohibit gas exports from Iran. Iran had hoped to make the sales and also export to the European Union when sanctions were lifted. Iranian exports of gas that started in 2017 were itself delayed for 4 years by the war from Islamic State.  Iran has the second largest reserves of natural gas in the world. The Trump administration's sanctions have led to a drop of Iranian crude shipments by 29% in 3 months and added to upward pressure on oil prices to take prices to $80 a barrel. This issue has implications for India and China, particularly India as it faces both higher prices for oil and the tight restrictions in purchase of Iranian oil. ...

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The National Association of Realtors reports that sales of previously owned homes dropped by 27.2% from June, to seasonally adjusted annual rate of 3.83 million homes. House prices gained ameasure of stability in 2009, after dropping since 2006. Now that measure of stability may be lost as house prices weaken. The expiry of a home-buyer tax credit was expected to dampen sales but not by this much. Paul Dales of Capital Economics expects a further drop of 5% in house prices. Combine this with sluggish consumer spending and prospects of deflation in 2011, a weak Obama administration HAMP homeowner relief program, fading stimulus and the likelihood of no further stimulus because of deficit fears; and the picture shows serious problems. The underlying picture of housing is not changing. One in four homeowners with mortgages owe more than their house is worth. Banks are handling over 5 million loans that are delinquent, if these loans are modified or short sales are permitted by banks, there would be support for housing prices. HAMP has failed in this regard, see the link to this....

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Moody's downgraded its outlook on Germany's triple-A credit rating to negative. It also shifted to negative the outlook on triple-A ratings of Netherlands. Spain's ten year bond yield went up to 7.51% on July 23, 2012 according to Tradeweb. Analysts estimate Spain needs to issue 28 billion euros of debt for the rest of 2012 to cover deficits and repay maturing debt, and 50 billion euros in short term Treasury bills. An additional 30 billion euros may be needed if tax revenues decline increasing the deficit, and to meet the needs of regional governments. In changing the outlook for Germany, Moody's emphasized the costs Germany would incur if Spain needed a full bailout and if the situation spread to Italy, including the large exposures of German banks to Italy and Spain.

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Europe has something that is just as bad as subprime mortgages that have troubled the US, its the bad debt of European banks to Eastern European emerging market countries. This plus the high indebtedness of companies in Western Europe is creating serious problems for the economies of western Europe. In addition to the property bubble in Ireland, the UK and Spain, Germany is facing falling demand for its exports as a result of the steep descent of the global economy, especially China. As a result of all this the EU is facing a problem of the magnitude of that faced by the US, if not worse. In much of Europe especially in Germany and the Eastern European countries what generates growth and jobs is exports. Three quarters of the cars made in Germany are exported, and many of the parts used in BMW's and VW's come from plants in the eastern european countries, some form Slovakia, Poland and from plants elsewhere in Eastern Europe. With the collapse of some Eastern European economies and serious problems in others these markets are shrinking. The same thing is happening to exports from Eastern European countries where factories there manufacturing goods for Western Europe are closing. And banks in the western European economies like UniCredit Group of Italy, Germany's Commerzbank, and Belgium's KBC Group have large loans outstanding in the eastern European countries to companies and consumers. And some of these countries have run up huge current account deficits. Bulgaria the deficit is 20% of GDP. Increasing the risk and hitting consumers in the east is that banks issued low rate mortgages and other laons in euros and swiss francs. With the Hungarian forint, Romanian leu, and other weaker currencies seeing big drops, the cost of repaying these loans has jumped. Instead of consumers being overstretched from overspending as in the USA, or facing foreclosures, these consumers are facing huge loan repayment problems from borrowing in other currencies. Morgan Stanley says more than half of the private debt in Hungary, Romania, and Bulgaria is in foreign currency. And customers in Eastern European countries owe foreign banks loans equal to one third of their combined GDP, according to the Bank of Internatonal Settlements. A lot of these loans could end up turning into bad debt if the economies of Eastern Europe deteriorate further as consumers there pull back, factories close and job losses mount, and currency values drop even more. This would create huge problems for Western European banks and restrict lending in Western Europe as these banks make fewer loans creating more problems for Western European economies, in the same manner as ricotcheting effects have done in the USA....

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Angolan investments are increasing in Portugal's economy. Privatization of Portuguese companies- required by the IMF as part of the bailout deal- is leading to investments by Angolan companies connected to the ruling party of Jose Eduardo dos Santos. Angola's Banco BIC is buying Portugal's Banco Portugues de Negocios (BPN) for $58 million, a fraction of the original asking price of $260 million. The IMF made the privatization of BPN a condition for Portugal to have the recent bailout loans. Angola's state oil company Sonangol has a 12% share in Portugal's largest listed bank Millenium BCP. There is a reverse migration of Portuguese to Angola. Portugal's foreign ministry says it showed 45,000 Portuguese citizens in Angola in 2007-2008. The figure in 2008-2009 had jumped to 92,000 as professionals lefto Portugal for Angola. Portuguese building companies are doing more work in Angola, and Portugal's banks are the basis of Luanda's financial system.

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Is the jobless rate in Liverpool, in the one time industrial heartland of Britain about 6% or counting the hidden jobless close to 13%. Is the unemployment rate much higher than the 3% in official statistics for Britain because official statistics do not include the hidden jobless. Learn more about this astonishing quirk in the statistics that distorts reality about social conditions. None less than the OECD, the Organization of Economic Cooperation and Development and the Center for cities thinkt tank is of the view that 3 million people are missing from the official jobless figures. The OECD report says that when these 3 million people are counted the UK's unemployment or jobless rate is about 13.2% or abut 4.3 million people. This report shows that the austerity policies of the last ten years in Britain have bit by bit hurt people's chances of finding work.  The OECD/Centre for Cities study shows something else that is striking- it says Liverpool has the highest rate of hidden jobless in its study, with about 20% of working age adults out of work compared to an official rate of 5.8%. The mayor of the Liverpool region, Steve Rotheram, sitting in his office overlooking the Albert Dock on the banks of the Mersey river, where Britain's mighty shipbuilding industry once dominated and now in decay, says sanctioning people does not work,  a decade of cuts have done damage, and that his authority runs Households into Work, in an attempt to treat people as human beings first to get a better response. The government job centres tend to focus on people 25-35, says food bank and job support charity at the Anglican Cathedral on a ridge overlooking the Mersey. That means a lot of people in their forties and fifties are left out. ...

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NATO's new guiding document and security concept now includes China for the first time as a shared security challenge. In the past there were concerns about China yet Germany and France continued economic engagement with China as before. The clearly worded statement by Xi Jinping and Putin expressing strong disapproval of a world in which the US and the EU play a prominent leadership role, made just before Russia launched its attack on Ukraine, has changed the sentiment in Europe. It is now becoming clear to Germany that the world has changed.Under Merkel Germany expanded trade ties with Russia on energy and with China as a major trading partner. The first steps are now being taken to decouple the trading relationship with China and restructure Germany's trade away from China towards other parts of the world including India, Vietnam and other Asian countries. Mr Scholz pointed to this needed shift during the Trade Fair in Hannover. As part of this shift NATO now sees cooperation with Indo-Pacific partners Australia, Japan, and South Korea and India essential for meeting the challenge of Russia today and of China over the long term. The NATO document says about China that "its stated ambitions and coercive policies, challenge our interests, security and values." Here are some of the ways the world has changed today. There are new administrations and newly elected leaders in the US, Japan, South Korea, and Germany. The new administrations are led by leaders in Japan and South Korea that are keen on working hand in hand with the US to meet the challenge from China. In the US president Biden seems determined to build up America's strength to meet any challenges China can pose. In Germany the administration is run by the SPD socialists with the Greens and the Free Democrats coalition. The Greens led by Robert Habeck and Annalena Baerbock have taken a strong position to face up to Russia's invasion in Ukraine, and Mr. Scholz is following step by step and has distanced himself from old SPD and CDU policies of  Angela Merkel of close commercial ties with Russia and China.  Indian prime minster Modi was a close partner at the G7 conference in Munich, Germany. The leaders of Japan and South Korea attended the NATO summit in Madrid and met with president Biden as shown here.   ...