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DW.com report by Mu Ciu shows a CATL(Contemporary Amperex Technology) plant in Arnstadt, Thuringia, in eastern Germany. It will not bridge Germany's technology gap. German and US consultants at the microeconomic level of the company and German and US economists at the macroeconomic level of the economy entirely fail to grasp the effectiveness of China's investment driven model. Of its joint partnering with European and American companies and China's single minded focus on technology access. This is why the DJT US administration has warned Europe that it is failing economically. China's macroeconomic and microeconomic model are run by the same authority by the state, and according to goals and plans (which in a socialist economy is weak at the microeconomic company level lacking the initiative and freedom of action). By combining its macreconomic framework run by the state with a micreconomic company level run by the state but on free market lines the Chinese investment driven model has dual advantages and operates at a speed that far surpasses the German and American model. It's society suffers as a consequence, but in few short decades 1990-2009/2020 this is all it could accomplish with a single focus on modernization for what was once a peasant agricultural economy. Where it lacks is in future technology access and as long as weak companies in the US and Germany partner with Chinese companies the technology access for Chinese companies give it the essential ingredient for its investment model to work, as American and European companies can waver in investment Chinese companies backed by the government will not waver in investment and have the clear advantage. DJT's approach is to give a big shock to the entire system of world trade now run by China, so that this is no longer going to work at the macroeconomic level and legislate huge investment incentives for one time depreciation and other moves to get American companies to invest. It wants Europe to do the same, including getting rid of the bureaucratic structures and regulations. German Chancellor Merz is getting the message and is acting quickly first with the trillion dollar investment plan, the meetings with Draghi and Meloni to get Italy and like minded nations on board, and internal efforts to get rid of regulations and bureaucratic structures, and building a new partnership with India to remove an error of Merkel/ Clinton+ Obama in excessive concentration and dependence on China. This requires a steady hand and steady governments, steady policy, and companies in America, Europe and India to work together for the long haul without wavering or delay, to rebuild the world economy along new lines and on a new path. ...

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Eduardo Porter describes the choices facing Germany as EU leaders of most EU countries call for deposit insurance, European banking regulation, and eurobonds.

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The European central bank chief and former French finance minister takes a dim view of crypto currency. It has called for direct regulation of crypto currency, and their inclusion in anti money laundering and terrorist financing laws. ECB's view is- "Since Bitcoin is suitable neither as a payment system nor as an investment, it should be treated as neither in regulatory terms and should not be legitimised."

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The split of the global internet into three with the emergence of a closely monitored internet in China, and Google developing the Dragonfly version to enter China in cooperation with the government. The European Union will have its own version that rivals the U.S. with its own regulations and rules. Each has its large home base. A fourth base is in South Asia where a home grown internet is still to develop. The split will be based on home versions such as Baidu in China and Google, Bing, Safari in the U.S. and the EU version with different rules for privacy and protection. Openness, limits, regulation, government rules and control in home countries, will characterize the patterns in each. This Editorial Board article in NYT says the U.S. version may not end up being the best.

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The Europeans led by France and Germany demand stricter regulation and a financial regulatory system that oversees the entire financial system, and oversees all the larger countries. The US in contrast wants to see a lighter regulatory system, and lighter regulation of parts of the financial system like hedge funds. For the USA where the crisis originated, the emphasis is on larger stimulus spending. For the Europeans which have a larger safety net that they would like to see considered as part of their stimulus- and their social arrangement such as reduced hours in Germany to avoid layoffs, and the presence of a large public sector in France that is about 52% of GDP- the situation as they see it does not require breaking the EU's committment to control large deficits. The cultural and historical roots are also different. Germany was hit by hyperinflation in the period between the two wars, and there is thought there that this helped the rise of demagogic leaders and the collapse of democracy there. At that time the issue was war reparations that Germany found difficult to absorb in an economy devastated by the first war, which strained German finances. France and Germany also have no foreclosure crisis, and car sales and consumer spending are not in the deep decline that is seen in the USA. In fact car sales have increased in the two countries with the refunds for scrapping old vehicles, with no such plan in place in the USA. Making there is a credible position on the European side. Germany does see itself hit by the collapse in international trade. Germany and France face the prospect of helping their banking systems deal with the large bad loan situation facing them in Eastern Europe. At the same time Germany and France want to save some firepower for coming to the aid of key parts of the European community like Spain, Greece, and Ireland, which are facing a worsening crisis. In short both sides have credible positions, and some form of accomodation as events unfold may be a better desired outcome than some unified outcome. And little has been said of the position of the other countries in the G20, the emerging countries like Brazil, India, China, Russia, Indonesia, Argentina and others, and the position of the World Bank speaking for the poorest countries. These countries may favor stronger stimulus, and would favor the stricter regulation and supervision of global financial systems favored by the Europeans. This is because they may rightly feel that the messups in the global financial system have stolen their chance, at just the point where they were turning the corner in their efforts at bringing better standards of living to their peoples....

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New regulations from the European Union and an order from president Putin asking industry to cut emissions to below EU levels by 2050 are pushing companies to reduce emissions. Russian companies are pushing to be greener. Russia emitted 11.3 tons of carbon dioxide per capita in 2017, compared to 7 tons for the European Union, according to Oxford University. An EU plan that could come into effect in 2023 could affect 40% of Russian exports because of emissions, costing $5 billion, according to the Russian central bank. Companies in steel, aluminum, petrochemicals, are investing in new plants that reduce emissions or are carbon neutral.

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The Global Green Credit Initiative is launched by the UAE's Sheikh Mohamed Bin Zayed, with Narendra Modi of India, Ulf Kristersson of Sweden, Charles Michel of the European Union. Green Credits have huge potential to transform the landscape of climate change. Companies and individuals buy green credits to reduce their carbon footprint and corporations do so for meeting climate regulation.  Today as the adjoining WSJ article shows market is about $1 billion for carbon credits expected to grow to $250 billion by 2050.

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President Biden's action to protect consumers when there is a run on the banks such as SVB bank, Signature, Republic bank in the US. And the coordinated action with European central banks and European governments that protect the international banking system because of the interconnections between US and European banks and risks of contagion from one region to another. Janet Yellen at Treasury and the FDIC, Federal Reserve, Swiss central banks worked together on Credit Suisse and other banks affected by the collapse of Silicon Valley Bank and Signature bank. The Federal Reserve bank of San Francisco supervised SVB bank and flagged the problems of it not being able to sustain itself in a crisis with enough cash on hand. Congress under president Trump removed banks under $250 billion in assets from supervision which made it difficult for the San Francisco Fed to take the problem of SVB to the next level or to be able under the law passed during the 2009 financial crisis to regulate SVB and impose the Fed's requirements. A problem exists  of lobbying by banks for less regulation and the influence exerted on the US government and even the Fed. Spreading of ideas that a culture of laissez fairre or little regulation works well for the banking system contrary to evidence from the 2009 financial crisis and the mismanagement of banks such as Credit Suisse, Goldman Sachs, with frequent or egregious behaviour leading to settlements with the government. All it takes is the failure of one significant bank even if it is not a large bank, and the spiralling effects on banks with weakness of some kind for a crisis of confidence in the banking system. The role of lobbying by SVB bank and its CEO's appointment to the board of San Francisco Fed is seen as part of this self serving culture. ...

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The long and bruising process of exiting the European Union for Britain is being seen across EUrope as a lesson. Marie Le Pen in France and Salvini in Italy have dropped ideas of France or Italy leaving the EU. Nationalist politicians are now shifting to a new agenda of reforming the European Union from within. Voters are being reassured by politicians that it is best to remain inside the European Union. Chancellor Merkel has carefully guided the European Union through this crisis, first through the eurozone financial crisis, then through a period of migration to Europe from war torn Middle Easter and African countries, and more recently with president Macron of France facing the effort to get Britain to leave the EU. After Boris Johnson's win in British elections with 44% of the vote Britain now faces the difficult choice especially for hard line Brexiters such as Mr. Jacob-Lees Moog and Johnson, to either accept European rules, regulations and standards over which it has little control or lose market access to the EU. There is also the issue of Scotland which favors being inside the EU and a Scottish independence referendum. ...

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The language and tone of the leaders says something about what is likely to be the outcome of the G20 summit. Its a first for significant participation, as countries as diverse as Russia, China, India, Indonesia, Saudi Arabia, and the Netherlands are represented. The credible positions of both sides, the US, UK and Japan, and the European side of France, Germany and the Czech Republic, well presented, provide for some serious discussion and negotiations. France's Sarkozy and Germany's Merkel want to see a global regulator that would reach inside the borders of the US with stricter regulation. Sarkozy calls this "nonnegotiable." And he said that he would reject an agreement that puts off stringent new regulations on banks, tax havens, and hedge funds. He said "the compromise has to come from all countries around the world." US President Obama said that if there is going to be renewed growth it can't just be the US as the engine, everybody is going to have to pick up the pace," at the same time saying that the US had to be concerned about its own deficits. The fact is that the US stimulus will mostly help a severely impacted domestic economy recover with social safey net payments to local and state governments and unemployment insurance, as well as targeted investments in infrastructure, education, energy and health care. It will not mean anywhere near the kinds of imports the US made from other countries, especially China. And Obama made that clear when he said the US will never return to that situation, where the US had become a "voracious consumer market." For the Germans the major market for their middle companies is China, and China has its own stimulus spending on infrastructure spending, which should provide for continued imports of machinery from Germany at a much lower level. Thus Germany and France see a strong tendency to call the source of the crisis and repeat that call till the US listens, and refer to the failure of free market capitalism in its unregulated form. And to insist on fixing it through a global regulator with strict and systemwide rules. So you hear this in Merkel's words, "the foundation for this finacial architecture must be laid now, that is why we seem to be so tough." While the vivacious Sarkozy talks of compromise, and a US gesture in regulation in return for Franc's gesture of joining NATO, the mild mannered Merkel is clear and focussed about her concern. She rejects the idea of linking stimulus spending demands of the Anglo-Americans with the Franco-German demands for global systemwide regulation. "This is not a bargaining chip," she says. The media may mistakenly report lack of consensus as a failure of the summit. But in the long run in the presence of good positions on both sides, it could lead to some tough negotiations even if continued at another meeting. And result in something serious, credible and lasting in its impact, rather than something that was easy and did not in Andy Grove's useful words involve "constructive confrontation." ...

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Banks in the UK are considering giving investment bankers allowances to make up for lower bonuses mandated by new EU rules. This is one of the mechanisms banks are considering to be able to pay competitively. EU rules do not limit total compensation making it possible to shift pay given earlier as bonuses to the new 'allowance' category. For instance a 1.8 million euro bonus might be dropped to 1 million euros and 800,000 euros given as an allowance. Such an arrangement means banks can adjust the allowance as markets and regulations change. Increasing fixed salary would mean effects such as higher pension costs. Most of the 35,000 higher level banking employees to which the EU rules apply work in London, England. The UK Prudential Regulation Authority has come out against the EU bonus rule and the UK has taken this up in a legal challenge at the European Court of Justice. U.S. and Asian banks are deferring parts of bonuses and paying in a mix of shares and cash.

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Simon Nixon says British prime minister, Cameron, has antagonized European leaders by making demands to protect Britain's financial industry. Ironically this happens as Britain was arguing for stricter financial regulation. Britain has been isolated and risks remaining on the sidelines from now on. Nixon says this starts a process that could lead to Britain withdrawing from the European Union.

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Did Summers spend so much time in the hedge fund world and with institutional investors like sovereign wealth funds, and other large investors, that he started to think like them, asks a Professor of Public Policy at UCLA. Is therre a conflict of interest here in that Summers is advising Obama on issues like hedge fund regulation when his most recent position was managing director of a large hedge fund D.E. Shaw, where he made $5.2 million last year. At the G20 meeting Obama's position on hedge fund regulation was one of the critical differences between him and the Europeans who wanted strict comprehensive regulation.

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Starting January 1, 2011, new rules governing European finance will be put in place. Three new European regulators will exercize control over large parts of Europe's financial markets. The new bodies take over from three committees that earlier co-ordinated the supervison of European banks, insurers, pension funds, and securities. Credit derivatives and ratings agencies will be brought under regulation. The new rules centralize authority that was exercized by national supervisors -or as in some cases as in Ireland not exercized at all. Considerable power will be exercized by the new agencies. The European Securities and Markets Authority (ESMA) will directly supervise ratings agencies.

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Beatrice Weder di Mauro of the German Council of Economic Experts points to the needs for beeter incentives for regulators to ensure their is no local regulatory capture and to ensure that regulators are doing their job well. One is to increase the pay of central bankers and bank supervisors and to make the job nearly as attractive as working in the private sector. The other is to give more authority to supranational institutions to regulate. She points out that competition has been kept in the Eu's domain and this has helped ensure consistency in the way bank bail outs are being handled in the European countries. The same needs to happen in Europe for banking reguolation and oversight. She points out the flaw in the argument for national regulators on the basis that the money to bailouts comes locally. a substantial part of the bailouts come in the form of regulatory forbearance, enabling banks to make higher profits because of reduced competition, and implicit support from central banks. And she adds that the temptation to solve the future crises by these "off balance sheet methods" is greater now because no one wants to go to parliament or congress to get bail out money for banking instituitons....

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This report in The Times gives an extraordinary look at the man who is prime minister Boris Johnson's key adviser, as chief executive, to get Brexit done or take Britain into a general election. Dominic Cummings, 47 years, was the key strategist for Leave in the first Brexit referendum. He is somewhat of an individual who breaks all conventions and relishes the prospect of doing so. The Times says he has thrown bombs at the establishment including Blair and Cameron for 20 years. He has contempt for the Cabinet Office, Downing Street, the Treasury, and in his view the officials have a misplaced confidence and are not competent. Mr. Cummings is played by Cumberbatch in British Television Channel 4's Brexit: The Uncivil War, which is how Britons know him. In his view one needs to dismantle the existing physical infrastructure of government as a reform priority, says The Times. He has his own reasons having had his confrontations with British ministry officials who repeatedly and often incorrectly cited EU regulations as obstruction for much of what Dominic Cummings wanted to do as Adviser to Michael Gove in the Education ministry. His early beginnings at University mentored by a professor who was a serious opponent of Britain joining the European Union also influenced Cummings.  ...

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The June 28, 2012 EU deal is expected to increase the role of the European Central Bank in addressing the eurozone crisis with powers of banking regulation and supervision and direct capital aid to Spanish banks. Mario Draghi's experience with the Bank of Italy and in dealing with different Italian governments has prepared him for the difficult task of making sure governments in the eurozone make responsible decisions for eurozone finances.

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This countercyclical regulation advocated by Charles Goodhart and others including some central bankershas been discussed a lot at USA Federal Reserve Bank conferences. But though some central banks have tried to do this it has not ocurred in the US, UK and most European countries.

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Even though U.S. president Trump has singled out countries such as Mexico, South Korea and China for trade practices, the U.S. today faces stronger competition in trade from Germany. The trade surplus with Germany for 2016 was $297 billion for Germany compared to $245 billion for China, according to Ifo economic institute. China's trade surplus according to the World Bank was down from 10% of gross domestic product or GDP in 2007 to 3% in 2016, while Germany's has gone up to 8.5%. The Chinese currency is seen as not being undervalued by some experts, while the euro has lost a quarter of its value in the last 3 years, giving Geman exporters an edge. The U.S. also competes with Germany in nine of the 10 export categories such as machinery and electronic equipment, according to the Peterson Institute. Then why is the focus under U.S. president Trump not including Germany? One reason is that China's products have put a downward pressure on U.S. manufacturing wages, and the the speed with the Chinese manufacturing has grown in certain industries. Germany has very few of the manufacturing subsidies that China provides to its industries. And the depreciation in the euro is not favored by the German government as it opposes the policies of the European Central Bank. Germany also has a higher propensity to save about 10% of GDP compared to about 3% for the U.S., according to OECD. As a result Germany is accumulating foreign assets at a faster rate than any other nation, while the U.S. is borrowing capital from overseas. Ways to change this are minimum wage regulations introduced by the government, but larger measures such as increasing government investment in the economy are not supported as the country prepares for the future with an aging population.   ...

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Italy's prime minister, Mario Monti, a senior EU official before becoming prime minister, has the credibility and credentials to bring the French and German sides together on a new plan forward for the European Union, says Steven Pearlstein of the Washington Post. In this report from Rome, where leaders of Italy, Spain, France and Germany are meeting to discuss solutions Pearlstein describes the solutions Monti is putting forward. The European Investment Fund would be built up so that it has funding of about $175 billion or 1% of Europe's GDP to finance truly productivity and growth enhancing projects of innovative small and medium sized business in transportation, energy, education and environmental sectors. These companies have suffered shortages of capital as banks pulled bank from lending. It is the inadequate private investment that is causing the greatest damage in this crisis and $175 billion is at the low end of the amount needed in this crisis. Other steps Monti is pushing forward- for immediate steps to tackle the crisis deposit insurance to prevent a run on banks is essential for European banks. This would come with a eurozone regulatory authority that would have the powers to regulate European banks. The European Financial Stability Facility would be the "sovereign buyer of last resort," under Monti's proposal. Eurobonds come up as a key part of the solution. This is not because German and French taxpayers would be required to finance economies of Spain and Italy. As was shown by the U.S. Troubled Asset Relief Program (TARP) a well designed program could pay for itself. This would include the EU financial authority taking up stakes in the banks getting help and closing banks that are insolvent. The key point is that if properly executed and executed in a timely and appropriate way this does not have to cost French and German taxpayers- the important thing being to support the eurozone economies before the situation deteriorates. Borrowing at 6% for Spain and Italy will only put the situation out of control as deficits rise rapidly. The concessions for tighter regulation of European banking systems, reducing risk in banking, setting up adequate reserves, closing poorly run banks, and ceding powers to a European Financial Authority that can make the final decisions, are the steps that would have to go with these arrangements. Sound financial management requires that the kind of banking risks taken in the speculative bubbles in Spain, the lack of transparency and credibility in banking estimates of bad loans in the system, and the glossing over the problems at Bankia, would have to be addressed in solutions through regulation by a credible European Financial Authority to convince skeptical German public opinion that financial accounts are conducted in a proper manner....

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German chancellor, Angela Merkel, speaking to the German parliament, the Bundestag, in Berlin, on December 2, 2011. She talked about the need for early agreement on changes in treaties that would place strict controls on budgets. Merkel said she sees the process of resolving the debt crisis as a long one, saying "this process will take years." At the same time she continued to emphasize the future of Germany in the European Union- "The future of the euro is inseparable from European unity. The journey before us is long and will be anything but easy. But I am convinced it is the right path. It is the right path to take to reach our common goal: a strong Germany in a strong European Union that will benefit the people in Germany, in Europe." Merkel compared the process to a marathon run, with efforts being particularly difficult at the 35 kilometre mark, making it helpful to know this at the beginning of the race. She ruled out common eurozone bonds as "unthinkable." Instead of agreements, Merkel expressed the need for "legally binding regulations," saying this was the time to "fix the mistakes of construction" by founders of the eurozone....

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Mario Draghi, president of the European Central Bank appears before the Economic and Monetary Affairs Committee of the European Parliament. He said the ECB had resumed normal lending to Greece's four major banks after the 18 billion euro recapitalization of the Greek banks by the government of Greece using bailout funds assigned for this purpose. Draghi tod the parliament: "The ECB will continue lending to solvent banks. We will avoid bank runs on solvent banks." At the same time he asked the EU to setup a deposit insurance fund for European banks and regulation of banks at the European level. On the actions taken by European leaders Draghi had strong criticism for the slow response always one step behind action needed and a day late, saying: "The next step is for our leaders to clarify what is the vision for a certain number of years from now. The sooner this has been specified the better. Dispel this fog." He described the configuration for the eurozone of the last ten years as unsustainable unless steps are taken, with leaders having to decide quickly what kind of eurozone they want to see. On Bankia's recapitalization by the Spanish government, Draghi said everybody winds up doing the right thing after many delays at the highest possible cost and price. It showed the need for centralization of supervision at the Europe wide level because Spain took too long to tackle the bad real estate loans at Bankia....

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The chairman of the high level group on Financial Supervision for the EU says central banks neglected their roles as guardians of financial stability. He is proposing asystemic-risks council with central bankers from all over Europe as members , and with the clear intent of overseeing financial stability. Jacques Larsiere's plan is part of the overhaul of the regulatory framework for the EU. It has been endorsed by the European Commission.

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The Fed announced that it will review compensation policies of 28 of the large complex banking organizations in the USA. The review will be an horizontal one that compares them to each other. The other significant move is that the Fed wants to see employees who take greater risks and use large amounts of borrowed money, to receive negative points in evaluating how well they have done, and consequently to be compensated less than other employees who earn money for banking firms while controlling the risks associated with transactions. This ties in with the discussions at the G-20 meeting in Pittsburgh, where the Europeans pushed for tighter regulation on bonuses and pay, to control the excessive risktaking of banking firms. This is because the prevailing culture in global financial institutions is a high risk high return culture, which ignores the social consequences of bad decisions. There is no cost to individuals taking the risks on other people's money, and regulations discouraging risk are not in place. The question remains, is this an adequate response to prevent future crises, or too little too late? If the banking community does not see it this way, and financial regulation is watered down in Congress- see the links to this- then it will much like Don Quixote swinging at windmills. In this sense the title of this piece is a misnomer, as the Fed has not hit banks with sweeping pay limits. It only said it would review pay practices. It is jawboning of the mild kind to show the public something is done. See Paul Volcker's point that pay practices would adjust and desirable goal of less risktaking and reasonable salaries would be achieved by separating deposit taking banks from banks engaged in trading activities. Similiarly, the governor of the Bank of England, Mervyn King, made the point recently that the biggest banks should be broken up. That is supported by the intuitive sense of experts that banks engaged with depositors should be engaged in the social functions of society, lending and supporting economic activity, and the trading desks of investment banks should operate entirely separately from this. One should be insulated from the other. In this sense there is a bit of evasion in these actions. A Wall Street capture of regulatory activity continues, of regulators and senior economic advisors in the administration, as the coziness between the two lingers on from a previous era of deregulation. This has the potential to cost the country and the global economy dearly in another crisis, and the jobless and young jobless people especially. In this economy both in Europe and the USA, the jobless young have been left with the least hope. ...

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The failure of regulators is one of the features of the last decade leading to the losses of capital that could have been better allocated to infrastructure, health education and paying down debt in the U.S. and Europe. This WSJ report says fintech or financial technology companies faced little regulation or critical oversight from regulators as regulators tried to foster growth in that sector. This puts more burden on shareholders to be vigilant, it says. Wirecard went into insolvency with huge losses and debt and accounts in the Philippines for over a billion dollars that were later proved not to exist. The astonishing aspect of the Wirecard scandal is the way German regulators not only did not investigate but pushed back against critics of the company's finances, that there was something fishy about the finances. Wirecard was established in 1999, and is described as a slow-burning story since 2016 when the stock price took off for a wild ride. This report says government regulators are relaxing important rules in the hope of coming up with a winner- this is proving to be a dangerous exercize and an exercize in folly, as it leads to losses of capital with no one taking responsibility among government officials or regulators. In the case of Wirecard the German officials even filed a criminal complaint against accusers, and banned short selling. of stock.    British and European financial watchdogs are acting as cheerleaders and watchdogs at the same time says the WSJ. Watch out it says when regulators play this kind of double role. During the financial crisis of 2008 the revolving door between companies being regulated and the regulatory agencies themselves was a defining feature of that period leading to huge losses of capital. Today this has taken on a new  and additional dimension, each time making things worse, even as infrastructure investments, investments in health and education are being deprived of capital because they benefit the public, and are not a benefit to small groups of well connected people willing to flagrantly conduct activities such as setting up accounts that do not exist for over a billion dollars.   ...