The need to fulfill promises of increased aid for Africa, and a general agreement between the United States and Russia on an approach to Iran's nuclear program took center stage as leaders from the Group of Eight industrial nations met Monday in Japan, The Associated Press reported.

President Bush, attending his last summit as a sitting U.S. president, underscored the importance of providing aid for Africa, calling on wealthy nations to provide mosquito netting and other aid to prevent needless deaths, the AP reported.

Basic items - - even equipment as basic as mosquito netting - - can reduce mortality rates in sections of Africa. Mosquito netting prevents children and others from dieing of bites from disease-carrying mosquitoes.

In 2005 the G-8 pledged to increase global aid to $130 billion, and increase assistance to Africa to $50 billion. ONE, a nonpartisan group working to end extreme poverty, predicted that the U.S. and the United Kingdom will meet their commitments, while France, Italy, Germany and Canada are off the mark, Bloomberg News reported Monday.

Increased global food aid likely

Economist Glen Langan, whose specializations include agricultural economics, said increased aid for food and agricultural development will likely be announced by G-8 leaders at the summit, or soon thereafter, due to the rising cost of food's impact on poorer nations. "The aid will be targeted to meeting basic needs first, but with an eye toward directing some funds to self-sustaining agriculture," Langan said, adding that Africa "has the potential to achieve food production gains greater than South America."

European business confidence declined more than forecast, the European Commission announced Friday -- an indication slowing euro-zone economy and rising inflation are beginning to lower business executives' expectations for the immediate quarters ahead.

The EC's sentiment index fell to 94.9 in May from 97.6 in April. It was the index's lowest reading since May 2005, Bloomberg News reported Friday.

Europe's major stock markets closed mixed Friday on the news. London's FTSE gained 11.70 points to 5529.90, Germany's DAX decline 37.69 to 6,421.91, and France's CAC 40 dropped 28.87 to 4,397.32.

Europe's execs: in defensive mode

London-based economist Mark Chandler told BloggingStocks that the slowdown in the United States, record oil prices, and rising inflation on the continent have but many of Europe's executives in defensive mode.

"Maybe the biggest concern is the impact of the slowdown in America and its affect on trade. Executives here are really concerned about a possible deeper U.S. recession dragging Europe lower. Their concern is well-rooted, because there's just not enough Asia demand to compensate," Chandler said. "Oil prices hitting $140 are another negative. It's not going to hurt the U.K. as much, but Europe could really be hurt by consumers cutting back spending on retail goods.

Barclays is expected to receive a $927 million capital investment from Japan's Sumitomo Mitsui Financial Group as part of a plan to restore depleted capital, Bloomberg News reported Friday.

Barclays (NYSE: BCS), the United Kingdom's fourth largest bank, has been hurt by write-downs stemming from the end of the U.S. housing boom and subsequent mortgage and related asset-backed bond defaults.

Barclays' shares fell $1.29 to $24.28 on the news in Friday morning trading.

London-based economist Mark Chandler told BloggingStocks there are three positives stemming from the announcement. First, banking regulators in the U.K. will view it as "a coming to terms, something markets around the globe will also appreciate." Second, it demonstrates that investors "are still willing to jump into the pool and commit capital for less than ideal ventures, so you can see how the markets will look favorably on that." Chandler added that he does not have a rating on nor own shares in Barclays.

Japan's banks: capital to deploy

Finally, Mitsui's commitment to a bank abroad indicates that Japanese banks have repaired the worst of their balance sheets. "A Japanese bank would not commit funds abroad if their balance sheet was not solid," Chandler said. "Japan's banks have rebuilt their businesses, and are in better shape than they were a decade ago. Unfortunately, I'm afraid it looks like the world's bank concerns have shifted to the U.S. and U.K. for this decade."

German Chancellor Angela Merkel said continental Europe should take the lead in financial market reform because the "Anglo-Saxon" model of regulation had failed, The Financial Times reported Wednesday.

Merkel, speaking before her meeting with U.S. President Bush and ahead of next month's G-8 leading industrialized nations economic summit, called for a European credit ratings agency to counter-balance Moody's and Standard & Poor's (NYSE: MHP), adding that despite the progress Europe has made with the euro, the financial regulatory framework is still "a strongly Anglo-Saxon dominated system."

Reforms sought by Berlin will include a ban on agency ratings for products they helped to create, new capital adequacy ratios for banks, and the prevention of bank sale of products they don't understand.

London-based economist Mark Chandler told BloggingStocks Wednesday he agrees with Merkel on the need for both financial market reform and a Europe-based counterweight to complement the largely U.S.-based regulatory framework, but is slightly surprised by Merkel's rhetoric.

There may be a glimmer of progress regarding oil policy, and by extension, oil prices. To be sure, it's nothing likely to immediately relieve the pain at the pump that American and European motorists are feeling, but it could point the way toward a moderation in price increases.

United Kingdom Prime Minister Gordon Brown, warning that the world is facing an oil shock, has proposed that governments around the world take coordinated action to mitigate price increases, The New York Times reported. Also, on Monday, Saudi Arabia's oil minister Ali al-Naimi called for a meeting of oil producing and consuming nations to discuss how to deal with high oil prices, Bloomberg News reported.

Oil Monday closed down $4.19 to $134.45 per barrel. Still, oil is up more than 100% in the past year, and more than 400% since 2000.

American drivers, weighed-down by record-high gasoline prices, may have an unlikely ally as they seek policy responses to address the nation's current energy problems. The Associated Press reports that European drivers are joining them in fighting for lower energy costs

Drivers of private and commercial vehicles have staged protests and related demonstrations in France, Germany, Spain, and Portugal, among other European countries, as drivers deal with prices that have rocketed to the $8-10 per gallon range. In France, last week, more than 200 farmers and truck drivers blocked a fuel depot in Villette-de-Vienne, The New York Times reported.

The four-year rise in oil prices that has reduced U.S. disposable income has not exempted Europe. Given higher per gallon taxes across much of the continent, Europe may become the first major economic region in the world to see an average $10 per gallon gasoline price, if current trends continue. Taxes in Europe comprise 40-60% of the price of a gallon of gasoline, according to U.S. Energy Information Administration data; in the United States taxes account for about 12% of gasoline's retail price.

The venerable George Bernard Shaw once observed that the United States and Britain are two nations separated by a common language.

Well, in the initial decade of the globalization era, one could argue that the United States and Britain are two nations united by a common housing slump.

That's because U.K. home prices plunged an alarming 2.5% in May 2008, Nationwide Building Society announced Thursday -- the largest drop since 1991.

The U.K.'s median home price declined to173,583 pounds or $342,774. Prices are now down 4.4% in the past 12 months, according to Nationwide, the U.K.'s fourth-largest lender. Further, property values have declined for seven straight months, the longest consecutive drop since 1992.

U.K. housing slump mirroring U.S.?

London-based economist Mark Chandler told BloggingStocks Thursday there are new data points each week that suggest that those who felt the United Kingdom's housing sector would fare better than the U.S.'s during the economic downturn, are wrong.

U.K. home repossession claims by mortgage lenders increased 16% from a year ago to their highest level since the early 1990s, Bloomberg News reported Friday.

The U.K.'s Ministry of Justice said possession claims, the first step in the foreclosure process, increased to 38,688 in Q1 2008, from 27,530 in Q1 2007, Bloomberg News reported.

Anglo-American housing slump

London-based economist Mark Chandler told BloggingStocks Friday the large foreclosure rise indicates that the air is easing out of the housing balloon, and that the housing correction that began in the United States, is "clearly washing shore in the U.K."

For once, the oil market responded relatively calmly. At least for today.

Oil briefly rose to a record-high $119.93 per barrel on word of a strike-related closed pipeline by BP, before settling back to close Monday up 18 cents to $118.70.

Earlier in the day oil futures watchers -- and anyone else who uses oil or gasoline -- had feared the worst after Bloomberg News reported early Monday that BP plc (ADR) (NYSE: BP) closed the Forties Pipeline System, which carries 40% of the U.K.'s oil production, after a strike at the Grangemouth refinery cut power supplies.

Economist Peter Dawson said despite the size of the BP production disruption, the oil markets interpreted the U.K. shutdown as "a localized event, at least for Monday."

OPEC Monday rejected calls from the United Kingdom and Japan to increase production, and reiterated that the oil markets are well-supplied, Bloomberg News reported.

Oil briefly rose to a new high at $117.60 per barrel Monday morning. However, it should be noted that oil spiked higher on a report of a possible Nigeria oil flow disruption due to a damage oil pipe, Reuters said. Oil soon gave back its gains to trade 10 cents lower at $116.59.

OPEC Secretary-General Abadalla el-Badri said in Rome that there is no shortage of oil, and blamed the record-high plus-$115 per barrel oil prices on the weak dollar and speculators, according to Bloomberg.

Because oil is priced in dollars, oil tends to rise when the dollar falls, as producers / traders bid the price up in an effort to preserve dollar-denominated purchasing power.

Despite robust oil demand growth in emerging markets, particularly in China and India, OPEC has repeatedly argued that the weak dollar, driven by the U.S. trade deficit and federal budget deficit, and 'speculators' seeking a return on equity via short-term trade profits, are primarily responsible for oil's record rise. However, OPEC has never stated what percentage they think these factors account for in the present oil price.

Those business executives, economists, and investors/traders who had hoped G-7 economic leaders meeting in Washington over the weekend would take efforts to stem the U.S. dollar's decline may be left feeling slightly disappointed.

Finance chiefs from the G-7 notched-up their rhetoric on the dollar, but provided little substantial evidence they'll take actions -- monetary or fiscal -- to stem the dollar's slide, Bloomberg News reported Sunday night.

"We continue to monitor exchange markets closely, and cooperate as appropriate,'' the G-7 said, Bloomberg News reported, with U.S. Treasury Secretary Henry Paulson adding that the G-7 statement on currencies "reflects market developments and changes in the markets." The G-7 then pledged to implement further monetary and fiscal policies "as appropriate,'' without providing specific details.

No substantive action on dollar

Economist Peter Dawson told BloggingStocks Monday the G-7 statement by the United States, the United Kingdom, Germany, Japan, France, Italy, and Canada amounted to a statement against currency rate volatility, not a substantive effort to bolster the dollar. He added that G-7 representatives, in his interpretation, appeared more concerned about maintaining financial market liquidity due to the ongoing credit slump, than about the dollar's value.

Every economic problem or setback seeks a scapegoat -- someone decision makers, pundits, and others can blame (unjustifiably) for a turn of events that's preferred by virtually no one.

The criticism is parsimonious, unfair, and injurious -- but that hasn't seemed to stop practitioners from venturing forth with charges that are often tenuous, if not absurd.

Scapegoat-of-the-moment

The ever-incisive FT columnist Martin Wolf points out that former U.S. Federal Reserve Chairman Alan Greenspan is being cast as 'the villain' for the housing bubble, its bursting, and consequent impact on credit/bond markets and credit availability. All of it is unfair, Wolf notes, and he provides ample evidence to support his point.

Chiefly: Greenspan did not create low, long-term interest rates. The low, long-term rates were caused primarily by a global savings glut, Wolf said. (See: China's savings rate.) The Fed had little control over this -- Greenspan even creatively and accurately referred to the Fed's inability to force long-term rates higher despite the Fed's best effort: he called it "a conundrum." Given the surplus savings sloshing around in global markets at that time, among other factors, those low rates would have occurred regardless of who was Fed chairman.

The European Central Bank Thursday kept its key, short-term interest rate -- the refinanced rate -- the same at 4%, the bank announced.

The ECB said its most recent data confirmed the existence of strong, short-term upward pressure on inflation. The bank went on to say that Europe is "experiencing a rather protracted period of temporarily high annual rates of inflation, resulting mainly from increases in energy and food prices." Hence, upside risks to the price stability remain, the ECB added, necessitating the stand-pat monetary stance.

Trichet is resolute

In general, economists and analysts had expected the stand-pat stance, given the acceleration of inflation in the euro-zone. ECB President Jean-Claude Trichet indicated as much in his post-ECB meeting news conference.

"We believe that the current monetary policy stance will contribute'' to bringing inflation under control, Trichet said, according to Bloomberg News. "The firm anchoring of medium- to longer-term inflation expectations is of the highest priority.''

Further, for at least the time being, the ECB does not appear to be concerned about the euro's steady, two-year rise versus the dollar. The euro rose to a record $1.5913 versus the dollar Thursday morning before paring gains to trade around $1.5830 Thursday at mid-day.

The euro is up about 33% versus the dollar since January 2006. A stronger euro makes European exports harder to sell because it raises the cost of exports as European producers increase the price of their goods to compensate for foreign currency depreciation. Some European companies, commercial aerospace giant Airbus among them, have complained that the euro's rise versus the dollar is beginning to affect their competitiveness.

U.K. consumer confidence fell to its lowest level in almost four years in March 2008, as the housing downturn continued to weigh on consumer sentiment, Bloomberg News reported Wednesday.

Britain's Nationwide Building Society's index of sentiment declined one point to 77, its lowest level since records started in May 2004. The result is based on a survey of 1,204 people conducted by Taylor Nelson Sofres from February 18 to March 20, 2008.

U.K. housing sector weighs

Economist Mark Chandler, based in London, told BloggingStocks Wednesday the fall in housing prices is beginning to weigh on U.K. consumer confidence. The average home price in the United Kingdom fell 2.5% in March 2008 to 191,566 pounds or $379,000, according to a survey by mortgage lender HBOS Plc., according to Bloomberg.

Financial eras, like social periods, are often defined by moments or epiphanies when decision makers and/or citizens realized that a serious flaw/mistake/problem was occurring through time, and across space, and needed to be corrected.

The ever-incisive FT columnist and economist Martin Wolf describes one contemporary concern that's likely to be addressed: the failure to align the interests of managers with those of investors.

My BloggingStocks colleagues Peter Cohan and Zac Bissonnette have also written on the subject on several occasions in this space, and now the FT's Wolf has assembled additional data that may very well lead to public policy changes, both in Wolf's United Kingdom and in the United States.