Atlantic Council

First it was €40 billion.  Then it was €25 billion.  Now it may be as high as €50 ($68.1) billion.  The changes to Germany's proposed economic stimulus package rival those of TARP.  The plan, which will reportedly focus on schools and public works, remains stalled by conflicting domestic political debates over tax cuts within Merkel's governing coalition. 

It is common wisdom that the incoming administration cannot possibly increase government tax revenues in these horrific economic conditions.  However, this common wisdom is simply wrong.  There is a major new source of revenue available to the government – the shadow financial system. 

The euro turns ten with the new year and the tributes are rolling out.    An AP "Euro at a Glance" piece shows the vital statistics: • The euro zone currently encompasses 15 countries with a combined population of 320 million and a 16.4 percent share of world gross domestic product.

Germany's fiscal stimulus package will be smaller than earlier announced.  Apparently, Spiegel's article from last week touting the availability of €40 ($56) billion in funds was incorrect; the figure is actually closer to €25 ($35) billion. 

One unexpected byproduct of the global financial crisis has been a boom for Islamic banks.  AP business writer Emma Vandore explains: France is becoming the latest country to woo Islamic banks, which avoided much of the damage from the subprime mortgage crisis by following strict principles laid out in the Quran — as the global financial crisis broadens the appeal of Islamic finance. 

Moscow and Kiev are once again on a collision course over gas supplies. WaPo: Russia and Ukraine appear to be heading for a new collision over natural gas that could disrupt supplies to Europe this winter, with Russia threatening to stop selling the fuel to Ukraine on Jan. 1 if it does not repay more than $2 billion in debt.

Following weeks of disagreement with Brussels, and France and the UK in particular, the German government has agreed to a second stimulus package of nearly €40 ($55.5) billion.  Merkel faced a strong backlash throughout Europe in recent weeks from critics who felt the government was not responding adequately to Germany's economic downturn.  Her refusal to spend more on the crisis has also cost her domestic popularity. 

Poland has drastically cut the number of workers eligible for early retirement, AP reports. Under current law, workers in some professions can retire and receive a state pension after only 15 years of employment.

"We are flying blind," the FT's editors declared after the Fed cut its federal-funds rate to a range of 0 to 0.25 percent on Tuesday.  Although Bernanke had indicated he was willing to employ unorthodox measures to lift the U.S. economy out of recession, few analysts expected such a dramatic cut. 

NPR's Rob Gifford asks, "Is Britain's Labour Party Back To Pre-Blair Ways?" After Tony Blair was elected British Prime Minister in 1997, he blurred the line between the Labour Party and the usual opponent, the Conservative Party. But the global financial crisis has forced Prime Minister Gordon Brown to take the Labour Party back to a platform of nationalized banks, government assistance for industry and massive public borrowing.