The IMF has significantly lowered economic growth projections for 2012 and 2013. The IMF also predicts a mild recession for Europe in 2012 with the Euro Zone GDP projected to be -0.5% for this year. Below is the IMF chart for new economic output projections.

Once again the Obama administration refuses to label China a currency manipulator. This is when the U.S.-China trade deficit looks on target to hit $300 billion and China just slapped the United States with a unjustified 22% additional tariff on American SUVs.

In the U.S. Treasury's Semi-Annual Report to Congress on International Economic and Exchange Rate Policies, team Geithner and the Obama administration literally refuse to label China a currency manipulator in spite of overwhelming evidence.

The Report highlights the need for greater exchange rate flexibility, most notably by China, but also in other major economies. Based on the ongoing appreciation of the RMB against the dollar since June 2010, the decline in China's current account surplus, and China's official commitments at the G-20, APEC, and the U.S.-China Strategic and Economic Dialogue (S&ED) that it will move more rapidly toward exchange rate flexibility, Treasury has concluded that the standards identified in Section 3004 of the Act during the period covered in this Report have not been met with respect to China. Nonetheless, the movement of the RMB to date is insufficient. Treasury will closely monitor the pace of RMB appreciation and press for policy changes that yield greater exchange rate flexibility, a level playing field, and a sustained shift to domestic demand-led growth.

China just slapped a huge 22% tariff on some U.S. auto imports. Reuters:

China will impose punitive duties of up to 22 percent on large cars and SUVs exported from the United States, China's Commerce Ministry said on Wednesday, the latest in a series of trade disputes between the world's two largest economies.

Why? Because China wants to develop it's own domestic luxury SUV industry. China already imposes an outrageous 25% tariff on U.S. truck imports. This makes the total tariffs on SUVs 47%!

While the New York Times claims China is skimpy sales, we beg to differ. GM sells more autos in China than in the United States.

What this really means is GM and other SUV U.S. manufacturers will move production offshore....to China. In other words, to sell SUVs, trucks in China, this outrageous tariff will force U.S. manufacturers to offshore outsource even more jobs simply to continue selling their products in that country and gain access to China's markets.

China's claim the U.S. is dumping SUVs in China is absolutely pure fiction. As it is, a 25% tariff on trucks is obscene considering China is killing this country with imports and the second largest economy in the world.

Here comes S&P, throwing their opinions around with threats of a credit downgrade. I guess nation-states now know how Americans feel, being FICO scored over whether they shop at Walmart, literally being denied a job.

By now you're heard S&P has whipped out their weapons of mass destruction on 15 European countries. It's like the entire Eurozone just had war declared on them by Standard and Poors.

It's quite the bloodbath with Germany, France, Austria, Belgium, Ireland, Italy, Spain, Portugal, The Netherlands, Slovenia, Estonia, Malta, Slovakia, and even the frugal, we actually paid our WWII debt Finland being place on negative credit watches. A negative credit watch is a flip of a coin chance of being downgraded in the next 90 days.

The two other Eurozone countries, Cyprus and Greece are already downgraded, hammered by S&P.

What makes this political, is S&P has some policy prescriptions, they want to see, a new fiscal compact, or a fiscal union, i.e. Euro bonds. S&P has further requirements to come out from under their sovereign credit ratings thumb:

Japan intervened in their foreign exchange rates after the yen hit a post WWII high against the dollar.

The dollar spiked after the intervention as much as 4 percent past 79 yen from around 75.65 yen. The dollar touched a record low of 75.31 yen earlier on Monday.

Finance Minister Jun Azumi said Tokyo stepped into the market for the second time in less than three months on its own at 10:25 a.m. local time (0125 GMT) and would continue to intervene until it was satisfied with the results.

The Yen is considered safe haven and there have been other recent interventions:

Monday’s maneuver was the fourth time in just over a year that Japan has intervened to stem the yen’s rise.

The BBC reports the Yen dropped 5% to the dollar after the move. One must wonder why is such speculation going on with the Yen, which is considered save haven. It seems in spite of the big Greek debt haircut and U.S. Q3 GDP of 2.5%., markets are leery and believe little has be resolved.

It seems speculators are ganging up on the yen in spite of Japan's quantitative easing:

We have another Eurozone bail out. The Euro Summit has released a 15 page statement (pdf) overviewing the agreement. The plan was ratified by all 17 Member States of the euro area.

First, there is a haircut on Greek debt, which while pretending to be voluntary, the volunteer or else threat behind it would allow a complete Greek default, where bond holders would get nothing and banks would probably be ruined.

We invite Greece, private investors and all parties concerned to develop a voluntary bond exchange with a nominal discount of 50% on notional Greek debt held by private investors. The Euro zone Member States would contribute to the PSI package up to 30 bn euro.

The plan is to reduce Greek debt to 120% of GDP by 2020 and is about €100 billion reduction with yet another €100 billion in additional aid.

Who rules the markets? Not short sellers says France, Spain, Italy and Belgium. They just banned short sales wreaking havoc on their markets, for some banks. Echos of 2008 now abound. In particular, short sellers are focused in on Société Générale, which dropped 20%, betting it might implode.

France, Spain, Italy and Belgium will impose bans on short-selling from today to stabilize markets after European banks including Societe Generale SA hit their lowest level since the credit crisis.

While short-selling can be a valid trading strategy, when used in combination with spreading false market rumors this is clearly abusive. -- European Securities and Markets Authority

Perhaps the short selling ban impending move had much more to do with today's stock market pop up than erroneous claims that a little tick down in initial unemployment claims caused a 423 point Dow increase.

Zerohedge, cynically notes the ban on some banks can be easily circumvents through options puts and calls.

August 26 just went supernova, as this is the day the short selling ban expires, the BEA reports the second, sub 1% GDP revision, and Bernanke presents his 2011 Jackson Hole keynote speech.

Greece gets a new €109 billion bail out with €37 billion coming from the private sector. Al-Jazeera does a good job in the below video report overviewing the bail out terms. One of the goals was to stop contagion.

Eight banks out of 90 failed the European Stress Tests, five in Spain, two in Greece and one in Austria. Sixteen banks are close to failing, defined as below the 5% capital ratios for the next two years. Another German bank would have failed, but they refused to disclose their data.

Banks were allowed to cheat and raise capital months before the actual test:

For the 2011 exercise, the EBA allowed specific capital increases in the first four months of 2011 to be considered in the results. Banks were therefore incentivised to strengthen their capital positions ahead of the stress test.

In spite of raising €50 billion in 2011 before the tests, 8 banks failed anyway with 16 being damn close to failing. Without the raising of additional capital cheat, 20 banks would have failed. The test involved a lowering by 4% of GDP, but no exposure to sovereign default. From the EBA press release:

China's trade surplus ballooned:

Exports hit a record high of $162 billion in June, while imports for the month were $139.7 billion. That left the country with a trade surplus of $22.3 billion in June, compared with $13.1 billion in May.

What is more frightening is how Reuters words their report. Because China once again dominates trade with exports, Reuters tries to claim their economy is softening. This is because China's imports were way below expectations, but imports do not imply weak China domestic consumer demand. Why? Unlike the U.S., Consumer spending is only about 35% of China's GDP. They save and invest, not spend money buying imports.

Therefore, a slowing of imports does not mean China's economy is slowing as it would the United States, if anyone bothered to read the basic GDP equation. China's GDP was 9.7% in Q1 2011.