China has enjoyed surging economic growth, even when the developed world was suffering through the recession. The country’s blistering expansion should continue: Goldman Sachs chief economist Jim O’Neill believes China’s economy will be larger than the U.S.’ in 2027.

Japan is not faring as well. The nation’s GDP expanded by just 0.4 percent, on an annualized basis, in the second quarter – much slower than the 4.4 percent annualized growth it posted in the first quarter.

Ironically, though, currency investors have looked favorably on the yen of late. It surged to 15-year highs against the dollar last week – investors lost interest in the greenback because of the U.S.’ economic slowdown – and it has risen so fast that Japanese exporters are asking finance officials to intervene in the currency markets.

There is a precedent for currency intervention: The Swiss National Bank bought euros during the second quarter when the Swiss franc was rising quickly. Stronger currencies hurt companies by reducing their overseas revenue; by intervening, the SNB helped Swiss export firms like Swatch.

Japan has a much larger export sector than Switzerland, though, and currency intervention may be more acutely needed in Japan than it was in Switzerland. Already, Japanese companies are feeling the pain: Their share prices slumped last week on concerns about the stronger yen’s impact on revenue.

But Finance Minister Yoshihiko Noda indicated that intervention wouldn’t occur in the near-term. "We will monitor economic conditions carefully and respond appropriately," he said August 12.

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The automaker, which exited bankruptcy just over a year ago, reported this week that it enjoyed its second straight quarter of profitability. In the second quarter, GM earned $1.3 billion and generated $2.8 billion in free cash flow.

While its sustained profitability could make a near-term initial public offering more likely, the company also surprised the markets by revealing that its chief executive was heading for the exit. Edward Whitacre, brought on last year to lead GM through the months immediately following its emergence from bankruptcy, said he was departing.

"My goal in coming to General Motors," Whitacre said, "was to help restore profitability, build a strong market position and position this iconic company for success. We are clearly on that path."

The U.S. Treasury, which owns more than 60 percent of GM, emphasized that it played no role in the CEO’s departure. Reuters reports that Treasury spokesman Mark Paustenbach said the company’s decision was made by GM’s board of directors.

The government has also sought to distance itself from the IPO process, in which it has a substantial stake. In June, the Treasury indicated that the timing of an IPO would be determined at the company’s discretion.

An offering could come as soon as Friday, the New York Times says, citing people familiar with the matter. An IPO for the automaker would raise up to $16 billion, the Sydney Morning Herald reports, making it the second-largest in U.S. history. Visa raised $19.7 billion when it went public in 2008.

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According to documents released by the Committee on Standards of Official Conduct, Representative Waters – a Democrat – arranged a meeting between officials of OneUnited and former Treasury secretary Hank Paulson. The day after the meeting, Waters recognized the potential conflict of interest that was present and determined that she would not advocate in the bank’s favor. But her chief of staff continued to do so – and OneUnited secured $17 million in private financing and $13 million in Treasury assistance.

Waters’ "actions and inactions," the ethics panel said, created the appearance of taking official action for personal benefit; were incompatible with the House rule regarding compensation received while in office; and were tantamount to dispensing special favors or privileges.

While the outcome of the Waters case has yet to be determined – she requested that a trial be held before the elections in November – it could present challenges for Democrats fighting to maintain control of Congress. The House is expected to be the main battleground in the midterm elections, and Democrats risk losing control of the legislative body, according to the latest polls.

A Fox News poll conducted in late July found that Republican candidates held an 11-percentage-point advantage over their Democratic opponents.

And the Waters investigation comes just after another Democrat, Charles Rangel, was charged with violating ethics rules. Rangel said Monday that he expects the case to go to trial – even though a settlement would be preferable for Democratic party, which will look to minimize the fallout from the allegations of Waters’ and Rangel’s misconduct.

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The Treasury announced Thursday that it was providing the funds to housing finance agencies in Rhode Island, North Carolina, Ohio, Oregon and South Carolina. The HFAs – state agencies devoted to housing-assistance programs – will be able to disburse the Treasury monies to homeowners at risk of foreclosure.

"Through this plan, we will provide resources that were previously unavailable to struggling borrowers," Doug Garver, the executive director of Ohio’s HFA, said. OHFA will provide rescue payments, partial mortgage payments and modification help to high-risk mortgagees.

Economic conditions in the five states selected by the Treasury are especially challenging. A. Robert Kucab, the executive director of North Carolina’s HFA, noted that "a quarter of the state’s population lived in a county with an unemployment rate of 12 percent or higher [in 2009], compared with 15 percent of the national population."

The $600 million, Treasury Assistant Secretary for Financial Stability Herb Allison said, would "immediately help those who are hurting the most during these tough times."

While the administration works to keep homeowners from foreclosing, the state of the housing market may be improving. Clear Capital, a provider of data to the real estate industry, reported August 5 that the saturation rate of real estate-owned properties fell to 22.7 percent in the most recent quarter.

REO properties are those seized by banks; a falling saturation rate could suggest that the real estate market’s fundamentals are improving. Prices are on the rise, too, Clear Capital revealed.

The rising-price trend, company senior statistician Alex Villacorta said, "indicates that the initial upward momentum created by the tax credit expiration is being sustained."

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The environmental ramifications of the crisis could be considerable, of course. Microbes that eat oil exist in the Gulf, so the worst long-term damage may come from the dispersant used to break up the oil as it left the well. The effects of that dispersant on fragile oyster and shrimp larvae remains unknown, but fishermen have already expressed concern about the viability of future years’ harvests.

Also worrying for residents of the Gulf Coast is the effect the spill will have on property values. CoreLogic, a real estate data firm, says the communities affected by the crisis could see their homes’ values fall by an aggregate of $648 million over the next year and $5 billion over the next five years.

CoreLogic assessed the loss of beach amenity value and its impact on property prices. With oil expected to remain in the Gulf ecosystem for some time, the beaches for which the Gulf region is well-known could be all but useless to vacationers and residents.

"Using well-established economic techniques for the measurement of the economic value of environmental amenities," CoreLogic chief economist Mark Fleming said, "an estimate of the loss in beach amenity value is substantial."

In a bid to appear responsive to the spill and allay the fears of Gulf residents, the White House is sending President Barack Obama’s top energy adviser, Carol Browner, to the region this week. Browner, the head of the Environmental Protection Agency under Bill Clinton, will meet with state and local officials on her visit, Politico reports.

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"We want to ensure that offshore drilling is done efficiently while protecting the environment," Bloomberg quoted House Natural Resources Committee head – and West Virginia Democrat – Nick Rahall as saying in a conference call.

The House’s bill, Bloomberg adds, would lift the $75 million cap on oil spill-related liabilities, force energy companies to prove that they could control damaged wells and bar BP plc from drilling in federal waters.

It would also funnel $1 billion a year from the government’s drilling-royalty revenue to land and water conservation efforts.

One proposal – to force oil companies to post spill-liability costs before beginning drilling – could be particularly damaging to small and midsize drillers. American Petroleum Institute president Jack Gerard threatened that the House’s bill could raise production costs and result in the loss of hundreds of thousands of jobs.

"I would encourage the House and Senate to protect American jobs as they consider appropriate responses to the Gulf of Mexico oil spill," the New York Times quoted him as saying.

Gerard, TheHill.com reports, was also critical of a provision that would toughen standards for blowout preventers, the devices that cap damaged wells in the event of a calamity. It’s believed that the failure of the Deepwater Horizon’s blowout preventer caused the Gulf spill, but Gerard said that had yet to be proven.

"We’re going into surgery without a diagnosis," he said of the blowout-preventer rule.

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The coalition comprises Royal Dutch Shell, ExxonMobil, ConocoPhillips and Chevron. The four companies are among the world’s largest private energy producers, and all have drilling operations in the Gulf. Notably, though, the largest Gulf driller – BP – is not included in the coalition.

There are questions about BP’s competence as an offshore driller, and it may not even be allowed to return to Gulf drilling following the Deepwater Horizon debacle. The company has been faulted in the past for noncompliance with safety rules, and in the wake of the ongoing spill, regulators could simply pull the plug on the company’s offshore drilling permits.

The four oil companies working on contingency measures are creating a nonprofit, dubbed the Marine Well Containment Corp., to manage the spill-containment system that they are developing. The system will, the companies hope, be able to capture 100,000 barrels of oil per day in water up to 10,000 feet deep.

The Macondo well that was connected to the Deepwater Horizon, by contrast, is just 5,000 feet deep. It’s releasing an estimated 35,000 to 60,000 barrels of oil daily.

The oil giants’ backup plans come as debate over the spill moves into the political realm. As ABC News reports this week, spill-related rhetoric is appearing in a number of campaigns – even those outside oil-producing regions. Democratic U.S. Senate candidate Paul Hodes of New Hampshire, for example, stated his support for a ban on offshore drilling in New England, even though the ban has been in place there for some time.

"I will … never support lifting the ban on offshore drilling in New England, which provides an essential safeguard for our Seacoast region," he said.

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Massachusetts GOP member Scott Brown indicated that he would vote in favor of the legislation. Brown and Maine’s Susan Collins are the only Republicans offering support – but the bill’s authors need just one more backer to secure the 60 votes that would move the legislative package forward without further debate.

The bill’s proponents could find what they’re looking for, Bloomberg reports, in Maine’s other senator, Republican Olympia Snowe. Iowa’s Chuck Grassley – also a member of the GOP – indicated he would support financial reform in the past and could be the all-important 60th vote, as well.

Brown’s willingness to back the financial reform bill is significant. The Democrats’ healthcare reform legislation was believed to be a nonstarter after he was elected in January; pundits widely interpreted his victory as a sign that voters – even in the decidedly blue state of Massachusetts – were concerned with the White House’s ambitious reform agenda.

Brown didn’t support healthcare reform, but he’s now on board with the bank reform that the Obama administration has championed.

"Send me a reform bill I can sign into law, so we can empower our people with consumer protections, and help prevent a financial crisis like this from ever happening again," President Barack Obama said to Congress in a late-June radio address.

While Republicans have raised concerns about the financial reform legislation’s impact on credit availability and bank soundness, recent tweaks gave it far less bite than bankers and their Congressional allies feared.

"It is a better bill than it was when this whole process started," Brown said in a Monday statement.

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The euro slipped about 9 percent against the dollar in the second quarter on fears that governments’ debt-reduction measures would curtail expansion of the European economy. The euro has risen in recent days as those fears subsided – but the International Monetary Fund argues that the euro-zone is in for months of slow growth.

While the Washington-based lender did not change the euro-zone expansion forecast it made in April, it’s expecting European debt to have a "modest negative effect" on regional growth. The euro-zone economy will grow by just 1.6 percent this year and 1.3 percent in 2011 – far slower than the U.S., which the IMF says will grow by 3.3 and 2.9 percent. Needless to say, Asian emerging markets are poised for even faster growth: 9.2 percent this year and 8.5 percent in 2011.

The IMF is also raising questions about the recently announced bank stress tests. While the announcement of the tests provided support to the euro, the IMF is asking who would provide funding to inadequately capitalized banks, MarketWatch reports.

"The IMF is asking very valid questions," the financial news site says. "And until bank and national government balance sheets are recapitalized, the market will be asking them too."

The European Central Bank, for its part, has been more bullish than the IMF on regional growth. But even bank president Jean-Claude Trichet was cautious: He said July 8 that the euro-zone would grow "at a moderate and still uneven pace in an environment of high uncertainty."

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The rule would add to a Bush-era emissions-reduction effort, called the Clean Air Interstate Rule. CAIR was challenged in court, and federal appeals judges ordered the EPA in December 2008 to adjust the rule. They did not, however, require that the rule be abandoned completely, so CAIR has been in place since the 2008 ruling.

"The rule has become so intertwined with the regulatory scheme that its vacatur would sacrifice clear benefits to public health and the environment while EPA fixes the rule," the judges wrote.

As it was originally written, CAIR used a cap-and-trade program created in the 1990s to cut sulfur dioxide and nitrogen oxide emissions. Those efforts – designed to reduce smog and acid rain – were largely successful, and CAIR aimed to continue the cap-and-trade program. As the Wall Street Journal notes, though, the appeals court’s 2008 ruling sent the U.S. emissions-trading market into disarray.

The rule announced Tuesday will supplant CAIR and regulate emissions more directly. It will impose significantly tougher emissions rules on power plants – mainly those that burn coal – and will cost emitters an estimated $2.8 billion.

Yet the social and environmental benefits of the rule are estimated at $120 billion. Reduced sulfur dioxide and nitrogen oxide emissions will improve air quality in urban areas, the EPA says, and cut both emergency room visits and premature deaths.

By 2014, the EPA says, the rule and other measures would reduce sulfur emissions by 71 percent and nitrogen emissions by 52 percent, compared to 2005 levels.

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