Pope overhauls Vatican finance.

Pope Francis has decreed a sweeping reform of the Vatican's financial system, establishing a kind of economics ministry, the Secretariat for the Economy, headed by Australian Cardinal George Pell. The Secretariat will implement the directives of a new Council for the economy, consisting of eight cardinals or bishops and seven lay experts. The papal directive also, for the first time, describes the Administration of the Patrimony of the Apostolic See as the Vatican's central bank. The heads of the Secretariat and the central bank will report directly to the Pope, not to the secretary of state. For the first time in decades, the Catholic Church has a clear, logical system of economic management in place, which goes a long way toward preventing further financial scandals. Pope Francis is proving to be capable of leadership in the down-to-earth, corporate sense, not just the spiritual one.

German growth powered by export surge.

Germany's Federal Statistics Office confirmed its earlier estimate of 0.4 gross domestic product growth in the fourth quarter of 2013. While the feeble growth its no surprise, data on its components are instructive. Exports rose 2.6 percent quarter-on-quarter, the most in three years, while private consumption dropped 0.1 percent. Domestic demand made a negative contribution of 0.7 percentage point to GDP growth. The numbers are in keeping with last year's complaint by the U.S. Treasury that Germany is growing at the expense of its neighbors and not doing enough to boost domestic demand. While Germany has responded to that by saying its export-driven economy kept unemployment low, that is not the most relevant argument now that too-low inflation is Europe's biggest worry. If domestic demand keeps falling, deflation will become a real threat soon.

Erdogan and thousands of others could have phones tapped.

Two pro-government Turkish newspapers, Yeni Safak and Star, published allegations that up to 7,000 members of the Turkish elite had their phones tapped by prosecutors loyal to self-exiled cleric Fethullah Gulen. The list of possible surveillance victims includes Prime Minister Recep Tayiip Erdogan and the head of the intelligence service, Hakan Fidan. The paranoid world of Turkish politics in which no one can be sure enemies are not listening is turning into a parody of itself. Erdogan is one of the leaders who should closely study the experience of deposed Ukrainian President Viktor Yanukovych, who has been missing for three days now after fleeing his riot-torn capital, Kiev.

Loewe rescue attempt fails.

To contact the author on this story:
Leonid Bershidsky at lbershidsky@bloomberg.net