As I look back at some of my recent posts, it seems that the majority are focused on Europe and the euro zone crisis.
For better or for worse, the European community is the whole game for the markets right now.
If the European leaders can come up with a workable plan to save the euro, the equity markets will probably rocket ahead. The alternative, of course, is pretty bleak and dismal for the world's economies.
But this might just be my opinion, speaking as an American.
Ezra Klein of the Washington Post had an interesting column yesterday discuss the almost unnatural calm that he witnessed in Germany last week:
In more than a dozen discussions with policymakers, I’ve noticed that Germans just do not talk about this crisis the way anyone else does....
They seem serenely confident that it will all work out, and this will end with a stronger, more united Europe. There’s less panic than you would expect. Less panic, certainly, than there is among American economists and policymakers.
It could be that the German government is simply aware that it holds all of the cards, and that its positions will ultimately carry the day.
The problem I have is that most of the German ideas focus on austerity and economic pain. Here's Wolfgang Munchau writing in yesterday's Financial Times:
Contrary to what is being report, Ms. Merkel is not proposing a fiscal union. She is proposing an austerity club, a stability club on steriods. The goal is to enforce life-long austerity, with balanced budge rules enshrined in every national constitution. She also proposes automatic sanctions with a judicially administered regime of compliance. She rejects eurobonds on the grounds that they reduce pressure on fiscal discipline.
American rating agency Standard & Poor's warned that Germany and five other members of the eurozone that they face the possibility of losing their AAA credit rating if a responsible solution to the current crisis is not announced.
The cynic in me was unimpressed by S&P's announcement. Interest rates in the United States plummeted after S&P downgraded the U.S. last summer to AA+.
At the end of the day, it seems that all of this drama boils down to asking the citizens of numerous countries to accept austerity and poor economic conditions for many years in order to pay back the bankers.
And while no one doubts the moral righteousness of this position, I wonder how long before popular backlash begins.
Ireland is often cited as the model for some of the other debt-burdened countries, the New York Times reports this morning, yet the Irish are less than thrilled with how the burden of debt repayment has hurt their daily lives:
Pain is inevitable in any nation overwhelmed by its debts, which in Ireland continue to climb rather than fall as a percentage of gross domestic product. But the Irish example shows the dangers of taking from ordinary people to pay off creditors rather than sharing the burden more broadly.
For example, welfare payments have steadily been reduced even as the unemployment rate has ticked up to 14.5 percent, and is forecast to remain high at least through next year.
The Irish are not prone to protest, but now more are being organized, inspired by the Occupy movement in the United States.
“The euro zone is entering a very serious slump, and it is not certain the euro will survive in its current form,” said Simon Johnson, a professor at the Massachusetts Institute of Technology’s Sloan School of Management and a former chief economist at the I.M.F. “Why Ireland would want to spend its time being a model student in the context of the broader European mishandling of the situation, I don’t know.”