BLACK SMOKE

No new Pope today, but not to worry, with  Buonarotti's magnificent "Final Judgement" before them as they kneel before the alter in the Sistine Chapel acting as a great incentive for these men of faith, the job will get done.

Now across the river, the job of forming a government for the Vatican's neighboring state of Italy may not be so easy.  Whilst Massimo has disappeared from sight and hearing and I therefore cannot be certain, it appears that none of the principal players are speaking with one another and perhaps the most important, Beppe the Comedian (who incidentally is slightly ahead in the most recent public opinion polls) claims he never will.  He has vowed never to join a coalition meaning that the formation of a government will not come until after another election and in any case, there's not going to be any SPQR coming out of that event, at least none that I can see.  Even if a government is formed it will be a weak one, entirely subject to the whims of the population. whatever those may be at any given time.  Austerity will be a dirty word and financial uncertainty will return first marked by heated exchanges between the South and the North of Euroland.

As we have said, Italy is a real country and cannot be ignored or bullied like Greece.  As such a stance in opposition to the "get your fiscal houses in order" position of Euroland c.2012 resonates with the likes of a Greece, Cyprus or even Portugal.  Here we go again.  But more importantly is the effect that such a stance would have on the ECB for it one thing to boldly pronounce "whatever it takes" as Sr. Draghi brilliantly did when all the big guys were singing from the same hymnal, but quite another when the third largest economy says, "I don't like the tune."  In the very short term about the worst thing that could happen is we get a puff of white smoke out of the Vatican because then all the focus turns to Italian politics and frankly, I don't think they are ready for that.  Then again, the Lord works in mysterious ways.  Then again, Italy may stop people from worrying about Spanish banks (they stink) 25% unemployment or France's awful economic and fiscal situation about which they are getting rather stroppy especially when Germany tells them they really should improve things.  The Germans are sounding more and more British every day.  So let us remember the oft-repeated word of the Yogi Man, "Things look lousy until they don't."   He really said that.

Over Here,  Abbemum Budgetums...for the first time in 4 years as a tax, tax--spend, spend appeared out of the Democratic controlled Senate...or at least we are told that it has.  There seems to be a general belief that both sides are now prepared to sit down and talk with The Leader showing a renewed interest in a "Grand Compromise..." assuming of course that he understands the phrase which, given his actions in the past when he thinks he has a winning hand, is hard for some of us to understand.  Then again, as he likes to remind folks, he won...twice.  I would still like to see a rebirth of Eskine Bowles and the Wyoming Wing Nut because there is simply no other template around from which people can work but I'm afraid that is not in the cards.  It would be terrific, however, and do more for an increase in confidence than any other thing out there.  But maybe there is movement on both sides.  Let's hope so.  There are an awful lot of issues out there that can break either way in the next few months...or even weeks.  Maybe everybody can catch a break.