MOVING ON

Well, Monday came and went.  The Leak created not a ripple in the otherwise placid pond of Euroland.  The Italians formed a government which withstood its first no confidence test and promised that Italy would not die the slow death of austerity as the PM flew to Germany to express his desire to stick to the suggestions of Ms. Merkel and the requirements of the Troika.  Now how that circle is going to be squared is anybody's guess but there you have it and so far the Germans have not said anything...well...Germanic.

I must admit that I was a bit skeptical about Massimo's outline of the last week despite his past record but almost as though on cue, the deputy PM, who as a member of the governing coalition while at the same time the head of the party of Berlusconi, immediately took credit for the tough talk against austerity and proclaimed his party's victory and of course by extension, the victory of the old reprobate.  I was going to call Massimo today and congratulate him but then thought, hold on, let's see how this thing plays out...at least for a month.  In the mean time, the focus may well be off Italy for a bit as the news out of Spain continues to worsen and while somewhat overlooked Over Here, all the talk Over There is is the utter collapse of Franco/Germanic relations at this point, they degenerating into ad hominem attacks on Ms. Merkel.  The Hollande government's approval rating is somewhere in the middle 20 per cent and a bit of frustration and panic seems to be setting in.  Funny.  The French and the Germans used to have at it about every 40 years for God knows how long--I mean every generation in Alsace-Lorraine would have to learn a new language--and that was supposed to be ended by the EU.  Well, old habits die hard and while I'm absolutely sure there will be no shooting, not much good is going to happen in the mean time.

The near future conversations will be dominated by thoughts as to the action of the ECB on Thursday.  There is now an almost 100% agreement that Mr. Draghi will lower interest rates yet again from their massively high level of 0.75%.  If that doesn't happen it's really going to be fun to watch...almost as much fun as observing people in belief that this action is going to make a difference.

Finally, today in a truly funny moment, Harvard historian Nigel Ferguson--who is a seriously smart guy--was commenting on the dust-up between his two Harvard colleagues, Rogoff and Reinhart and Little Paulie of Princeton residence.  Deriding Krugman's assertion that he had won the argument, Ferguson proclaimed that he in fact was wrong and that was the kind of comments headline writers for a tabloid make up not someone who used to be an economist.   Whoa!  In academia that's akin to remarks about your mother.  Can't wait for the next chapter in this soap opera.