GENTLE BEN...AGAIN

Over Here, the stock market got great housing numbers, good confidence numbers and Ben Bernanke.  As a result it came roaring back, shrugging off yesterday's news, Asia's performance and a stinko day in Euroland.  But make no mistake, it was Bernanke who, in pledging that the cookie jar will remained stuffed, was the cause of it.  He remains firm in his resolve that his policies are the correct ones.  On the subject of the EU, whilst troubling, he made it quite apparent that he had little concern.

Over There, the mood was, if not quite somber, certainly muted.  There will probably be no government in Italy as Berlusconi and the comedian announced that they will not work with anyone and no one seems to want Monti any where near them as the feeling is that will be the kiss of death.  Now no government in Italy might be considered by some a good thing, but not the chance of contagion from the mood of the Italian populace concerning austerity.  If that spreads to the rest of Europe there may be trouble ahead.  Memo to Euroland:  it will.  Almost immediately, Germany began warning that the early steps taken by Monti to rationalize the Italian State should not be reversed and suggested to France that stronger measures should be taken to make more productive its industry while at the same time supporting the austerity program of the EU.  You can imagine how that was received.  Spain is clearly looking closely at the Italian results for with an unemployment rate of about 25% the rumblings the government already faces over its austerity program could be moved to a full throated roar in conjunction with the Italians.  I think there is genuine consensus among the leaders of Europe that austerity must be continued but the Italian "thing" (as it is being now-called) could make life very difficult and should Italy reverse the Monti approach, as moderate as it may have been, all of the threats to the Union seen last year will probably reemerge.  Angie, unfortunately, has very little wiggle room.  The Volk can read the tea leaves and they seem to be telling a story of a strong possibility of more bail outs and a push back by the Southerners against the good German traditions of frugality, hard work and savings...not to mention that if needed it will be the Volk's cash that gets used.  They don't like that.

Massimo pointed out this morning that Thank God we have the election of a new Pope coming right up as that will shut up everyone in Italy until that process is completed as the politics surrounding this are the dreams of Italian pundits and Italians.  He's probably right.  I must say I am surprised with the lack of real interest or concern--save for a few trading hours yesterday--that this country is showing over the events Over There.  Then again, we have always been a nation to whom the price of hamburger in Kankakee is more important the possible dissolution of a political union of 350 million people...should it come to that.  But as long as we have Ben, I guess things will be OK.  Or at least that's what the stock market thinks.  It gives me great comfort.