As Spain gets ready to receive its bailout package of 39.5 Billion on the 12th, the markets are wondering who will next ask for a bailout? Could it be Ireland, Cyprus, Portugal....?
Originally I thought Italy would be next in line, but Signor Silvio Berlusconi's announcement that he's withdrawing support for Premier Mario Monti and thinking of standing again for the Premiership has caused upset in the Italian stockmarket. Today, it has gone down 3.5 percent upon hearing that Mario Monti, the technocrat Prime Minister who has helped Italy steer a steady course in recent months, is considering resigning if his support is withdrawn. The yields on Italian bonds have started to go up. How patriotic would it be for Signor Berlusconi to come back centre stage now? It would be more patriotic in my view for Signor Berlusconi to support Premier Monti's government.
The debacle in Misratta and the aftermath, when bond yields just shot up and have had to be hoisted down, is something that will come back to peoples' memories. It is an episode not worth repeating. As Italy makes steady headway to Recovery, the greatest act of patriotism would be for the Signor to back the Premier, and the Premier to stay on, confident in the belief that he is steering the right course of action, and without him his country will become rudderless.
Activity from Lisbon suggests Portugal is also hoping for a bailout, as is Ireland, and as is Cyprus. They probably could do with about 10 Billion for a year each, to lay further foundations for Recovery.
Superstorm Sandy dealt the U.S. a savage blow, right in the middle of the Presidential election. Hoboken, Staten Island, Lower Manhattan were all badly flooded, and the announcement of 240 Billion of rebuilding by the government and insurance funds must be a morale booster.
A solution to the U.S. fiscal cliff scenario is the issuance of an additional trillion over the course of the next year. Some commentators are suggesting a figure of $45 Billion per month for buying government securities, in addition to the $40 billion MBS already announced. I reckon a figure of $60 billion per month for purchase of government securities would be more comfortable, making a total of 1.2 trillion for the year.
Hearing that millionaire households have had to go on food stamps and that the swing voters were affected by Obamacare and the social security net, is a sobering thought.
The U.S. seems on a sound, expansion phase, and amicable agreement on the course of action regarding the fiscal ledger entries and creation of many more jobs per million of investment, will ensure the framework for a continued worldwide Recovery, as all nations manufacture and consume and trade and develop and grow. As Swami Vivekanada once remarked "Never underestimate the glory of human nature". And so it shall always be, the outlook for the world remains positive and optimistic.