As if propelled by The Ride of the Valkyries, markets are recovering lost ground. What changes led to three straight days of gains ending with the biggest spike of the year yesterday? Well, stocks are finally starting to indicate a more favorable view of the economy.
Tomorrow the German parliament will back the new wave of the Greek recovery plan: a reliving of another Lehman crisis has been ruled out and people are proposing the idea that when Merkel says "no" she usually ends up uttering a resounding "yes" as soon as fear increases enough. The chancellor said that she would not bail out Greece, Ireland or Portugal. But she has done everything she could to keep the euro intact.
And now Obama and the Chinese are pressuring her to resolve Europe's problems with haste and to not send the global economy into deep recession. As a result, markets look hopeful that the Germans will find a way to actually figure out a plan to assess the Greek debt problem while recapitalizing losses of financial lenders.
Further, it is predicted that the European Central Bank (ECB) will start selling mortgages and making 12-month loans to banks so that they can bolster liquidity within the financial system. Yesterday Merkel stiffened against Papandreou, but everyone knows that she has to agree to the Greek bailout or we will have to pick up the pieces after the euro falls apart and recession ensues. If expectations are not met once again, this could happen.