Germany Bad At Socialism After All

Charts: The S&P 500 rose this morning to 1227, the next Fibonacci number, and turned tail, plummeting downward in big volume. This is a failure of a key technical level. Not good.

Fundamentals: Recently Germany has cooked up a scheme that would give bond holders of Euro-periphery debt a haircut in the event of default. This has clobbered Euro-periphery debt. Which in turn hurts German banks, many of them state owned and it might even threaten the global recovery. Here we have proof that Germany really isn't that good at socialism after all.

Geopolitics: India has a military strategy called "Cold Start." Dedicated division sized strike forces are supposed to drive into Pakistan within a couple days of mobilization if a second Mumbai-style terror event occurs anywhere inside India. Pakistan says that it would devote a much bigger part of its military to fighting the Taliban if India would dismantle Cold Start. The Pak Army thinks that the existance of Cold Start gives the Taliban a way to start a war between India and Pakistan. The assumption built into Cold Start is that the Pak Army has total control over all the jihadis operating in the tribal lands (not true). Obama is telling India that he will work toward giving it a permanent seat on the UN Security Council, sell billions of dollars worth of new weapons, and other goodies if it does away with Cold Start. For now India is publically saying: "Cold Start, what's that? We've never heard of Cold Start." It might be saying something else behind the scene.