No wonder the global stock rally has gotten stuck in spring mud.
Since topping out on the Ides of March, Germany's Dax index has slid 4% over the last two weeks, with nearly half of that loss coming today. This even as the German jobless rate slipped to a 20-year low and German business confidence continued to improve.
Italian stocks have shed 6% since March 19. Technocrat Prime Minister Mario Monti has staked his government of passage of a reform exempting economic layoffs from court review. That might perk up hiring if and when the economy revives, but it threatens to lift the 9.2% jobless rate in the short run.
The yield on the ten-year Italian bond has moved up from 4.84% on March 19 to 5.25% today. Even if Monti sticks around, there are no guarantees that the bond buyers will as well.
And yet it's also a fact that Italy's stagnant economy hasn't developed the same downward momentum as Spain and Portugal, because the budget cuts have been somewhat less painful. With Germany holding up, Latin America still growing, and the US as well as Japan picking up the steam, the global outlook is better than it looked three months ago.
Not least, it's better because politicians facing re-election are under the gun to deliver some hope. Releases of emergency crude reserves now under consideration in Paris, London, and Washington are extremely unlikely to secure lasting discounts at the pump, but the talk does illustrate which way the winds in those capitals are blowing.
France is less than a month from the first round of its too-close-to-call presidential election. Perhaps not coincidentally, the German government, which has backed French President Nicolas Sarkozy, has squelched its qualms about reinforcing Europe's financial firewall.
Beijing faces an election of a sort as well, even if it's only by and from a phalanx of ruling bureaucrats. So far, the right-wing capitalist faction seems ascendant over the leftist communist sympathizers. But compromise at the top has been the Chinese way for decades, and both sides could soon agree that the suddenly struggling economy could use a lot more official forbearance than it's gotten to this point.
And in the meantime, the Shanghai Composite is down 8% since March 13.
China has lots of scope to stimulate domestic demand, and perhaps Chinese President Hu Jintao's nod toward a higher yuan in Seoul was a baby step along that road.
Clearly, politicians in the East and West have work to do if they don't wish to become unemployed.