Growth momentum in the US, China, and Europe is slowing rapidly; German, UK, Swiss, US and other 'safe haven' bond markets are priced for a global recession (see Weekly Chart) and European politicians are playing a high stakes game of 'chicken.' We believe Germany recognizes that it stands to suffer greatly from a collapse of the euro, but is clearly unwilling to extend budget support without budget control - no 'taxation' of German citizens without 'representation' in the form of budget oversight. France on the other hand, is terrified of, and so far unwilling to cede European budget control to Germany. They remain deadlocked, and we believe a global recession hangs on their ability to break the deadlock. We think Germany expects to get the concessions it wants, but that its plan B may be a withdrawal from the euro, but we can only guess.

David Fuller's view No one likes the uncertainty and I am wondering if this week's summit will be a game changer.