Economic Outlook: All in the family

It is a game of chicken, once again, in the eurozone.

This time, the epicenter is Rome where the forces of denial will hit head on with the forces of top-level deal making. Let's see if we can make that sentence make sense.

In simple terms, Rome would like to avoid asking for a bailout from the greater eurozone committee, because a simmering problem could be handled with the European Central Bank buying Italian bonds, which is a cheaper rescue for Italy than an international bailout package is likely to be.

But if Italy's financial problems go from simmer to boil and Italy accepts a bailout, the fall back position on paper would be that Italy could be paying back the troika -- the European Commission, the European Central Bank and the International Monetary Fund -- for decades.

This is why this one-act mini drama looks so familiar. The same act was performed in Greece, Ireland, and Portugal. And here's the script: Until the 11th hour, politicians claim their country's finances are on solid ground. Then they suddenly capitulate. And nobody seems to think it odd that in one minute the heads of state change their tune so abruptly.

Too bad, too. Greece's sub-basement credit rating is a signal that its finances are in poor shape, but also a sign that its credibility has more than a few holes in it.

Italy seems less willing to let its credibility collapse outright, as it is relatively early in the game for Italy and the pressure is already building to replace Prime Minister Silvio Berlusconi.

Greece has held on to Prime Minister George Papandreou for almost two years after its debt crisis surfaced. He turned out to be a stalwart leader, who, with a steady hand, led Greece deeper into trouble, by agreeing to a series of punishing austerity measures -- the economic equivalent to selling the motor in the car, then hoping in for a test drive.

Papandreou could manage members of Parliament. But, if Greece is the historical origin of democracy, it is now the poetic origin of Occupy Wall Street. Oddly, Greece isn't even rescuing Greek banks so, so the man on the street in Athens has even less to show for his government's bungling than the man on the street in New York or Oakland, Calif. For better or worse -- some would say at the price of millions of jobs -- U.S. banks have survived the financial crisis. In Athens, the banks they are saving are in Germany and France.

Isn't this clear how appealing this all is for French President Nicolas Sarkozy and German Chancellor Angela Merkel? Hiding behind the euro for political sympathy -- the euro is their infant in critical care -- Papa Sarkozy and Mama Merkel are relying on Greece, the nanny, to do all the heavy lifting. It is exactly as if something went wrong at work and the employer demanded the workers clean up the mess and pay for the damages.

In international markets Tuesday, the Nikkei 225 index in Japan fell 1.2 percent, while the Shanghai composite index in China dropped 0.2 percent. The Hang Seng index in Hong Kong was flat, gaining less than one point, while the Sensex in India shed 1.2 percent.

In Australia, the S&P/ASX 200 index rose 0.4 percent.

In midday trading in Europe, the FTSE 100 index rose 1.4 percent, while the DAX 30 in Germany jumped 2.4 percent. The CAC 40 in France gained 2.2 percent, while the Stoxx Europe 600 rose 1.7 percent.