An eerie calm

The mood in Belgium over talks with Greek creditors has gone from confidently calm to a sense of foreboding, media reports indicate.

The talks stalled Jan. 13, after which Greek Prime Minister Lucas Papademos asserted that bond holders and the Athens government were "close to an agreement," and the breakdown in negotiations was simply a "pause for reflection."

That pause was really the technocrat learning the art of sidestepping the obvious -- the former banker is learning his politics.

In truth, while the current mood in Brussels looks more like hand wringing than biding one's time in a Barcalounger catching up on some light reading, there is an eerie calm prevailing over markets. The Dow Jones industrial average rose on each of the first three weeks of the year. Taking Europe's debt problems off the front page, for whatever reason, appears to have a positive effect on markets.

That doesn't mean the squabbling is over. "We're sending a very direct message to Greece that the [European] community expects more, also in terms of structural reform," Austrian Finance Minister Maria Fekter said.

Fekter told reporters, "We're not pleased and only when there's a written message on the table in front of us, can further assistance be discussed."

International Monetary Fund director Christine LaGarde this week in Berlin said the size of the EU rescue fund was half the size it needed to be, suggesting it be increased to $1.3 trillion.

At the same time, Lagarde and others have suggested that the austerity strategy espoused by German Chancellor Angela Merkel has gone far enough. It is time to stimulate economies in Europe that look to be badly floundering.

There is math on paper and there is economics, which is math plus human beings. One paper, it is easy to change directions. Fiscal discipline will add sure footing to the mix, a foundation that breeds confidence. Stimulus spending on the other hand will draw in opportunists and could be self-correcting if tax revenues rise.

The problem is doing both at the same time. That can't be done on paper or on Main Street.

In international markets Tuesday, Asian markets were up, while European markets were down.

The Nikkei 225 index in Japan rose 0.22 percent, while the Shanghai composite index in China rose 1 percent. The Hang Seng index in Hong Kong gained 0.84 percent, while the Sensex in India added 1.46 percent.

The S&P/ASX 200 in Australia was flat, off 0.02 percent.

In midday trading in Europe, the FTSE 100 index in Britain shed 0.96 percent, while the DAX 30 in Germany dropped 1.09 percent. The CAC 40 in France lost 1.11 percent, while the Stoxx Europe 600 shed 0.92 percent.