News that Italian Prime Minister Berlusconi could resign soon and the expected establishment of a technocratic government in Greece has helped sooth market nerves somewhat. A lower CPI number in China and hopes of looser policy ahead in the world’s second largest economy has also helped sentiment, though we continue to note that there are several variables in play. Compared to Greece at present, there is a lack of clarity in Italy over who could succeed Berlusconi and the prospect of further uncertainty in the run-up to elections, while a change of government does not automatically mean a country’s fiscal problems would go away. Continue reading →