So the market makes a delayed reaction to European votes and then finds a way to rebound into the close. It was a nice move although the market was still lower; gold is crashing and the ten year yield screams of worry and crisis. The key characteristic of Rally 2012 has been resolve, but the shenanigans in Europe are wearing out investors all over again. Watching it all play out is like watching the last race after a long night at the demolition derby. That last race pits all the losing cars from earlier in the evening in a blind free for all.

You Have to Beat the Germans in Innovation and Discipline

In 9AD the Roman Empire continued to expand and made it through lands controlled by Germanic tribes. It was here that Romans saw its armies broken in the most decisive way to date at the Battle of the Teutoburg Forest. Despite leading a force that consisted of the sixteenth, eighteenth, and nineteenth legions, Publius Quintilius Varus was so humiliated in defeat, he took his own life. The victory is seen in Germany as the birth of German history and the leader of the rag tag confederation of tribes, Arminius, continues to be seen as a hero. By 260 AD Germanic people broke through Roman lines at the Limes and Danube, expediting the eventual fall of the then greatest empire in the history of mankind.

Over -Civilized & Decadent
Vs
Creative & Vital

In Germany they still refer to Welshmen Erbfeind, which loosely translated speaks to the Latin speaking archenemies of Germany. Arminius (also Hermann, his German name) is still used as a rally cry in Germany where they have seen their confrontations with Mediterranean neighbors as over-civilized and decadent while viewing themselves as creative and vital. For the most part the creative and vital Germans have gotten the better of the deal, save for that moment in the sun for napoleon. Interestingly, the battle never stopped and continues to this day. What we are watching in Europe today is the continued failure of the over civilized and decadent, along with the notion that linking arms in a collective makes the overall group stronger.

Both are cautionary tales for American voters looking to buy into the idea that we are all better off linking up and letting the government lead us by the nose. It also proves the cream rises to the top, not as a function of fairness and redistribution, but as a result of determination and work ethic.

Whenever Europe has had the chance to hem in Germany it has worked tirelessly to build giant moats. The Treaty of Versailles went a long way toward neutralizing Germany. While there is no doubt German destruction took a heavy toll on the continent it is said the treaty was an appeal to emotions rather than reason. The terms were so onerous that many, including the British representative, believed the nation would be vulnerable to accepting communism. As it turns out, those fears were valid but it was Socialism or National Socialism, also known as Nazism, that erupted when the Weimer republic sank under the economic strains of the treaty.

Still the treaty was signed on June 28, 1919, at the Paris Peace Conference.

Terms of the treaty include:

* Accepting reasonability for starting war (the Guilt Clause)
* Disarm
* Reduce military by 100,000 men
* No tanks
* No air force
* No submarines
* Six naval ships
* Give up territory
* Alsace-Lorraine-France
* Eupen and Malmedy-Belgium
* Northern Schleswig-Denmark
* West Prussia, Pasen and Upper Silesin-Poland
* Pay Reparations of $31.0 billion or $442 billion in 2010 dollars

The bitterness was obvious and the world was hurting. In addition to the aftermath of war, the Spanish flu killed 25 million. Still the idea was to take away Germany's ability to be competitive. The deal actually created the backdrop for the rise of the most evil person to walk the face of the earth. After Germany lost WWII there was yet another attempt, ostensibly, to curtail its military ambitions and might, to slow down its creativity and vitality. In the aftermath of the post WWII ring fence Germany was nudged into committing to the Euro by France in return for supporting reunification. That was 1989 and on February 7, 1992, the Maastricht Treaty was signed.

The Euro was born and went into effect on January 1, 1999, and a unified Germany was hitting its stride once again. Those workaholic Germans now control the Euro as the largest economy and the one with the only wiggle room to pay its debt-ridden neighbors. Still, even in the face of obvious fiscal decline the over civilized remain defiant and decadent. France is back to its official socialist ways and a communist is starting all kinds of trouble in Greece. Here's the rub for Americans. Combining the economic might and supposedly adding a pinch of economic discipline was supposed to make Europe stronger. In fact, Europe is weaker in part because its welfare mentality was able to thrive.

Policies and aims to compete with Germany not as rivals of quality, but by leveling the playing field, have made the Welschen Erbfeind less competitive. Now here we stand with profligate spenders demanding another bite at the apple, forgiveness of past debts and doubling down on policies that mean economic suicide. I don't believe communist Greeks have the guts to bail on the Euro, but they know how to milk the situation. Yesterday's reversal might signal Wall Street's willingness to call their bluff - for sure; I know the Germans will. If the Greeks and French want to dig deeper into the pockets of Germans, I suspect the spirit of Arminius will spur a counter movement.

History shows that national pride can morph into something more dangerous, but it always aids in the creation of economic prosperity. The gimmicks, the whining, and the selfish demands are a waste of time. The only thing that stops the Germans is military conquest, so maybe the best thing Greece could hold out for is an invasion after they refuse to pay up on past debts and obligations.

Market

Stock are headed for lots of volatility today as investors focus more and more on the euro zone's mounting debt. In particular, Spain is becoming unstable again, as its 10-year yields push through 6 percent on Greek concerns and on word that Bankia is getting a bailout and may be nationalized

We're looking at a rough opening, down in triple digits as the mayhem in Europe continues. Leaders in Greece are now expecting members of the New Democracy and PASOK parties to send a letter to the EU renouncing their austerity pledge, and in the meantime Germany is seeming to say they are open to the idea of Greece making an exit from the euro zone.

We're going to have to hold tight for a little while and wait for the situation to settle, we're going to hold off of a new idea this morning.