Several months ago, I predicted there was only a 33% probability of a recession in this country, unless Europe pulls us into one.  Now, it looks like that will happen.  The question becomes how severe and how long will it be, as those answers drive investment planning.

The answer to those questions depend on how Europe responds.  Yesterday’s loss of 389 points on the Dow is a somber indicator of how grim it is.  Make no mistake:  We are now watching the battle for Europe.  The few remaining World War II veterans will experience deju vu.

Overnight, Italy was able to see about five billion euros worth of short term bonds at slightly lower-than-expected interest rates, which was a small victory over the bond vigilantes.  More importantly, comments by both Sarkozy and Merkel show they are thinking about a new “two-speed” Europe.  In other words, it shows they are ready to cut off the PIIGS and go on without them.  While that would be painful, the market is comforted that there is at least some plan!

At 6AM, futures indicate the Dow will recover about 55 points at the open.  However, like any day since the European crisis began, it could be a wild ride on Wall Street until 11:30AM here, when the European markets close.  Pray that Rome can pass their budget today and that Greece can pick new Prime Minister . . . is that too much to ask??

Does anybody care that Wells Fargo predicts fourth quarter growth will be a respectable 2.5% in the United States of America?