We seem to be moving out of the eye of the European hurricane, as the winds are starting to blow again and people are taking cover. Spain and Greece made the front pages of the papers: the Wall Street Journal (WSJ) has “Bottles Fly as Spain’s Confidence Shatters,” accompanied by a photo of a bottle shattering on a building right by an older woman’s head as she takes cover; the Financial Times (FT) has “Spain’s premier fights turmoil,” accompanied by a picture of what looks like a masked riot policeman assaulting a member of the Spanish parliament; and the New York Times (NYT) has “New Protests Over Austerity Plans in Greece,” with a photo of a masked riot policeman running away from the remains of a Molotov cocktail. All three papers also have follow-up articles on both the Spanish and Greek protests to provide more context. Although the photos are quite scary, this is not just a photo op—it goes much deeper.

This is what it looks like when all the choices are bad ones. Everyone is looking for a solution that doesn’t require any sacrifice. The Catalonians are convinced they are paying too much, so they want to separate, which, of course, would make the problems worse for everyone, including themselves. “Spain Resists Homage to Catalonia” (WSJ, p. C12), “Spanish Ire Symbolized by a Carrot” (NYT, p. B1), and “Financial crisis stokes fires of Spanish identity” (FT, p. 4) all center on exactly this issue. What is the relevant governmental unit in Europe? At what level should different communities hang together and sacrifice for the common good? Without solving this fundamental issue, can any other issue be solved?

I want to highlight an interesting chart put together by Pete Essele of Commonwealth’s Asset Management and Research teams. Pete does excellent work in a variety of areas, but he is particularly good at putting together charts and graphics that make important points in very clear ways.

China rolled out its first aircraft carrier, in a significant symbolic move. The Financial Times (FT) covered the story in “Sea change: China enlists first aircraft carrier” (p. 6), the Wall Street Journal (WSJ) in “China Adds Carrier to Its Navy” (p. A9), and the New York Times (NYT) in “China Launches Carrier, But Experts Doubt Its Worth” (p. A4). I say symbolic because it will only be used for training and the Chinese do not yet have planes capable of carrier landings, as the NYT article points out. This is a sign of things to come, but not of things right now.

It does raise the ante across Asia, though. Japan is feeling it, per “Island spat raises military heat” (FT, p. 6), which talks about how the confrontation is getting more military in nature. Most people do not realize this, but Japan actually has an extremely capable military, including an excellent navy. If these confrontations result in Japan starting to re-arm, that will change everything about the Asian environment. This is a big deal for the next 10 years and forward.

Even though it is not on the front pages in the U.S., Europe continues to simmer and deserves an update. Spain did make the front page of the Financial Times (FT) with “Catalonian push for independence piles pressure on Spanish premier,” highlighting the problems the regions are creating for any bailout of the country. Not only that, but existing deals are also starting to show cracks; “Deal over bank bailout thrown into doubt” (FT, p. 2) discusses how Germany, Holland, and Finland are backing away from components of the bank bailout deal for Spain and Ireland that they were thought to have agreed on. Nothing solid yet, but a troubling sign.

That troubles are hitting the general population is shown not only in the recent protests in Catalonia, but also in “Protesters Take to the Street in Madrid” on page A4 of the New York Times (NYT), which references the regional protests. The Spanish government is attempting to address the issue, per “Spanish Leader Outlines Fresh Overhauls” on page A12 of the Wall Street Journal (WSJ), but markets are not convinced, as seen in “Debt Auction Shows Unease Over Spain’s Prospects” (NYT, p. B2). Spain is the bellwether here, and Hurricane Spain continues to spin.

So the U.S. markets are at their highest point since 2007. In 2007, the markets were at their highest since 2000. In 2000, the markets were at all-time highs. In 2000, values were driven by the bubble, as we now know. In 2007, spending and growth were driven by unsustainable growth in housing values and consumer borrowing, as we now know. In hindsight, those valuations were not supportable. We are smarter than that now.

I have discussed two major China themes over the past couple of months: growing cracks in the economy and—quite possibly as a result, to distract the population—growing nationalism and conflict with its neighbors. There have been riots over the second, brought on quite possibly by the first. Now, for the first time, we seem to have riots driven primarily by economic issues— not by the authorities.

The papers have stories on large riots at Hon Hai, a large manufacturer better known as Foxconn, which is a principal supplier for Apple. The Wall Street Journal (WSJ) has “Chinese Factory Erupts” (p. B1), the New York Times (NYT) has “Factory Riot Underscores Rift in China” (p. B1), and the Financial Times (FT) has “Foxconn halts production at Apple supplier after 2000 workers riot” (p. 17).

As promised, the coverage on Romney has tried to turn more favorable, with “Three Reasons the 2012 Race Could Still Change” on page A6 in the Wall Street Journal (WSJ). Notably, the turn has not been completely rounded, with the article acknowledging the problems, but the intent is there. Expect to see more—horse races are how the media makes its money.

One potential game changer is the introduction of foreign policy as a central part of the race. “Race Focuses on Foreign Policy” made the front page of the WSJ, while the New York Times (NYT) had “Republican Team Attacks Obama on Foreign Policy” (p. A11). Apparently, Obama’s lead in this area is eroding, and it represents a potential opening for the Romney team. With everything that is happening, there is the potential for a disaster abroad, which could damage the Obama campaign. This is not a guaranteed win for Romney, though, as the Financial Times (FT) points out in “Romney’s China holdings criticized” (p. 8), reminding us that Romney has vulnerabilities of his own on the international front.

Honestly, when the lead headline in the Wall Street Journal (WSJ) is about the costs of “free” checking, and it runs right above a story about the Emmys, you know it is a slow day. We have the usual follow-up stories: Greece will probably be back in the headlines soon in a big way, but for now, France is trying to buy it some more time; in China, Bo Xilai’s police chief was sentenced to 15 years, and Japan warned China on the island conflict. And, of course, we have U.S. politics.

The U.S. political stories are the most interesting, in that they don’t focus on the elections but rather on the underlying issues. The New York Times (NYT) has two articles, “Liking It or Not, States Prepare for Health Law” on the front page and “What Do Teachers Deserve? In Idaho, Referendum May Offer Answer” on page A14.

I sat down with Wall Street Week contributor Carrie Coghill to review the investing landscape. In this segment, we discuss why Congress needs to “do something smart,” and where investors can find yield and safety.

Watch: How the “Fiscal Cliff” Is Hurting the Economy Now

I wanted to mention a couple of stories today that actually brought some good news. The first two are on a point that I have made a couple of times—most clearly in the Economics and Politics webinar I linked to back in July—about how the U.S. is in a relatively strong competitive position, despite the glaring weakness of capital dependency.

The stories, “Cost advantages build case for US industrial revival” on page 5 of the Financial Times (FT) and “A Manufacturing About-Face: Made in America and Sold in China” on page A18 of the New York Times (NYT), both talk about how U.S. manufacturing is regaining its competitiveness, although they come at it from different angles. The FT story references a Boston Consulting Group (BCG) report, which predicts that growth in U.S. manufacturing could add five million jobs in the U.S. by 2020. Although the FT story indicates that some analysts are skeptical, the NYT coverage supports the idea of a revival by identifying and describing several companies that are doing exactly what is described in the headline—manufacturing in America and selling abroad.