Felix Salmon

The weirdly rational flash crash

Felix Salmon
May 20, 2010 18:53 UTC

As the Dow started falling dramatically this morning, my colleague Frank Tantillo and I put together a Google spreadsheet comparing the Dow’s current level to what it looked like at the low point on the flash crash day of May 6.

It’s not all that easy to understand, especially now that the Dow seems to be rising again, but basically what I was trying to do was get a feeling for just how crazy the markets got on May 6. My intuition was that if the Dow today, near its May 6 lows, looked very much like the Dow actually looked on May 6, then the crash would be much more rational than if the Dow components today were trading at wildly different levels from where they were trading at the lows on May 6.

There’s a few weird bits and pieces in the spreadsheet. For one thing, because the Dow components’ low points didn’t all happen at the same time, the Dow didn’t fall quite as much as the spreadsheet makes it look. (The actual low point is in cell B2; the fake calculated one is in cell B34.) And what’s more, because there’s still a significant gap between the Dow’s actual level (in column C) and its low point (in column B), I created a new column (column F) which simply takes the current price and shrinks it so that the overall Dow works out to the May 6 low point.

The interesting stuff starts happening when you look at the difference between rational, real-world depressed stock prices today, and the crazy, flash-crash depressed stock prices of May 6: it turns out that there isn’t much of a difference at all. In fact, with the exception of 3M and Procter & Gamble, it seems that the Dow fell in a pretty rational manner on May 6. Those two companies overshot a lot, but everything else looks like it’s pretty much in the same ballpark today as it was at the height of the craziness.

If the flash crash was caused by liquidity completely drying up and computers doing insane things which make no rational sense, then it seems to me that the relative prices of the Dow’s 30 components wouldn’t have stayed as tightly correlated as they did: I don’t think there was a lot of relative-value Dow component arbitrage going on during those 15 minutes.

And clearly the absolute level that the Dow reached on May 6 wasn’t all that irrational either, since we got pretty close to that level today, just a couple of weeks later.

So while the volatility we saw on May 6 was crazy, and the speed of the drop was unprecedented, it seems to me that the stock market didn’t break, during those 15 minutes, quite as much as conventional wisdom says that it did. There were a few genuinely crazy individual prints, but overall, something seemed to be working.


Very interesting. We at Nanex have completed our analysis of the Flash Crash of 05/06/2010. What we found may surprise you:

http://www.nanex.net/20100506/FlashCrash Analysis_Intro.html

- Jeff

Posted by JDonovan | Report as abusive

Viewing the euro crisis from Britain

Felix Salmon
May 20, 2010 15:36 UTC

The Economist’s Charlemagne was unimpressed by my euro fantasia this morning: apparently I was the BBC’s second choice for the spot, and was approached only after they had been turned down by more sober journalists.

There is enough noise out there about Anglo-Saxon newspapers talking down the euro without dragging The Economist into a spoof about the death of the single currency… the whole idea felt unworthy of the BBC. …

The British media is handling this crisis with unusual complacency, tinged with a certain glee.

Charlemagne even manages to call the Times (of London) “criminally irresponsible” for writing about a break-up of the euro.

All of which represents a level of hypocrisy in the Economist that I’d previously suspected, but not noticed due to highly evasive skills.

Exhibit A:

Economist Cover.jpg


Your piece about euro collapse was indeed truly, totally ridiculous nonsense and here is why.

Let us first use the example of US from 2008. You could write in similar tone *before* October 2008 about “How US economy might collapse”: the banking system will go to a standstill and next day Great Depression will start. Why it did not happen we know, FED acted by circumventing the banking system and contained the problem AT A PRICE of printing money.

It is clear now that, if needed, the same happens with euro after the first step to quantitative easing was taken. Now you may say “but the price will be terrible”. Right, the price may be terrible but otherwise the price will be terrible too. And actually, equally well the price MAY NOT turn out to be terrible as we can see the dollar becoming strong and valuable after all the printing.

So the real scenario is this: all PIGS are unable to raise money from the market anymore. ECB starts buying unlimited quantities of their debt. Obviously market shorts on euro in a biiig way, escaping in droves to the dollar. That makes Euroland extremely competitive, exports surge fenomenally. Any hope of getting US economy out of the hole by increasing exports dash completely, the US trade deficit bombs. Simultaneous huge budget deficit and trade deficit become an issue of Armageddon proportions for the US.

So what happens next? Eyes turn on the US problems, euro raises, confidence in Euroland gets huge kick since it is showing up they are dead serious about their deficits. Now euro starts becoming safe haven, and the US gets its turn for coming close to the black hole.

Posted by Boomgloom | Report as abusive

Adventures in market reporting, short-selling edition

Felix Salmon
May 20, 2010 15:11 UTC

Everybody knows what happens to stocks when you try to ban short sales, right?

LONDON, May 20 (Reuters) – European shares were sharply lower at midday on Thursday, extending the previous session’s steep fall, on persistent concern other euro zone countries will follow Germany in banning short selling in certain instruments.

Except that’s not exactly what happened in September 2008:

LONDON, Sept 19 (Reuters) – European shares soared in afternoon trade on Friday, driven by a temporary ban on short sales of financial stocks in the United States and Britain.

So, if you ban short-selling, then stocks go down. Or else they might go up. Glad that’s cleared up.


Well, in fairness, this isn’t an apples-to-apples comparison; the 2008 ban was on ALL shorts, and this 2010 ban is on just NAKED-shorts. The all-shorts ban of course led to a surge as everyone needed to cover their bets, leading to a supply crunch; the naked short ban is more like a non-confidence vote that warns people to stay away from the market or get out while you can. I think that might account for it, but who knows… maybe it was just someone pissed off their trip to Thailand is likely off :p

Also wanted to say what the hell kind of keyboards are over in UK that ANYONE could come up with this fat finger nonsense and believe it! My bottom row looks like this: Z-X-C-V-B-N-M… that’s one hell of a fat finger to miss by 2 keys or not at least get an N in there to boot. I suggest a big head-smack is due to the next person who says anything so idiotic

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How the euro might collapse

Felix Salmon
May 20, 2010 14:32 UTC

I had a little three-minute fantasia this morning on Radio 4 in the UK; if you prefer text to audio, here you go. The idea was to give an idea of one way in which the euro might fall apart, but I had no idea, when I recorded it, that markets would plunge again today.

August 18, 2010:

Markets around the world plunged on Wednesday, after Spain announced that the cost of bailing out its beleaguered mortgage lenders would amount to more than 250 billion euros. The country was immediately downgraded by both Standard & Poor’s and Moody’s, triggering fears of default or devaluation in both Spain and Portugal. Stocks fall by more than 5% in all major markets, including the US.

August 19, 2010:

Chancellor Angela Merkel of Germany, in an unprecedented joint public appearance with Jean-Claude Trichet, the head of the European Central Bank, railed against “speculators and hedge funds” who were damaging European unity and threatening the viability of the common currency. She said that Europe would provide up to 500 billion euros in support of Spain, Portugal, and Greece, to help them bail out their banks during a period when investors have simply stopped lending them any new money.

August 22, 2010:

In the largest set of coordinated demonstrations since the run-up to the war in Iraq, angry voters and opposition parties across Europe came out in their millions, protesting the hundreds of billions of dollars being spent on southern European countries, and the painful austerity measures being demanded of Greece, Spain, and Portugal by the IMF.

Opinion polls show that an overwhelming majority of Eurozone members oppose the current bailout plans, both in northern European countries like Germany, which don’t want to see their money spent abroad, and in southern European countries like Greece and Spain, which refuse to be told how to run their countries by Brussels bureaucrats and the IMF.

The riot photos from Greece are becoming depressingly familiar, but now we’re seeing riots across Germany, too.

August 23, 2010:

As markets continued to plunge around the world today on civil unrest across Europe, governing coalitions across the continent broke apart, with no parties seeing any political upside in supporting the most unpopular policy that has ever been implemented in European history. Even Angela Merkel started backtracking from her earlier statements, saying that no democracy could unilaterally act against its citizens’ wishes.

August 24, 2010:

A solution, of sorts, was found to the European crisis today, when the governments of Greece, Spain, Portugal and Italy announced that they would no longer accept EU or IMF funds as part of the bailout program, and would solve their problems on their own. The joint statement was taken by markets as tantamount to default, since none of the four countries has access to the liquidity needed to roll over their debts.

August 25, 2010::

Greece has announced a debt restructuring that will push back the maturity of its bonds by three years.

It will swap existing debt for new bonds denominated in New Drachmas, which the Greek government is introducing at a 1-to-1 exchange rate but which are already trading in the “grey market” at just 50 euro cents each.

September 13, 2010:

Markets were shocked once again today as France joined, at the last minute, the joint restructuring offer from Italy, Spain, and Portugal. All four countries are offering to swap their old euro-denominated debt for new obligations denominated in a currency they’re calling “neuros”. Other eurozone countries have indicated that they, too, will leave the euro for the neuro, cutting their debt at a stroke. In the grey market, the neuro is already trading at 75 euro cents, while the new drachma is holding steady at 45 euro cents.

Today was the last day of the euro as we knew it for a decade: Europe is returning to a system of multiple floating currencies. And that means that political ties are much weaker, too. With the death of the euro, the future of the European Union itself looks very uncertain.

This is not a prediction, it’s just one way of many in which things could go wrong. There’s always a worst-case scenario. And although I didn’t have time to spell things out here, this really is a worst-case scenario, and would cause legal chaos with respect to the redenomination of assets and liabilities in what might be called the neurozone.

Which means that questions like this one, which I got via email this morning, are simply unanswerable:

What happens to the euros which I have in my travel wallet (or under the mattress or where ever) if the euro splits into various neuros? More importantly, what happens to euros held by a British bank? Answer needed!

Most likely, in this kind of a scenario, the euros would transform themselves into the currency of whatever country they’re on deposit in. You can see where the flight-to-quality trade comes from: cash flows away from euro-periphery banks and into German banks, and away from euros and into dollars, lest it end up forcibly converted into something else. Physical euros should be pretty safe: you could probably convert them into neuros at an advantageous exchange rate, assuming that it’s the weaker countries which leave the eurozone, rather than Germany and a few others deciding that they’re going to create a smaller, stronger, super-euro.

Returning back to reality, the euro itself could still fall further, especially if questions over its long-term survival continue to be raised. And all this uncertainty is bad for assets generally around the world. Expect lots more volatility going forwards.


I think the €750bn bailout might be a bluff. I seriously doubt they have the capital available to pull that off, unless of course the ECB turns on the printing presses.

And yes they do want to devalue the euro, but that’s not the ECB’s policy, and when Germany joined the EMU they told the German people that the euro would be a stable currency, so that their savings would remain intact. Ze Germans have lost everything to hyperinflation twice already, they don’t want to go through that ordeal again.

This Greek crisis gave them the opportunity to devalue the euro without severe political reprecussions as they can blame the Greeks. Straightforward quantative easing would not have been as well received.

Why devalue the euro? Haven’t you been paying attention, we’re on a race to the bottom. Just look at a 10-20 year graph of precious metal and commodity prices in any fiat currency. A euro devaluation would make the interest payments in euro debts much cheaper, and it would make the euro more competitive as a currency, maybe leading to more exports for Germany, who just got overtaken by China as the worlds biggest exporter.

However as Germans have lots of savings, they would be wiped out, or at least badly bruised in the process. At best, Merkel is buying them time to get rid of their euros.

The euro will continue to devalue, gold will continue to go up, because it must do so, or else Greece, Portugal, Spain, Italy, Ireland, France etc. will have problems paying their interest payments on euro debts on time, and must then default.

We’re playing a game of default or inflate.

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Felix Salmon
May 20, 2010 06:21 UTC

Otto has the full JPM World Cup analysis. England apparently does very well on penalty shoot-outs. Ha — Inca Kola

Paddling five miles across a lake in a bouncy castle — NatGeo

From the you couldn’t make it up department: Greek central bank faces short selling claims — FT

“Allen Stanford’s pretrial incarceration has reduced him to a wreck of a man” who keeps on firing lawyers — Reuters

Bordeaux Loses Prestige Among Younger Wine Lovers — NYT


Another link for you:

http://www.economist.com/blogs/charlemag ne/2010/05/euro_crisis_5

Felix, you are totally busted as a doomsayer. Did you enjoy adding the howling wolf sound effects?

Posted by lubumbashi | Report as abusive

A real Goldman Sachs scandal

Felix Salmon
May 19, 2010 21:04 UTC

When Matt Taibbi published his famous “vampire squid” article about Goldman Sachs, people accused him of throwing everything and the kitchen sink at the company; today’s broadside from the NYT feels similar. It’s basically the same story, repeated many times: Goldman had clients who were invested in X going up, and yet at the same time Goldman had investments which would benefit from X going down.

The fact is that Goldman Sachs is an intermediary which hedges its positions and which, as a broker-dealer, will naturally be taking long and short positions in all manner of different securities at different times. This should not be a scandal at all.

On the other hand, it really would be a scandal if Goldman Sachs was deliberately and unnecessarily kicking people out of their homes, even when doing so would lose it money. And that seems to be what it’s doing in one case in Ohio.

You might recall American Homeowner Preservation, a company I wrote about last month. The idea behind their business is that they negotiate a short-sale with the bank holding a mortgage, find an investor to buy the house in question, and then lease the house back to the original homeowner, who has an option to buy it back, at a fraction of the original mortgage payments.

It’s an idea which makes a lot of sense — but which Goldman Sachs seems to have problems with. AHP’s principal, Jorge Newberry, explains:

Struggling to stay in their home of 18-years, a Windham, Ohio family is desperately trying to solve their crisis before a May 24th sheriff’s sale. Suffering from reduced income and an ever-escalating adjustable payment, the family contacted their servicer Litton Loan Servicing to obtain a loan modification, which was eventually denied. The family then contacted American Homeowner Preservation, who made an offer to purchase the home at the appraised value of $43,000. With AHP, the family would receive an affordable 5-year lease to stay in the home, plus a favorable 5-year option to repurchase…

Last week, Litton indicated that they will approve the Windham, Ohio family’s short sale, but only if the family vacates the home due to an internal policy which restricts short sales in which the purchaser provides leases and/or options to the selling families.

Litton, of course, is owned by Goldman Sachs. And right now it seems that the house will go to auction on Monday with an opening bid of $45,300, and there will almost certainly be no bids at that level. Litton will then buy the house for $45,300, and, following the standard loan-servicer playbook, will start eviction proceedings against the family in question. Once the family is homeless and the home is vacant, Litton will try to sell the home — but there are lots of vacant homes in this particular part of Ohio, and the home is realistically just going to deteriorate steadily in terms of its condition and its value. Litton, if it ends up being able to sell the home at all, will surely get less than $43,000 for it — and will have to pay a large amount of money in legal fees on top.

So why isn’t Litton accepting AHP’s offer? In a bull market, it makes sense to be wary of short sales which aren’t bona fide arm’s-length transactions, but right now it’s undeniably better for all concerned to keep the current occupants in their home. And indeed AHP has dealt successfully with Litton in the past. What’s more, Goldman Sachs spokesman Michael DuVally told me that “Litton has no such policy that requires borrowers to vacate”.

It’s true that under the latest iteration of the Home Affordable Foreclosure Alternative Program, or HAFA, short sales must be arm’s-length transactions. But this isn’t a HAFA sale, and in any case the servicer always has the option of deleting the bit of the arm’s-length language which prevents the seller from renting their home back from the buyer.

I tried calling Ceci Oliveira, of the Litton short-sale department, the person who told Newberry about the Litton policy; she didn’t get back to me, so it’s all a bit unclear whether this Litton policy exists or not, and if it exists, why it exists.

My hope is that if Litton doesn’t see sense and agree to the short sale before Monday, at the very least they’ll hold off on eviction proceedings once they take title to the house. After all, there’s really no reason for them to evict: right now, in this part of Ohio, an empty home is not more valuable than one without people perfectly willing to make regular lease payments. Instead, it just falls in value over time.

I’m going to try to keep an eye on this case — and I have to admit to a tiny bit of hope that now it’s being publicized, Litton/Goldman is going to do the right thing, for themselves and for the owners of the home, and allow this family to stay where they are. But if they don’t, and choose instead to lose money by evicting the family in question, they deserve all the opprobrium that the NYT is trying to drum up today.


I wonder if the Windham, OH family are class members of the Schaffer v. Litton Loan Servicing class action currently pending settlement approval in CA?

http://www.latefeessettlement.com/casedo cs.html

Not a bad deal for Litton and Goldman since settlement claims appear to be limited to not more than $60.00 per claim. I guess this gives a little more urgency to my previous question of whether the Windham, OH – or any other family involved with Litton – is/was facing a fraudulent foreclosure.

I wonder just how many families have lost their homes to potentially fraudulent foreclosures initiated by Litton either when C-Bass, Radian and/or MGIC owned them or since Goldman Sachs took over?

And here I thought that the USA/Curry v. Fairbanks settlement was a farce at $147.00 per claim – if the settlement had been dispersed equally across the 281,000 victim class, which it wasn’t.

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A granular look at finance job losses

Felix Salmon
May 19, 2010 18:55 UTC

Many thanks to Mark Beauchamp of EMSI, who has provided a very granular breakdown (Excel file) of exactly where the job losses are in the finance and insurance industries. The numbers cover 2007, 2008, and 2009: so far the data for 2010 are too inaccurate to be useful. And interestingly the peak of the finance-and-insurance jobs market was 2008, with 8.88 million jobs, which then fell to 8.56 million in 2009: a fall of 3.6%.

If Mike Mandel’s theory is right, we ought to be seeing an uptick in the credit-related jobs. But “credit intermediation and related activities” saw job losses of 8% between 2007 and 2009. The gains were in things like commodity contracts dealing, which saw 7% more jobs; “trusts, estates, and agency accounts”, which saw 11% more jobs; and of course “miscellaneous financial investment activities”.

The insurance industry in general was flat from 2007 to 2009, while investment banking generally (“securities, commodity contracts, investments”) saw its total employment rise by 1% over that time.

In fact, the biggest job losses of all are exactly where Mandel expected to see gains. ” Nondepository credit intermediation” saw total jobs fall by 18%, while “Real estate credit” fell by 31%. “International trade financing” was exactly flat.

Beauchamp also broke out New York jobs — the investment banking world has been harder hit here, down 7% between 2007 and 2009, and even “Monetary authorities – central bank”, which I take to mean the New York Fed, saw its headcount fall by 8%.

In any case, enjoy playing with the spreadsheet yourself. But one part of Mandel’s theory does seem to have held up: Finance in general does seem to have lost many fewer jobs than manufacturing.

Update: Beauchamp adds, via email:

I just remembered a story that ties with this subject from New Jersey during the crash – I was working with their Department of Labor, and they told me that the unemployment offices in the north part of the state were reporting lots of financial products sales guys showing up in their offices, but because the sales guys were 1099′ers (on full commission as opposed to salary- W2′s) they were caught off guard with how many had been working in their area.

This is because the Quarterly Census of Employment and Wages derives its employment estimates off of unemployment insurance data.  Therefore, if you were on the sales side of the financial industry, you aren’t covered by unemp. data, and don’t show up in the employment estimates.

Numbers on this coming tomorrow!

Update 2: Here they are!


This is just the beginning, shrinking the financial service industry wil take reform and a reduction of the types of things that created out sized profits for undersized efforts.

Manufacturing took a hit because the banks received huge bail outs and out side of the auto industry the rest of us were left to build rafts from the wreckage.

Growth in manufacturing, less financial “innovation” and more investment in areas of science (real science not economics) that improve everyones life instead of just raising Manhattan Real Estate Prices.

Posted by jstaf | Report as abusive

Has Wall Street escaped job losses?

Felix Salmon
May 19, 2010 14:36 UTC

Mike Mandel has the chart of the day, asking why the finance industry has lost so many fewer jobs than much of the rest of the private-sector economy: financialjobs.png

I don’t agree with Mandel’s theory, which is this:

As long as the U.S. is running a big trade deficit, financial sector jobs are going to do very well. The rest of the world has to lend large amounts of money to the U.S. to keep the global economy going, and all of that money has to be funnelled through Wall Street, which creates well paid jobs.

The US twin deficit is more weighted than ever towards the public sector these days, rather than the private sector, and the number of jobs on Wall Street involved in dealing in Treasury bonds is pretty constant, and pretty small. More generally, while Wall Street does do quite a lot of debt finance, I don’t think that activity explains big headcount trends nearly as well as Mandel thinks it does.

So what’s my theory? If you look at the chart, it turns out that the job losses in finance are put into two buckets. There’s “commercial banking”, on the one hand, which has had very small job losses: people have just as many checking accounts and bank loans as they always did. And then there’s “finance and insurance”, which is what we generally think of as Wall Street, but which also includes the enormous number of employees in the insurance industry. And just like commercial banking, the insurance industry is pretty steady, and is going to have seen very few job losses indeed. What’s more, it’s probably bigger, in terms of total headcount, than the investment-banking industry.

So assume that insurance has seen even fewer job losses than commercial banking, and that it accounts for most of the jobs in “finance and insurance” — in that case, the job losses on Wall Street alone could be very large indeed to get to that final 7.3% figure.

Before reading too much into these numbers, then, I’d like to see a bit more disaggregation. It might be true that Wall Street hasn’t seen condign punishment in terms of job losses. But on the other hand, it might not.


Another reason maybe that some of the people laid off from financial services firms were given 1 year packages. That happened to two people I know. I wonder if they show up as still being on their books?

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Why Spain’s in worse shape than Greece

Felix Salmon
May 19, 2010 13:58 UTC

Note the circular reasoning in Martin Wolf’s latest column:

Greece is likely to restructure its debt at some point, as John Dizard has argued in the FT. That would not be the worst outcome. Once a country is in the “junk bond” category, no reputation is left.

Or, to put it another way, Greece got downgraded because it is likely to default, and it is likely to default because it got downgraded. This is yet another reason to start ignoring credit ratings.

The main point of Wolf’s column is a very good one:

European orthodoxy is that the crisis is, at root, fiscal. Marco Annunziata of UniCredit summarises it in a recent note: “In hindsight, it seems obvious that the flaw in the eurozone’s institutional setup is both extremely serious and extremely simple: first, a currency union cannot work without sufficient fiscal convergence or integration; second, the eurozone has been unable to create incentives for fiscal discipline.” Mr Annunziata’s chart shows that this view is wrong. Just consider the frequency of breaches of the rules requiring fiscal deficits of less than 3 per cent of gross domestic product. Greece is a bad boy. But Italy, France and Germany had far more breaches than Ireland and Spain. Yet it is the latter that are now in huge fiscal difficulties.

The fiscal rules failed to pick up the risks. This is no surprise. Asset price bubbles and associated financial excesses drove the Irish and Spanish economies. The collapse of the bubble economies then left fiscal ruins behind it.

It was the bubbles, stupid: in retrospect, the creation of the eurozone allowed a once-in-a-generation party.

This, in hindsight, was the biggest weakness of the Maastricht rules, capping debt at 60% of GDP and deficits at 3%. It’s not that the rules were broken: it’s that they were insufficient to prevent the kind of debt-fueled boom which leads inevitably to a fiscal crisis. As Wolf points out, the countries in fiscal trouble, like Spain, aren’t necessarily the ones with the highest sovereign debt ratios: they’re the ones with the highest debt ratios overall, including private debt. (Spain’s public debt is just 56% of GDP; its private debt, however, is 178% of GDP.) And private debt was never included in the Maastricht rules.

In a way, Greece has it easy: a sovereign default and devaluation solves a lot of its problems at a stroke. Spain, on the other hand, has a much tougher task ahead of it, since private-sector defaults won’t make the country any more competitive. And it’s already got unemployment over 20%. Only tough structural reforms have any chance of working, and those will take a long time, and face enormous political opposition. As Andrew Eatwell says:

Having squandered the opportunity to embark on unpopular economic, labour and pension reforms when his popularity ratings were relatively high after the 2008 general election –a period in which he fervently denied that Spain was facing an economic crisis– Zapatero now faces the prospect of tackling those issues while trailing the main opposition centre-right Popular Party in the polls and with a string of potentially tight regional elections around the corner. Necessary but unpopular measures may therefore be put on the backburner or at least kept to a minimum for fear of a voter backlash that could cost the governing Socialist Party dearly in regions such as Catalonia, where the Socialists lead a coalition government and elections are due this autumn. Zapatero also faces a general election in early 2012.

With regional governments accounting for 57 percent of total public spending in Spain, there is a serious risk that national interests and the economy as a whole may find itself subordinated to entrenched regional interests, crowd-pleasing promises and partisan politics.

All of which is different only in degree, not in kind, to what we’re seeing in the US right now.



Indeed, rating agencies have a record, and it’s hard to imagine a more dubious one, as these organizations failed totally.

The problem is neither Greece nor Spain: It’s the very economic, political and social fabric of the EU as an organization, and of its member countries on an individual basis.
Everyone’s intentions were good, and the vision was beautiful and exciting, but they no longer can be sustained economically, unfortunately.
The European system is neither productive nor competitive enough for today’s world. The European way of life and standard of living are unrealistic.
Euro socialism should evolve rapidly into a more competitive form, or the union would disintegrate.

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