"So there are Oliphaunts. But no one at home will ever believe me."
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Signal to noise ratio

Some worthwhile thoughts on the European bail-out. Well done, violent protestors!

1. The fundamental cause of the financial crisis has been people and institutions thinking they are more wealthy than they are; this spread to Europe as well and now we are seeing the comeuppance.

3. The major European powers would not have come up with a nearly $1 trillion bailout, also involving de facto loss of ECB independence, unless they were scared ****less.

4. They are trying to do a version of TARP-in-advance-of-the-panic and in my view that panic would have come today.

9. This doesn't solve any of the basic fiscal problems, so ultimately it raises the stakes and creates a chance of even greater financial failure.  Simon Johnson comments.

Read the whole thing. Obviously I don’t have access to news about the finanical system other than what is publicly available, so I have to wonder how the basic market signals about debt and borrowers were misread by so many, for so long. It seems like the system is so full of noise (bad data) that assessing the true value of anything is impossible. Good luck to those who make their living placing bets.

(From “Simple thoughts on Europe“, via Marginal Revolution.)