"So there are Oliphaunts. But no one at home will ever believe me."
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Hang together, or just hang

There is so much news to process as things fall apart. I feel like I could spend the whole day reading and by the end of the day events will have rendered half the facts obsolete. Here in Iraq, I spend an hour and a half to two hours teaching math on Mondays, Wednesdays and Fridays and I feel exhausted by the end of those days. I have no idea, none, how I managed to hang on through the same class for six weeks, teaching six days a week, not three last November and December. That whole time seems like a blur to me, and it was some of my busiest time during my “day job” as well.

Well, at least John Ellis has time to read and ask the right questions. He is consistently very good on the financialization crisis. My news reader’s gutter of “to read” articles is consistently of links from his blog.

Looming over the financial crisis of the developed world is the larger question of social cohesion. Given what is coming (higher taxes, sharply reduced services and a much diminished sense of financial security), do countries hold together or do they come apart. Clearly, “social cohesion” is being tested in Greece. The Irish, on the other hand, are holding together well, at least so far.

The social cohesion of the United States will soon be tested. Higher taxes and sharply reduced services are coming soon. Expectations of a brighter future are evaporating. The question that hangs out there is whether we are Greece or Ireland.

(From “Social Cohesion“, via Ellisblog!.)

May 12, 2010   Comments Off

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.)

May 11, 2010   Comments Off