Wednesday, June 30, 2010

Evidence of Minsky's brilliance....

...and the futility of "diversification" in the face of global economic crisis.

The Eunuch class...

...expounding upon my previous post.

The below snippet from a Fed official mentions the use of "strict scrutiny" in the formation of Fed policy.

This is a curious use of a LEGAL term of art. It is very instructive to note the gravitation towards using terms like "strict scrutiny" for the purpose of bolstering Fed legitimacy, it is also illuminating to note the Fed taking on analytical mechanisms steeped in an entirely different branch of Government.

Strict Scrutiny is applied by courts typically in challenges to legislation that impedes or infringes on Constitutional rights. It has never been applied to internicine conflicts between bearocraticies as a legal concept.

Nor is there precedent for Fed officials to review Fed policy with different levels of "scrutiny" ex-ante, and there are no records or references in Fed minutes to differing levels of scrutiny.

A very strange use of words, and the only effect achieved is one of signalling in furtherance of bolstering perceived legitimacy.

June 28 (Bloomberg) -- Federal Reserve Governor Kevin Warsh said any decision by the central bank to expand its $2.35 trillion balance sheet must be subject to “strict scrutiny.”

Warsh, in a speech in Atlanta, said he would need to be convinced that the economic benefits of such a move “outweighed any costs owing to erosion of market functioning, perceptions of monetizing indebtedness, crowding-out of private buyers, or loss of central bank credibility.”

Fed policy makers last week signaled Europe’s debt crisis may harm the U.S. economy, saying “financial conditions have become less supportive” of growth and repeated a pledge to keep interest rates near zero “for an extended period.” At the same time, officials are laying plans for an eventual exit from record monetary stimulus to head off an outbreak of inflation.

Analysts including Avery Shenfeld, chief economist with CIBC World Market in Toronto, and former Richmond Fed President J. Alfred Broaddus have said weakness in the economy increases the chances the Fed would resume expanding its balance sheet. The Fed bought $1.6 trillion in housing debt and Treasury securities since late 2008 as it battled the financial crisis.

“Some believe the Federal Reserve should do more, including expansion of its balance sheet,” Warsh said. “In my view, any judgment to expand the balance sheet further should be subject to strict scrutiny.”

Warsh, echoing some of the language of the Federal Open Market Committee’s statement, said the recovery is “proceeding” and the “labor market is improving, albeit gradually.” He added that “employers appear quite reluctant to add to payrolls,” and that most broad inflation measures “remain subdued.”

The Eunuch class...

...defending its perceived exclusivity rights on economic commentary. Naturally, I disagree with this. (My comments in italics)

"The punchline to all this is that when a professional research economist thinks or talks about social insurance, unemployment, taxes, budget deficits, or sovereign debt, among other things, they almost always have a very precisely articulated model that has been vetted repeatedly for internal coherence. Critically, it is one whose constituent assumptions and parts are visible to all present, and can be fought over. And what I certainly know is that to even begin to talk about the effects of unemployment, debt, deficits, or taxes, one has to think very hard about many, many things. Examples of this approach done right in the context of some of the topics mentioned above are recent papers by Robert Lucas of the University of Chicago, Jonathan Heathcote of the Minneapolis Fed, or Dirk Kreuger and his co-authors. Comparing, even momentarily, such careful work with its explicit, careful reasoning, its ever-mindful approach to the accounting for feedback effects, and its transparent reproducibility, with the sophomoric musings of auto-didact or non-didact bloggers or writers is instructive. For those who want to really know what the best that economics has to offer is, you must look here. And this will be hard."

The panopoly of economics is far too difficult for the unwashed masses. Very subtle. Economics is now officially a religion, having fully jettisoned the teachings of its founder(s) in favor of an organized system of thought which confuses process with wisdom, sacrosanctity for the sublime. Adam Smith, David Ricardo, Quesnay, Grotius, Pufendorf, William Petty, and other important "economists" suffered from the condition of being "auto-didacts". This letter reads like so many apologistic sermons. Also note the appeals to authority and genuflection for senior priesthood members.

But why should it be otherwise? Why should anyone accept uncritically that Economics, or anyfield of human endeavor, for that matter, should be easy either to process or contribute to? To some extent, people don’t. Would anyone tolerate the equivalent level of public discussion on cancer research? Most of us readily accept the proposition that Oncology requires training, and rarely give time over to non-medical-professionals’ musings. Do we expect advances in cell-biology to be immediately accessible to anyone with even a college degree? Science journalists routinely cite specific studies that have appeared in specific journals. They generally do not engage in passing their own untrained speculations off as insights. But economic blogging and much journalism largely does not operate this way. Naifs write books, and sell many of them too. People as varied as Matt Ridley and William Greider make book-length statements about economics. I’ve never done that, and this is myjob. This is, to say the very least, bizarre. The response of the untrained to the crisis has been even more startling. Many books have already been written about the nature of financial markets by non-economist writers, and I listen to Elizabeth Warren on the radio fearlessly speculating about the nature of credit market dysfunction, and so on

ECONOMICS IS NOT A SCIENCE. It has, however, become something of a profession, one that feels threatened by its lack of usefulness by comparing itself to sciences that can achieve real results. Even oncologists will admit they cannot predict the future, but Economists have a hard time dealing with this unavoidable human condition. The tone of this commentary reflects the most dangerous of attitudes: institutional arrogance and the confusion of credentials with knowledge. By beutifying not the pursuit of truth, but the establishment of an order, this commentary misses the point. Remember, it was "Political Economy" first, and should never be confused with true Science.

It is good to see rebuttals to this arrogance:

Monday, June 28, 2010

Failed state and capital controls

As I have discussed, the situation is disintegrating as the rule of law breaks down. It would have been prudent o remove exposure months ago.

Mexico’s peso fell after the leading candidate for governor in the border state of Tamaulipas was gunned down in the highest profile killing of a politician since 1994, fueling concern companies may cut back on investment in the country.

The currency dropped 0.4 percent to 12.6990 per dollar at 2:37 p.m. New York time, from 12.6490 on June 25. Government peso-denominated bonds erased gains.

Rodolfo Torre, a 46-year-old member of the Institutional Revolutionary Party, was killed in Tamaulipas state, said Interior Minister Fernando Gomez Mont in a press conference broadcast on television today.

“The market flipped suddenly a few minutes after the news of the candidate’s murder,” said Ramon Cordova, a currency strategist at Base Internacional Casa de Bolsa SA in Monterrey, Mexico. “This isn’t going to be a long-term risk, because we have been seeing this kind of violence in the country for two or three years now.”


Having your cake...

...and eating it too.

Cutting deficit spending (increased deficits should have been in the manifestation of tax cuts, but that of course removes power from the political process, a concept anathema to most politicians), while increasing growth during a period of debt-deflation is more than just a tall order.

We have heard countless speeches detailed things called "task forces" or "initiatives" or "plans of action" or "committees" all DESIGNED to somehow alleviate economic problems faced by nations.

Unfortunately, with market forces almost entirely co-opted by flailing policy makers whose zone of understanding is more finely attuned to popular opinion (and the corresponding effect on votes) than mechanisms that can increase economic growth, their behavior seems entirely rational: correct the problems they have helped to create by creating more problems. A sustainable, if unhealthy, ecology.

Saturday, June 26, 2010


...another great article by Mr. Das:

It seems that the global financial crisis is the economist’s moment in the sun. They are busily "solving" the problem, sometime with pet theories or, more often, rehashing old ones. Unsurprisingly, there have been spats between economists with allegiances to different camps. Most notable fights include Paul Krugman versus Stephen Roach, Martin Wolf versus Niall Ferguson etc. If Friedman had been alive, then it would have been Milton versus all comers. If Keynes had been alive, then the jousts would have at least been witty and cultured. No modern economist can touch Keynes and John Kenneth Galbraith for pungent wit.

Most economists, it seems, believe strongly in their own superior intelligence and take themselves far too seriously. In his open letter of 22 July 2001 to Joseph Stiglitz, Kenneth Rogoff identified this problem: "One of my favourite stories from that era is a lunch with you and our former colleague, Carl Shapiro, at which the two of you started discussing whether Paul Volcker merited your vote for a tenured appointment at Princeton. At one point, you turned to me and said, "Ken, you used to work for Volcker at the Fed. Tell me, is he really smart?" I responded something to the effect of "Well, he was arguably the greatest Federal Reserve Chairman of the twentieth century" To which you replied, "But is he smart like us?" Economists have delusions of adequacy and a related assured self-confidence that they bring to any problem.

Rogoff went on note that in one of Stiglitz’s books – "Globalisation and its Discontents": "… I failed to detect a single instance where you, Joe Stiglitz, admit to having been even slightly wrong about a major real world problem. When the U.S. economy booms in the 1990s, you take some credit. But when anything goes wrong, it is because lesser mortals like Federal Reserve Chairman Greenspan or then-Treasury Secretary Rubin did not listen to your advice." Rogoff concluded that Stiglitz was "… a towering genius. Like your fellow Nobel Prize winner, John Nash, you have a "beautiful mind." As a policymaker, however, you were just a bit less impressive."

Writing in his preface to Benjamin Graham’s "Intelligent Investor", Warren Buffet observed that: "…not only does a sky-high IQ not guarantee success but it could also pose a danger…I therefore urge the relevant regulatory bodies of the United Studies and Canada to incorporate an IQ test into their securities licensing exams. … nobody would be allowed to work in the financial markets in any capacity with a score of 115 or higher. Finance is too important to be left to smart people." One could add economics should definitely never be left to economists.

The blind leading the blind...

Because "coordinated action" has had a wonderful track record as of late. Cutting deficits in an environment of debt-deflation.

U.S. Treasury Secretary Timothy F. Geithner urged Group of 20 leaders at a summit this weekend in Canada to commit to policies that ensure the global economic recovery won’t be derailed.

Countries, particularly Japan and others in Europe, need to do more to boost domestic demand instead of just looking for ways to slash their budgets, Geithner said at a press conference in Toronto. China has already adopted such growth-oriented policies, while the U.S. is doing its part to rebalance the global economy by boosting national savings and investment, he said.

Other major economies are not doing enough to encourage growth after the worst financial crisis since the Great Depression, Geithner said. He said only a few countries, such as Greece and Spain, must reassure markets by cutting spending now, and he said growth would be a central focus of G-20 meetings today and tomorrow.

Japan and other European countries haven’t yet produced “a set of policies that will again give everyone confidence that you’re going to see stronger domestic demand growth in those countries going forward,” Geithner said. “That’s a very important debate. That’s a much more complicated debate than the simple question of how fast people move to restrain on the fiscal side.”

Tuesday, June 15, 2010

An allegory...

...about information. My apologies if this is somewhat scatological, but bear with me.

Information is like the grass in a pasture. It is a primary objective for the residents therein.

Mastication, digestion, and elimination result. Information follows a similar life-cycle with "Big Boys" doing the masticating, Institutions doing the digestion, and the retail audience is greeted with the elimination.

Yet another reason why silly "theories" like "efficient markets" which rely upon assumptions about the fungibility and universality of information fail to explain real economic events.

Monday, June 14, 2010

More subsidiarity... we see tremors and fractures in the post-war drive to unite the world.

A stunning electoral success for Bart de Wever’s Flemish nationalist party, which won the most parliamentary seats, is a significant new challenge to the fragile unity of a federal country where tensions between French and Dutch speakers run deep, and where voters in one region cannot vote for parties in the other.

It has also injected a new element of uncertainty into Europe at an especially difficult time for the European Union, struggling with serious problems over its finances and currency.

Belgium is due to assume the rotating presidency of the European Union in less than three weeks. But it is likely to take months to negotiate a new coalition, raising the prospect that Belgium will be struggling to assemble its own government at precisely the time it is supposed to be steering Europe out of a deep crisis.

In 2007, after the last general election, it took the Belgians roughly nine months to form a coalition government, a measure of the centrifugal forces threatening to destroy the already-loose federal state, or to make it even less relevant than it is today.

“We are close to the abyss,” said Lieven de Winter, professor of politics at the Université Catholique de Louvain. “Whether we are five meters or five centimeters away is difficult to say. But Belgians are at a crossroads where they are making a choice on whether they want to live together or not.”

Saturday, June 12, 2010

Excellent video...

...overviews the "quant bubble" currently expanding once again.

Quants: The Alchemists of Wall Street

Wednesday, June 09, 2010


...a very curious move given the well-publicized difficulties with the Spanish banking system.

Buying a large amount of U.S. dollar deposits based in Mexico? I am at a loss to explain this buy-back.

June 9 (Bloomberg) -- Banco Santander SA, Spain’s largest bank, agreed to pay $2.5 billion in cash to buy a stake in its Mexican unit that it sold to Bank of America Corp. in 2003.

The purchase of Bank of America’s 24.9 percent holding will lift Santander’s ownership of the Mexican division to almost 100 percent, the bank said in a statement today. The acquisition will increase earnings per share by 1.3 percent in the first year, the Santander, Spain-based bank estimated.

Santander is reversing the stake sale made seven years ago even as concerns about Spain’s public finances drag on the company’s shares. Bank of America is selling less than a month after announcing plans to shed its stake in Brazilian lender Itau Unibanco Holding SA as it strives to boost capital.

“If they have the wherewithal at Santander to make this kind of move, it does show some kind of confidence that they are not in the kind of difficulty that the price of their shares implies at the moment,” said Kevin Lilley, a fund manager at Royal London Asset Management, which oversees about 1.25 billion euros ($1.5 billion) in continental European stocks, including Santander.

Tuesday, June 08, 2010

A convenient excuse...

...for an invasion, or at least a military build-up prior to an invasion.

Readers here will note I have maintained there is a high probability that China deems its annoying Eastern neighbor as expendable, in both economic and (communist) doctrinal measures, and moves to perform a "peacekeeping" operation that will serve as a tune-up for its conventional armed forces.

This escalation at the border (over something that must have happened multiple times in the past) at this juncture is very telling.

China says a North Korean border guard shot and killed three people near the countries' border last week.

A fourth person was reportedly injured in the incident near the north-eastern border town of Dandong.

China has made a formal complaint to North Korea, a spokesman for the Chinese foreign ministry said.

The two countries are considered to be close allies and Beijing rarely makes any public criticism of its isolated neighbour.

Foreign Ministry spokesman Qin Gang told a regular news conference in Beijing that the four residents of Dandong, in Liaoning province, had been shot "on suspicion of crossing the border for trade activities".

"China attaches great importance to that and has immediately raised a solemn representation with the DPRK," he said, using North Korea's full name (Democratic People's Republic of Korea).
Close ally

Mr Qin said the case was being investigated, but gave no further details. Pyongyang has not commented on the accusations.

Illegal traders regularly cross the border between North Korea and China, taking black market goods into the impoverished country.

China is North Korea's main trading partner and the country perceived to have the most influence on the state.

The Paper Dragon...

...yet more unnerving news pouring out of China. None of this should come as any surprise whatsoever to readers of this blog, but it is interesting that investigative pressure into worker conditions (now its a Honda factory) will add pressure to wage increases and cost-push inflation. What a mess.

Lost Decade redux

...If these measures are effectuated, they will create ever more deflationary forces that will drag on growth. A terrible set of prescriptions.

June 8 (Bloomberg) -- Yoshihiko Noda, who may become Japan’s ninth finance minister in four years, would bring support for spending cuts to the incoming cabinet as policy makers compile a plan to rein in the world’s biggest public debt.

Noda, a 53-year-old member of the ruling Democratic Party of Japan, has been asked to become finance minister, according to a person familiar with the matter speaking on condition of anonymity. Prime Minister-elect Naoto Kan is poised to announce his cabinet today following the emperor’s return from a holiday.

Noda, who has no previous cabinet experience and would be the youngest in the job since the 1980s, will need to restrain budget requests of fellow ministers as he seeks to implement a deficit-reduction plan due by month-end. Noda in his current role has opposed using bond issuance to pay for new spending measures and last month warned that any let-up in fiscal discipline threatened to send yields soaring.

Monday, June 07, 2010

Paternal scaleability

...Describes the relationship between politician and constituent, with the very unfortunate side effects of condecension as well as capitulation to the inevitable tantrums. This of course reinforces unproductive expectations.

Since the precedent of bailouts has been set and replayed several times, it will be interesting to observe how both parent and child behave when the FHL banks finally capitulate.

Hastening the Obama doctrine... the implications for shrinking markets will force the hand of the U.S.'s security apparatus.

El-Arian of Newport Beach...

From the tone of my previous posts regarding the dangers of "epoch change", it appears that I am not alone. Full article found here.

Finally, it welcomes agreement on “the World Bank’s voice reform to increase the voting power of developing and transition countries by 3.13%.” While this is a signal of ongoing efforts to address longstanding representation and legitimacy deficits in international institutions, it also confirms that the steps being taken are miniscule and slow. This is a further indication that, despite what they say, industrial countries continue to embrace and protect a global governance system that reflects the outmoded world of yesterday, rather than the world of today and tomorrow. This will further undermine hope for effective and durable global policy coordination.

So, what should we make of all this; and how will it play out in markets?

I come away with the strong feeling that today’s G-20 communiqué is a further confirmation that structural and balance sheet realities are imposing themselves on the global economy.

Compared to what the world has known for the last 40 years, this situation results in a highly unusual configuration of growth, debt and deficits; it raises legitimate questions about the prospects for self sustaining private sector recoveries in industrial countries (and the related ability to grow out of excessive indebtedness); and it loudly illustrates the limitations of cyclical policy responses and international coordination, and associated problems with unintended consequences and collateral damage.

I fear that all this may continue to catch off guard at least three dimensions that are still significant in today’s marketplace:

* Mindsets that have difficulties recognizing regime shifts, preferring instead the illusionary comfort of the more familiar cyclical frameworks;
* Approaches that focus excessively on rates of change and inadequately on levels; and
* Investment portfolios that are over-exposed to equity and credit risk, and that maintain insufficiently hard interest rate duration.

In concluding, I would repeat what I said early yesterday morning when asked by a reporter “what does the US jobs report mean for markets:” Investors should keep their seat belts on and tight.

Sunday, June 06, 2010

The end of the beginning

More evidence on the reversion towards a new age of incrementalism and subsidiarity as the post war bubble of Globalization is and its obligations are jettisoned in the name of expediency.

It was always thus. Every treaty in history is broken. The speed of this deflation is actually exacerbated by democracy as politicians must cater to local constituents and no longer can afford to outsource power to super sovereign entities. The benefit is a greater probability of peaceful resolutions. I shudder to think what quagmire we would be in if the world was mostly comprised of monarchies.

This is a good and natural thing, and will usher in great opportunity for those firms who profit from higher friction costs of trade.

So now we see our ministers advising their counterparties to avoid the pratfalls of mercantilism without full knowledge of their relative predicaments. And of course, the reason why there is no full knowledge is that we are witnessing a great reallocation of trust. Just as the Banks in Europe no longer wish to lend to one another for similar reasons. What was a friendly game of cards has now turned into a no-limit game of texas hold'em with every marker burned to the house limits.

June 7 (Bloomberg) -- Global policy makers are starting to clash over their individual prescriptions for recovery as Europe demands lower budget deficits while the U.S. warns against pushing exports instead of domestic demand.

At a meeting of Group of 20 finance chiefs in Busan, South Korea, June 4-5, Treasury Secretary Timothy F. Geithner said the world cannot again bank on the cash-strapped U.S. consumer to drive growth and urged other nations to stimulate their own demand. European Central Bank President Jean-Claude Trichet said fiscal tightening in “old industrialized economies” would aid the expansion by shoring up investor confidence.

Each strategy carries threats for the global rebound that the G-20 said faces “significant challenges.” Continued stimulus risks bondholder revolt over rising debt burdens, while spending cutbacks could worsen unemployment. Relying on exports leaves the world prone to trade wars and competitive currency devaluations as countries seek to give their companies an edge.

Saturday, June 05, 2010

EU debt...

Nice graphic and accompanying article on EU debt cross-holdings.

Friday, June 04, 2010

Incentives... I said, massive incentives for governments to be "liberal" with official figures.

June 4 (Bloomberg) -- Hungary’s forint dropped to the weakest level in a year, stocks plunged the most worldwide and government bond yields had the biggest increase since November 2008 after a spokesman for Prime Minister Viktor Orban said the economy is in a “very grave situation.”

The forint depreciated 2.1 percent to 287.73 per euro at 2:28 p.m. in Budapest, the weakest level since June 2009. The extra yield investors demand to own Hungary’s debt over U.S. Treasuries rose 93 basis points, the most since November 2008, to 4.12 percentage points, according to JPMorgan Chase & Co.’s EMBI Global Index. The BUX Index of equities tumbled 7 percent.

Hungary’s economy is in a “very grave situation” because the previous government manipulated figures and lied about the state of the economy, Orban’s spokesman Peter Szijjarto said at a press conference in Budapest today. Talk of a default is “not an exaggeration,” Szijjarto said. European equities and U.S. stock-index futures fell after the comments.

“The headlines explain it all,” Koon Chow, an emerging- market strategist at Barclays Capital, said in a phone interview from London. “The situation in Hungary is not really that bad, but if you have someone from the government say something like that it only invites people to put on shorts.”

Thursday, June 03, 2010

National Security...

The President's National Security Strategy report (found here) maintains the themes I have echoed on this blog. Namely, that the U.S. enjoys a very privileged position as sole provider for global security in addition to being the marginal consumer for the world's exports.

More interesting to me is the realization that this current cycle of massive globalization can unravel very quickly; the speed of which depends on economic stability.

Needless to say, there are massive incentives for governments to be extremely liberal with official statistical releases and budgetary figures.

The dark side of this globalized world came to the forefront for the American people on September 11, 2001. The immediate threat demonstrated by the deadliest attacks ever launched upon American soil demanded strong and durable approaches to defend our homeland. In the years since, we have launched a war against al-Qa’ida and its affiliates, decided to fight a war in Iraq, and confronted a sweeping
economic crisis. More broadly, though, we have wrestled with how to advance American interests in a world that has changed—a world in which the international architecture of the 20th century is buckling under the weight of new threats, the global economy has accelerated the competition facing our people and businesses, and the universal aspiration for freedom and dignity contends with new obstacles.
Our country possesses the attributes that have supported our leadership for decades—sturdy alliances, an unmatched military, the world’s largest economy, a strong and evolving democracy, and a dynamic citizenry. Going forward, there should be no doubt: the United States of America will continue to underwrite global security—through our commitments to allies, partners, and institutions; our focus on defeating al-Qa’ida and its affiliates in Afghanistan, Pakistan, and around the globe; and our determination
to deter aggression and prevent the proliferation of the world’s most dangerous weapons. As we do, we must recognize that no one nation—no matter how powerful—can meet global challenges alone. As we did after World War II, America must prepare for the future, while forging cooperative approaches among nations that can yield results.

Wednesday, June 02, 2010


The repurcussions from the inevitable China decline is already starting to have major ramifications with U.S. NAFTA trading partners. I have already mentioned Mexico, but Canada will suffer as well with falling commodity prices and an already frothy Real Estate market in the wealthiest portions of British Columbia.

(Doffing my Fedora to these gentlemen here for the above graph)

Tuesday, June 01, 2010


Not to pick on the author of the below statements, merely illustrating the prevailing wisdom espoused by most experts earlier this year, which I vehemently disagreed with.


Feb. 4 (Bloomberg) -- Nassim Nicholas Taleb, author of “The Black Swan,” said “every single human being” should bet U.S. Treasury bonds will decline, citing the policies of Federal Reserve Chairman Ben S. Bernanke and the Obama administration.

It’s “a no brainer” to sell short Treasuries, Taleb, a principal at Universa Investments LP in Santa Monica, California, said at a conference in Moscow today. “Every single human being should have that trade.”

...and the riposte by reality:

NEW YORK, June 1 (Reuters) - Europe's sovereign debt crisis may have finally tamed some of the most bearish traders in U.S. government debt, which just scored its best month in more than a year.

Growing fears over the heavy indebtedness of Greece, Spain and other euro zone nations have fueled a stampede into perceived lower-risk investments including Treasuries, cash, and gold since early April.

But until very recently, there had been a stubborn group of investors and traders who believed the intense safe-haven demand would fade. They also believed the market would focus on improving U.S. economic fundamentals and the United States' own fiscal predicament, sparking a Treasury sell-off that would push up bond yields.

So far, however, there has been no sign that the flight-to-quality bids for Treasuries are abating in the wake of Fitch Ratings' removal of Spain's coveted AAA-rating last week.

Data also pointed to little chance of inflation rising in the next couple years, while the Federal Reserve has signaled it is in no hurry to raise short-term rates.

The Long and Short of things.

De-risking, Re-risking, scaling down, levering up, etc.

With popular media desperate for narratives to make sense of the current macro-environment, we have heard all kinds of hyphenated appellations that purport to describe aggregate buying and selling in the deepest capital markets in the world.


Markets are forward looking discount machines, incentivizing participants to gather information and communicate this information into prices. I must remind myself whenever I watch CNBC or the like that ex-post explanations are near-useless.

Besides, they should be more concerned about armed conflict at this point, with obvious flash points being the Middle East and East Asia. But there is also risk in Europe itself.

Central planning of any type, be it nations, corporations, municipalities, et al., face crisis of confidence. And with so many NGO organizations hopelessly devoted to the task of eroding more sovereign power from individual states (and the individuals that comprise those states), it speaks as another intellectual bubble ready to burst in favor of a new era of subsidiarity and incrementalism.