The Euro.

There have been many articles in recent weeks discussing the future viability of the Euro, which has promptly ignored these warnings and gone on to record levels against the dollar.

A few people asked me "how can this be?"

The occupation of government is to "pluck the most feathers with the least amount of hissing" from its populace, while keeping a monopoly on violence. Traders know this and punish governments who begin to think their monopoly powers apply to free markets as well.

Put less grandly, if the EU will not lower interest rates, and continues to be blind to their internal problems, traders will oblige them and push the dollar price of the Euro to record levels.

Markets win. Beurocrats and civil servants lose. It happens over and over and over again. Policy makers become arrogant in their belief that they can somehow "centrally plan" a "soft landing" and markets give them a dose of reality mixed with humility.

Then the beurocrats write books explaining how difficult it is to engineer an economic outcome...as if we did not already know that.