"It is easy to confuse what is with what ought to be, especially when what is has worked out in your favor."
- Tyrion Lannister

"Lannister. Baratheon. Stark. Tyrell. They're all just spokes on a wheel. This one's on top, then that's ones on top and on and on it spins, crushing those on the ground. I'm not going to stop the wheel. I'm going to break the wheel."

- Daenerys Targaryen


"The Lord of Light wants his enemies burned. The Drowned God wants them drowned. Why are all the gods such vicious cunts? Where's the God of Tits and Wine?"

- Tyrion Lannister


"The common people pray for rain, healthy children, and a summer that never ends. It is no matter to them if the high lords play their game of thrones, so long as they are left in peace. They never are."

- Jorah Mormont


"These bad people are what I'm good at. Out talking them. Out thinking them."

- Tyrion Lannister


"What happened? I think fundamentals were trumped by mechanics and, to a lesser extent, by demographics."

- Michael Barone

"If you want to know what God thinks of money, just look at the people he gave it to."
- Dorothy Parker

Monday, November 28, 2011


Europe's New Plan: Procyclical Fiscal Policy plus Hope by Yglesias
In terms of Europe's actual economic problems, however, this idea will make things worse not better. The big problem with the Eurozone is that the underlying economy simply isn't that integrated. The Portugese economy is very different from the Dutch economy, and Portugese workers face a lot of hurdles in relocating to the Netherlands or Finland where suddenly they'd be inconveniently illiterate in the local language. That means it's objectively difficult for the European Central Bank to set monetary conditions that are equally appropriate for all countries. During the credit boom, the ECB pursued policies that were too loose for southern Europe's economies. Then during the contraction, it's pursued policies that are too tight for southern Europe. It's not possible to target all the countries appropriately. The proposed continent-wide fiscal straightjacket will exacerbate the problem. If Eurozone-wide conditions warrant monetary policy that pushes Finland into recession, the new rules will mandate that Finland undertake sharp tax hikes and spending cuts that further deepen the recession. Thanks to balanced budget rules, American states already operate this way and it's a pretty serious problem. The good news for America is that we have a federal government with the ability to smooth out some of the pro-cyclical impacts of state and local budget. Europe has no such thing.

UPDATE: Henry Farrell's excellent review essay on the problematic evolution of European institutions (PDF) is very relevant here. Once again when faced with a political problem, the EU's lack of legitimacy is forcing it to reach for a "techical" solution that will further undermine its legitimacy.
Meanwhile there are rumors that the IMF and Italy are making a deal.

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