The Mark-To-Market Amplification Of Financial Distress by Krugman

A nice phrase from my colleague Hyun Song Shin (pdf), describing what’s happening in Europe right now.

The paper covers much more ground than that, of course. This is the latest in a series of papers arguing that the U.S. shadow banking system consists in large part of … European banks. This suggests that the creation of the euro had large implications even in US capital markets; and of course it suggests that the financial fallout of the euromess could be very large here as well.

In short, the ECB could be in the process of destroying not just the euro, but the world.

I saw the movie Melancholia and liked it. It's about the end of world, too. I'll discuss it soon.