Monday, November 21, 2011

Is Krugman too bullish on Europe???

He knows the situation a bazillion times better than I do, but this caught my attention:

"In fairness, Lehman’s bust called everything into question; everyone wondered whether there were 10, 20 Lehmans out there. We sort of know how many Italys there are."

But that wasn't the only problem with Lehman. It also did real damage to otherwise healthy firms. Yes, we know how many Italys are out there now. But how many more will look like Italy a couple weeks from now?

I would say that we've already priced an Italian failure in... but then again that's another thing they said about Lehman.


  1. Well, using Keynes's weight of evidence interval:

    0 ≤ w ≤ 1

    Now if I'm not wrong, we assign a probability of things occurring *closer* to nil or unity.

    What would you say are the chances of the eurozone breaking up, Mr. Kuehn?

  2. Ireland is still looking skaky (I know I live there), so is Portugal and Spain.

  3. I guess it comes down to how crazy you believe the ECB is.


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