Spain's Mess Explained

Prof Paul Krugman has an excellent summary of Spain's woes. He does not sound too optimistic "Spain now seems doomed to suffer years of grinding deflation and high unemployment" but affirms the Euro is here to stay "Am I calling, then, for breakup of the euro. No: the costs of undoing the thing would be immense and hugely disruptive. I think Europe is now stuck with this creation, and needs to move as quickly as possible toward the kind of fiscal and labor market integration that would make it more workable.

But oh, what a mess."

Market Psychology Explained

Funny read from Paul Krugman written in the late 90's as the S&P500 was ca 20% higher: "But suppose that, for whatever reason, the market goes up month after month; your MBA-honed intellect may say "Gosh, those P/Es look pretty unreasonable", but your prehistoric programming is shrieking "Me want mammoth meat!" - and those instincts are hard to deny."

Spain - "this is going to be ugly"

Paul Krugman is not very optimisitic for Europe's prospects, notably those of Spain.
At least he does not think "exiting the Euro is feasible".

"Irrelevant Lehman?"

Asks Paul Krugman. He disagrees with John B. Taylor, refers to James Surowiecki's comment in the New Yorker and uses the following image:
"You’re looking at some building, and you hear the fire alarm go off, and smoke starts trickling out the windows. Then a lot of fire trucks and firemen arrive — and only after that do flames start shooting out the top of the building. Clearly, the fire department turned a small problem into a crisis."