The US economy is quite evidently slowing again and the Fed in its wisdom has decided to extend Operation Twist, that is buying longer dated treasuries and funding that with the sale of shorter dated debt. This is like someone saying he’s got to water the lawn just after Hurricane Katrina.

The financial crisis rolls on. Failure to fully understand the first precipitation in 2008 is leading to errors in policy.

The problem of fiscal union in the Eurozone is not as intractable as many think. There is an elegant solution. Actually, let me retract that, there is a chaotic, potentially contentious, precipitous, union breaking, gut wrenching solution. Which is quite nice.

It is irrational to establish or maintain a common currency in Europe. If, however, the decision was based on ideology, then the policies designed to hold together the cracked and bursting union are misguided.

Forget about fiscal union. If you cannot get convergence in the productivity of all factors of production, that includes not just labour but land and capital as well, you will not have convergence in the reward to factors, and thus convergence in factor prices.