Europe's Financial Vulnerability
In a world where capital is free to flow across international boundaries, the crisis in the US has spread to Europe. The European Central Bank's failure to tackle local bubbles – on the grounds that the Bank's role is to address inflation, not relative price adjustments – hasn't helped.
https://prosyn.org/njT51Kg
VIENNA – The most notable innovations of the past two decades have been financial. Like technological innovation, financial innovation is concerned with the perpetual search for greater efficiency – in this case, reducing the cost of transferring funds from savers to investors. Cost reductions that represent a net benefit to society should be regarded favorably. But as the current financial crisis demonstrates, where financial innovation is designed to circumvent regulation or taxation, we need to be more circumspect.