Explaining Southern California's economy

Eurozone crisis: Are we all Slovaks now?

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Did little Slovakia just exercise its muscle and kill the Euro bailout package?

The Slovaks have spoken! A nation with a population roughly the size the San Francisco area and a GDP of $86 billion has failed to ratify the eurozone's plan for it to contribute $10 billion — about 12 percent of that GDP — to the currency union's bailout plans. This is the latest chapter in a debt-crisis melodrama that's forcing Greece into default and threatening Italy, Spain, and the banks of German, France, and possibly the United States.

Slovakia was the only eurozone country that voted nay. This is from the New York Times:

If nothing else, the unwieldy process underscored how the entire $590 billion euro stability fund, approved by the 16 other members of the euro currency zone, could be held hostage to the domestic politics of one tiny country, in this case Slovakia. It showed as well how a measure intended to increase confidence in the euro zone could instead emerge as a telling example of the shortcomings of a system that relies on an unwieldy group of nations to make and execute difficult decisions.

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Reportings: Euro-crisis; housing bust; Gig Economy; recession generations

Greek default, French banks, and…Newport Beach? PIMCO's Mohamed El-Erian is more than a little concerned: “The light should be flashing yellow, if not red, in Washington, D.C., and hopefully the IMF meeting can be the catalyst for getting to a common analysis and setting the stage for the G-20,” El-Erian said from Pimco’s Newport Beach, California-based headquarters. (Booomberg)

 

The Federal Reserve of Dallas wonders why the housing boom boomed so big in the 2000s: "The most recent house price and construction run-up exceeded levels recorded during the 1990s economic expansion, when unemployment rates fell even lower and income grew faster. Why is this? Standard econometric models accounting for these factors simply cannot explain the surging house prices and building seen in the mid-2000s." (Dallas Fed)

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Reportings: Machine trading; Broadcom buys NetLogic; Greek doom; Countrywide bankruptcy

Irvine-based Broadcom is dropping $3.7 billion to buy NetLogic Mircrosystems, in an all-cash deal. Who says there's no tech juggernaut in SoCal (with deep pockets, to boot)? This is the LA Times' David Sarno on Broadcom earlier this year: "With nearly three-quarters of its 8,300 employees devoted to electrical engineering, the company has been able to storm markets where it had little experience, often dominating them within a few years." (Bloomberg, LAT)

 

Blame Germany for all this stock-market volatility? With a Greek debt default looking inevitable, the big question is whether the country stays in the Euro. And if it exits, what's next for Italy and Spain? (Bloomberg)

 

Blame the machines for all this stock-market volatility? Hmmm…not sure. But automated trading now accounts for 60 percent of "daily turnover" in four major markets. (NYT)

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