Tuesday, June 19, 2012

Polly says

To end this impasse, let us tap Europe's vast wealth 

She means
To end this impasse, let us tax Europe's vast wealth 

And what she is failing to understand is the difference between stocks and flows and the important things about "Europe's vast wealth" are that:
  • It's illiquid. Make people sell any significant portion of it and you'll find out exactly what a "falling market*" feels like.
  • It's largely isn't "Europe's". It merely belongs to people who have chosen to live here. And can, largely, choose otherwise.
But, fine. We'll start with a certain villa in Tuscany, shall we? 

* This may, of course, not be the worst thing in the world when it comes to housing prices. But, frankly, I couldn't give a flying shit what mansions are worth - two bed flats and three bed semis are the housing types I actually care about the value of.

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