EU Commission Authorities Protecting The Greeks

We should thank the European Commission competition authorities for doing the obvious, something that the Greek authorities did not do, for the usual reasons of collusion and corruption. I am of course talking about the proposed merger between two of Greece’s largest airlines, Aegean and Olympic Air. The competition authorities declined the proposition on the grounds that it would create a monopoly. They state,

“This would have led to higher fares for 4 out of 6 million Greek and European consumers traveling on routes to and from Athens each year.”

It is interesting that the commission rarely uses its veto on mergers. You may read the article here.

Burton Malkiel’s Interview About Efficient Markets

The Stock Market Is Here

It has been a great come back! Motivated by today’s crossing of DJIA of the 12,000 level, which with certainty is going to be heralded in the media, I wanted to remind a few facts. First, where were we before we get into this mess? We (DJIA) hit a level of 14,093 on October 8, 2007. Then we landed at 6,626 on March 2, 2009, and since then we have been going up and up until today we crossed the 12,000 mark. If you ask me where it is going to go, I will have to say that “I do not know”. However, it is more likely that will go higher than lower. Apart from the ongoing slow worldwide economic recovery, an important factor that can affect significantly the “near” future market returns is the positive feedback by the media. The index is climbing higher with no big hiccups and quite low volatility, VIX is at  16.71, a level we crossed, moving upwards, in July 2007 and we revisited in October 2007, as well as a few other times since then, which was the market’s high. For all these reasons, I see an upward movement in the overall market as being more probable than otherwise, even though the fact that we have not seen any serious disruptions in the up-trend makes me cautious. The market is back, good news come from a lot of directions, the news will be heralded, the hype may catch on again, the market probably will continue higher, but be cautious about when a correction, or a turn may come. The turn is not very probable. For it to happen, the bad news will have to be quite significant.

Sheer Regulators’ Incompetence

The failures of SEC in identifying Ponzi schemes or even following up after people pointed them out to the authorities are known and monumental. So, perhaps one more failure would not be of surprise or worthy to be mentioned. However, here I report the latest one, the failure to uncover a 500 million Ponzi scheme run by Westridge Capital Management that lasted more than a decade, in Los Angeles.

Other notable failures of SEC officials to uncover such practices include the Madoff scandal. Here are some older articles on the subject. Article 1, article 2.

With all this new regulation in place, the question that we still have to answer is who is going to do the job. It is not merely a matter of less regulation, but of sheer incompetence of people to perform their tasks, that brought us, to a big extent, where we are today.

A Paper on Greece’s Woes

My appointment at NYU has taken a toll on my time devoted on this blog. However, here is a paper I meant to include in the information about Greece’s economic problems. The article, written by well known academics Meghir, Vayanos and Vettas, not only identifies the causes of the Greek crisis but also proposes measures in order to get out of it as fast as possible. Hope you enjoy it.