Our financial system is crumbling this week.

[cpebbles]

So apparently the IPO valued Facebook at $107 billion once you account for all of the stock options that are going to be exercised.

What the hell does Facebook do that's worth $107 billion again? I can't for the life of me figure out how people spend more than a minute or two a day there.

[Hungary Jack]

So apparently the IPO valued Facebook at $107 billion once you account for all of the stock options that are going to be exercised.

What the hell does Facebook do that's worth $107 billion again? I can't for the life of me figure out how people spend more than a minute or two a day there.

Basically a media company that reaches 1 billion people and collects and sells pretty detailed information about potential consumers to advertisers. Think mass customization in advertising.

They earned about $3B in ad revenues last year and had about $1B in profits. So the margins are pretty darn good, and could improve. But it's valued at about 36x revenues. That's borderline absurd.

[Hungary Jack]

The economy is slipping...slipping...slipping down a slippery slope to sloth.

[IMADreamer]

We'll be fine I'm sure. Congress has everything under control.

[greenback44]

The 10-year Treasury rate fell below 1.5% today. But the greatest danger to our economy is inflation.

[planet planet]

I'm pretty pumped to have made $3k today, considering the alternative. Gold and USGX which had been underproducing lately saved us. That, and selling all of our Apple shares at the right time. The job numbers suck though for a multitude of reasons.

[longhornbaseball]

This is a good article on why a simple fiscal union probably won't be sustainable in Europe. They need to break up or form a full political union. That probably won't happen without significantly more pain.

http://online.wsj.com/article/SB1000142 ... lenews_wsj

A Fiscal Union Won't Fix the Euro Crisis

Recently Kurt Bills, a candidate for the U.S. Senate and a devotee of Ron Paul, introduced a bill to consider an alternative currency for Minnesota and its citizens. When I heard this idea I thought what every mainstream economist probably thought: Wow is that nuts.

Yet many observers (and online betting markets suggest a majority) believe that Greece must return to its own currency. The economies of Greece and of Minnesota are about the same size (2% of U.S. gross domestic product), so why is an independent currency viable for one and quackery for the other?

One key economic difference is the existence of a fiscal union in the United States. Increasingly, euro-zone hardliners have called for putting in a disciplined, unified fiscal arrangement similar to the one we have in the U.S. Unfortunately, their vision of fiscal union has badly missed the essence of the U.S. experience and would not fix the euro crisis.

At root, the euro-zone problem remains the locking together of very different economies into a monetary union without a way to adjust. Since the start of the union in 1999, productivity in the North, especially in Germany, has grown rapidly while wages have not. In the South, productivity has lagged. As a result, the unit labor costs in Germany have fallen about 25% since the euro's creation as compared to the Southern countries and France.

Normally, exchange-rate adjustments would reduce this gap. The slower growing, poorer country would become more competitive as its manufactured goods and its tourism became cheaper. Real incomes would take a hit initially, but the economies would have a path to growth. Inside a monetary union, however, there are no exchange rates to change.

That alone doesn't need to doom the monetary union. But without an exchange-rate safety valve you need an alternate way to rebalance economies. Moving, inflating, struggling, or subsidizing are your only choices—and none of them is easy.

If workers move freely to high-growth areas or if the central bank is willing to loosen monetary policy to get the high-growth economies to start inflating, that can replace the exchange rate as the safety valve. Inflation in the high-growth economies will change the relative real wages between the counties the same way a devaluation can. Labor mobility helps the U.S. in that sense. In Europe, though, mobility between countries with different languages is low and German tolerance for inflation seems even lower. That leaves suffering and subsidies.

Southern Europe can struggle through the problem—grinding down wages through high unemployment and structural labor-market reforms to make a country such as Greece more competitive internationally. History suggests this will not be an easy sell. Wage cuts usually come only after tremendously extended bouts of high unemployment. Structural reforms can take years to actually raise productivity growth rates.

Or Northern Europe could decide, for the sake of a united Europe, that it is willing to permanently subsidize euro-zone countries with low productivity growth. That could be through explicit subsidies or through bailouts and broad-based guarantees. But in the North, subsidies remain anathema. The Germans are quite right that the euro zone was absolutely not created to enable permanent subsidies, and their opposition is easy to understand.

Thus, lacking the normal safety valves to keep dangerous imbalances from destroying the monetary union, the euro hardliners are left with the idea of fiscal union. These hawks, however, misunderstand a fundamental strength of the U.S. fiscal union. They seek a union to impose budgetary discipline and structural reforms on laggard countries while the U.S. fiscal union serves mainly as an engine of subsidy.

Last year, the Economist compiled census data from 1990 to 2009 for all 50 U.S. states on the amount of federal spending in each state minus the amount the state's residents pay in federal taxes. Over 20 years, states like Minnesota and Delaware annually paid in about 10% more of their state GDP than they got back. On the other side, for the last 20 years New Mexico, Mississippi and West Virginia have received annual subsidies of more than 12% of state GDP. While not a perfect measure of subsidy, it conveys the basic point well. These are big. Greece's entire 2011 deficit, for example, was 9.1% of GDP.

The U.S. fiscal union has worked, in no small part, by enabling subsidies to the Mississippis without requiring the approval of the Minnesotas. It creates an important form of insurance. When Texans suffered from the collapse of the oil market in the 1980s, they could rely on the fiscal union to help them. When Texas boomed with rising oil prices in the 2000s, it contributed to the union to help harder hit regions.

Giving Northern Europe a veto over Southern Europe's budgets will not hold a monetary union together. The euro zone will continue to need the weaker countries to stomach decades of high unemployment to grind down wages.

Without some significant inflation in the North or mobility from the South, holding the European monetary union together will cost Northern Europe a great deal of money. In other words, if a fiscal union is to save the euro zone, it would need to facilitate subsidies from North to South, not eliminate them. As far as the likelihood of that, I wouldn't be willing to bet a dollar—even if it were backed by the state of Minnesota itself.

Mr. Goolsbee, a professor of economics at the University of Chicago's Booth School of Business, was chairman of President Obama's Council of Economic Advisers from 2010 to 2011.

[Freed Roger]

[longhornbaseball]

[JackofDiamonds]

Seems odd that the UK's share was never any larger than that.