Really great links - Technical trading and crash - EU will fight bubbles - Naked CDS - David Friedman vs. Robert Frank

Rajiv Sethi - Technical trading strategies and Thursday's crash - "The best explanation that I have seen is contained in a message by an anonymous analyst that Yves Smith posted earlier today. The hypothesis is that the initial trigger came from algorithms implementing volume-sensitive technical strategies"

Ambrose Evans-Pritchard - EU - "Commission president Jose Barroso unveiled plans for EU control over national budgets, including an incendiary demand that Brussels should vet budgets before their first reading in Westminster, the Bundestag, and other parliaments. Current account deficits and credit growth will be monitored. Brussels can imposing sanctions on states that let booms run out of control. "We must get to the root of the problems," he said."

Brad DeLong - Naked CDS - "As far as naked CDS shorts are concerned, they make it easier for pessimistic noise traders and pessimistic fundamentals traders to affect prices. Optimistic noise traders and optimistic fundamentals traders can already affect prices--they go long CDSs, take on risk, and so lead to the construction of new houses."

David Friedman - My Response to Robert Frank's Reply - "I do not know if it has occurred to you, but one implication of your argument is that spending on schooling, insofar as it produces status, imposes a negative externality on others, so private individuals will tend to buy a more than optimal quantity of schooling for their children. It follows, on straightforward economic lines, that instead of subsidizing schooling, as we do on an enormous scale, we ought to tax it. If schooling is “inescapably relative,” we could cut every school’s expenditure in half and still produce the same amount of education, relatively speaking, while saving many billions of dollars. Perhaps that should be the subject of your next op-ed."