The Fourth Turning
William Strauss and Neil Howe
1997   Bantam Doubleday Dell, New York, NY

 
This book turns history into prophecy, and so far, 23 years later, they are right on track.
For the past five centuries, Anglo-American society has entered a new era, or turning – every two decades or so, (the span of a human generation). Turnings come in cycles of four.  At the start of each turning people change how they feel about themselves, the culture, the nation, and the future.

America’s current cycle:
First Turning. A High, an upbeat era of strengthening institutions and weakening individualism. The American High of the Truman, Eisenhower, and Kennedy presidencies. America became muscular, conformist, and spiritually complacent.

Second Turning. Awakening. The Consciousness Revolution, from the campus revolts of the 1960s to the tax revolts of the early 1980s. Personal liberation.

Third Turning. Unraveling. The Culture Wars. Began during Reagan’s mid-1980s Morning in America. This began an era of national drift and institutional decay. This turning was expected to come to an end during the decade following the millennium.

The Fourth Turning. Crises. A sudden spark will catalyze a Crises mood. Remnants of the old social order will disappear. Political and economic trust will implode. Hardship and severe distress will be at hand that could involve questions of class, race, nation, and empire. The risk of catastrophe will be high. The nation could erupt into insurrection or civil violence, crack up geographically, or succumb to authoritarian rule. There could be a war and if so, it is likely to be one of maximum risk and effort. Sometime before the year 2025 America will pass through a great gate in history.  
The focus of this book is that while we cannot stop the seasons of history, we can prepare for them. This time of trouble will bring seeds of rebirth. As the old civic order gives way, Americans will develop a new consensus about what to do and craft a new order. The next Fourth Turning could end in apocalypse – or glory. The nation could be ruined or enter a new golden age of applied shared values to improve the human condition. The rhythms of history do not reveal the outcome of the coming crises, all they suggest is the timing and dimension.
 The authors suggest that the trends are tied to human generations. During the First Turning, (a High), a Prophet generation is born. A Nomad generation is born during an Awakening, a Hero generation during an Unraveling, and an artist generation during a Crises.
The challenge in history is to look at the future not as a straight line, but around the inevitable corners. An appreciation for history is never more important than at times when a secular winter is forecast. For much of the Third Turning we have managed to postpone the reckoning. But history warns we cannot defer it past the next bend in time.
How To Prepare For The Fourth Turning
As a country:

• Values. Forge the consensus and uplift the culture, but don’t expect near-term results. A decadent or nihilistic culture is a seedbed for fascism. The less self-control the media or public exercises now, the more likely it becomes that some outside authority will impose a despotic control
• Institutions. Clear the debris and find out what works, but don’t try building anything big. Political upheaval will occur. Simplify the federal government by cutting back in size and scope without imperiling its core infrastructure. Thin out procedural requirements that would delay or weaken emergency measures. Courts should avoid erecting constitutional obstacles to legislative actions or executive fiat. This would get in the way when the mood becomes urgent
• Politics. Define challenges bluntly and stress duties over rights, but don’t attempt reforms that can’t now be accomplished. Politicians should speak candidly about the nation’s future challenges and stress collective duties over personal rights. Fundamental reforms or vast civic projects will not work during an Unraveling.
• Society. Require community teamwork to solve local problems, but don’t try this on a national scale. National survival will require a level of public teamwork and self-sacrifice far higher than Americans now provide. We need to encourage integration of all types and discourage group niching, (from walled suburban enclaves to monoethnic college dorms).
• Youth. Treat children as the nation’s highest priority, but don’t do their work for them. The outcome of the Fourth Turning may depend on the generation coming of age. The federal government should start now to shift its benefit budget away from the non-needy old to the needy young.
• Elders. The economy will not keep growing. No one will be entitled to anything. Those in need will be authorized. Some benefits will have to be cut. Its time now to shift from defined benefits to defined contributions.
• Economy. Correct fundamentals, but don’t try to fine tune current performance. The American economy will experience extreme shocks to asset values, production, employment, price levels, and industrial structure. We must raise the national saving rate by shifting the tax rate from income to consumption and mandating personal and portable pension plans for every worker.
• Defense. Expect the worst and mobilize, but don’t pre-commit to any response. Isolation, diplomacy, massive superiority, and simple good will not keep us out of trouble. Invest heavily in R&D oriented toward future dangers and maintain diverse defense infrastructures. America should grid for a possible large-scale war. Expect scant help from transnational bureaucracies, but major help from allies who share our fundamental interests.

The authors acknowledge that some of these suggestions appear rather modest given the magnitude of the challenges Americans will soon face. But that is all the current season will allow.
As Individuals:
Picture yourself in the middle of a howling blizzard that lasts for several years. Think of what you would need, who would help you, and why your fate might matter to anyone but yourself.

• Rectify. Return to the classic virtues. Build a reputation as a person of honor and integrity. Be a good citizen. The more your bottom line is interwoven with other people and your community, the more helpful others can be in an emergency.
• Converge. Heed emerging community norms. Do not isolate yourself from community affairs. Appearances matter. Team, brand, and standard will be the new watchwords. Being unplugged could penalize you when you need to know what all levels of government are doing.
• Bond. Build personal relationships of all kinds. High level, (institutional), corruption may recede, but low-level personal dealings could flourish. Expect a loss of personal privacy, some hastily deputized magistrate may have new authority to do something to you.
• Gather. Prepare yourself (and your children) for teamwork. Stress less what sets you apart as an individual, and more what you have in common with others. Where public schools still exist, educate your children there, they can develop powerful connections with government.
• Root. Look to your family for support. This will be your ultimate safety net.
• Brace.  Grid for the weakening or collapse of public support mechanisms. Build your own financial security.
• Hedge. Diversify everything you do. Generalists with survival know-how will have the edge over specialists whose skills are only useful in an undamaged environment. Invest in equities to gain maximum profit while you still can, but stay alert too the public mood. The closer we get to the Fourth Turning the greater the risk of a Great Devaluation. Foreign markets may or may not be on the same cycle timing as America. Enter the Crises with a reliable cash flow, diversified savings, and some liquid assets.
  
  

The next Fourth Turning could mark the end of man, or the end of a nation. Alternatively, it could find America and the world in a better place. Rome survived twelve cycles, Etruria ten, and The Soviet Union perhaps only one. Fourth Turnings are critical thresholds for national survival. America has survived three so far, and each of those produced moments of extreme danger. In the Revolution, the very birth of the republic hung by a thread. In the Civil War, the union barely survived a four-year slaughter. In World War II, America was finally victorious against an enemy that might have destroyed America itself.

The Chickenshit Club
Jesse Eisinger
Simon & Schuster
2017

Great read. Well researched. It would have been a good novel, unfortunately it’s true.

If you read this book you will come away smarter but with much less faith and trust in the US Justice Department, the SEC and be more skeptical of corporations, the banks that finance them and the accountants that verify them.

Eisenger explains in detail the case of Enron and Arthur Anderson and how the companies and the individuals committed crimes including fraud and how they were brought to justice. WorldCom, Adelphia, Tyco International, and others also fell during the early 2000’s.

But ever since then and especially during the financial crises of 2007-2008 the DOJ and SEC have been very slow to indict corporations and hardly ever indict high ranking individuals. Case after case is discussed; Goldman Sachs, Bank of America, AIG, and on-and-on.

It seems that “too big to fail” actually means too big to prosecute. DOJ and the SEC have gone from going after corporations and individuals to no-admit, no-deny settlements that result in a fine. The fines tend to be looked at merely as a cost of doing business to the corporations

Among the reasons this trend has proliferated:

• DOJ sort of lost their balls as well as their litigating skills.
• DOJ, SEC and other agencies have a revolving door relationship with the corporations and defense attorneys.
• The heads of these agencies are political appointees who don’t know or don’t care.
• Afraid of failure or that the Appellate courts will reverse decisions.
• Worry that innocent stockholders will suffer if the corporation tanks.
• Worry that innocent employees will suffer if the corporation tanks.

There are few hero's in this book but you will love those that are mentioned. Their actions along with public fury at the status quo may just change the system

The New Confessions of an Economic Hit Man
John Perkins
Berrett-Koehler Publishers 2016

This is a true story that has all the elements of a real thriller, sex, espionage, deception, murder, blackmail, you name it. In this follow up to the original Confessions published in 2004 John Perkins chronicles recent developments in corporatocracy greed. In his words, Economic Hit Men, (EHMs) are highly paid professionals who are brought in to convince the political and financial leadership of underdeveloped countries to accept enormous development funds as “loans”.

The money comes from the World Bank, the US Agency for International Development, (USAID), and other foreign “aid” organizations and winds up in the hands of huge corporations who actually perform the development, (airports, bridges, dams, etc.), and the pockets of a few wealthy families who control the world’s natural resources. When it comes time to repay the loans, alternative arrangements are usually made in terms of political influence, US military installations, or other forms of blackmail. If the country’s leaders refuse to comply, as many have, the jackals are sent in and the ruling powers are overthrown or assassinated. Examples are Jamie Roldos of Ecuador, and Omar Torrijos of Panama, both killed by US government sanctioned murders.

It all started in 1951, when Iran rebelled against a British petroleum company that was exploiting Iran’s natural resources and its people. The democratically elected prime minister, Mohammad Mossadegh, nationalized all Iranian petroleum assets. England sought US help but feared military retaliation. Washington sent in CIA agent Kermit Roosevelt who succeeded in causing Mossadegh’s overthrow and the installation of US puppet Mohammad Reza Shah Pahlavi.

The book follows Perkins recruitment by the engineering company MAIN, (actually a front for the CIA), out of college and the Peace Corps not just because of his abilities, but because of his ambition and willingness to endure hardship and what he now calls personality weaknesses. His job as an economist was to forecast and justify the huge loans necessary to approve whatever massive engineering or construction project in whatever country looked ripe. Most MAIN employees thought they were doing countries favors when they build power plants, highways, and ports, but it was all actually very self-serving.

One kind of an aside in the book that really struck me relates a talk Perkins had with Indonesian students in 1971 where they say that Arnold Tonybee, a British historian, predicted in the 1950’s in Civilizations on Trial and The World and the West that the next century’s real war would be between Christians and Muslims. You need religion, faith, substance behind your ideology. History demonstrates that faith, soul, a belief in higher powers is essential. Muslims have that more than anyone.

As Perkins rose to partner at MAIN he was a key player in many projects throughout the world, most under very dubious circumstances. Plenty of names like Bush and Cheney pop up when relating stories of political and military intervention in places like Panama. It was an EHM failure in the 1980s that led to war in Iraq. He had a few good things to say, such as, President Carter may have been an ineffective politician but he had a vision of America that was consistent with the one described in our Declaration of Independence. This is an anomaly when compared to his immediate predecessors and successors. It seems the others all think America should control the world and all its resources.

That was all in the original part of the book. The new part starts off with the warning that things are even worse now and we still haven’t woken up. NAFTA, CAFTA, TPP, TTIP, and other so called “free” trade agreements are all aimed at achieving sovereignty over governments in countries around the world. Rain forests auctioned off to oil companies in Ecuador, prevention of rise in hourly wage rates in Honduras. Exploitation of the natural resources in under developed countries continues at an alarming pace.

Gadhafi, Hussein, and many others who, although were harsh dictators in their own right, were eventually brought down not because of their treatment of their constituents, but because they stood in the way of profit for the West.

EHM activities of today are reflected in the behavior of some of the largest banks such as in the Libor scandal, and later the foreign currency price rigging in 2014. EHM behavior can also be seen in large companies like Walmart siphoning off billions of dollars from US taxpayers by establishing overseas tax havens.

Today’s jackals are the drone operators that according to Michael Flynn do more harm than good. The feeling of many countries is that they would rather accept loans from Beijing than Washington because Beijing doesn’t overthrow or kill the country’s leaders.

We need to change our mindset about pollution, buying the cheapest goods, achieving market share as primary goal, and not caring about sustainability.

Four pillars of the modern empire shackle us to a feudal and corrupt system.

• fear
• debt
• insufficiency, (the temptation to keep consuming more)
• divide-and-conquer mindset

The last chapters are devoted to what you can do. Here are a few examples:

• Start with your individual behavior, (but don’t believe that that is enough).
• You must act. Every day.
• Develop an awareness of your own biases
• Speak out. Join an organizations
• Build communities and networks
• Support a culture of ethical behavior and accountability

Blockchain Revolution
Don Tapscott and Alex Tapscott
Penguin Random House. 2016

The following is not so much of a book review – more like a Cliff-notes, since I am essentially repeating what I learned from the book. This is the best blockchain book of all so far. Highly recommended. These are just some of the main points

Why should it take days or weeks for transactions to settle? As much as technology has progressed we are still paper based. Erik Voorhees of ShapeShift tells us we suffer from the productivity paradox – layering new technology over existing infrastructure.

First 4 decades of the Internet brought e-mail, the World Wide Web, dot-cons, social media, the mobile Web, big data, cloud computing. Along comes Blockchain - distributed, public, encrypted. The ledger itself is the foundation of trust.

And now we have the Internet of Things, (IoT). We register our devices, assign them an identity and coordinate payment among them without using, multiple fiat currencies. You can define new business cases using existing network infrastructure without having to bootstrap a new blockchain.

The bitcoin blockchain takes 10 minutes to clear and settle. Every 10 minutes all the transactions are verified, cleared, and stored in a block which is linked to the preceding block creating a chain. It's a Poisson process. While that is certainly better than days by banks, it is much too slow for the IoT. Latency of Litecoin is 2.5 minutes. Ripple and Ethereum are engineered to take seconds.

Blockchain can result in an economy of peers with institutions that are truly distributed, inclusive, and empowering and legitimate. Or it could be constrained or crushed. Worse, it could become a tool powerful institutions use to entrench their wealth, or if hacked or controlled by governments become a platform for a new surveillance society. With cryptology, autonomous agents, and artificial intelligence involved it could get out of control.

An increase in the money supply debases the currency.

Blockchain lowers the cost of transmitting funds:

• no bank account is required
• no proof of citizenship
• no birth certificate
• no home address
• no stable local currency

Seven design principals of the Blockchain economy:

• Networked integrity. Trust is intrinsic. Integrity is encoded in every step and distributed, not vested in any single member.
  
• Distributed Power. Peer-too-peer, no single point of control
  
• Value as incentive. The system aligns the incentives of all the stakeholders
  
• Security. Must use cryptography, no single point of failure. 
  
• Privacy. There's is no identity requirement in the network layer. The blockchain doesn't need to know who anybody is.
  
• Rights preserved. Ownership rights are transparent and enforceable.
  
• Inclusion. It works for everyone.
  
  

How cryptography provides security. Digital currency is not stored in a file, it's represented by transactions indicated by a cryptographic hash. uses hold the crypto keys to their own money and transact directly with one another.

Credit card type of transactions are very identity centric allowing personal information to be stolen every time there is a data breech.. Check out startup Personal Black Box Co, LTD. Deploys PKI on the back end so that only consumers have access to their data through private keys. Like the Internet where a TCP/IP address is not identified to a public ID.

Also, governments can subpoena ISPs and exchanges for information related to you, what devices you use and what you do, but they cannot subpoena the blockchain.

Blockchain's proof of work is also a time stamp for transactions so that only the first spend of a coin would clear and settle.

A smart contract provides a means of assigning usage rights to another party. The code of the contract would include all the terms, such as duration and termination.

Concerns:

Bitcoin is meant to circulate and will reach its max limit by 2140. As number of users go up price goes up like gold. But much of bitcoin is lost or held. Our current rules-based monetary policy is intended to prevent inflation triggered by arbitrary and discretionary decisions. Low or no inflation motivates users to hold bitcoin rather than spend it. A number of users are now holding bitcoin as an investment hoping it will go up in price.

Problems to overcome:

• infrastructure is unevenly distributed
• security not ready for mainstream usage, (volume)
• inaccessible to average user
• finite quantity
• high latency
• behavioral change (rely on digital security and storage)
• societal change (money is social)
• lack of legal recourse (irrevocable transaction and unavoidable smart contracts)

Hashing, the process of running pending transactions through the secure hash algorithm 256 (SHA-256) to validate them and solve a block uses a lot of electricity, a lot of computing power, all with a large carbon footprint. New Republic in 2015 advised that processing and protecting the more than $3 billion worth of bitcoin in existence required more than $100 million in electricity per year. But, says Erik Voorhes, all forms of money have a relationship to energy.


Alternative consensus algorithms:

• Ethereum – proof of state while retaining decentralization. 2nd largest and fastest growing public blockchain.
• Ripple – uses a federated model, a small controlled group like SWIFT. Aimed at wholesale banking.
• Bram Cohen founder of Tor – proof of disk where owners of disk storage space defines the economic set of users.

Proof of work = new area of computer science.

Satoshi Nakamoto, “You will not find a solution to political problems in cryptography”

What will legislators, regulators, and adjudicators around the world make of blockchain technology?

The bitcoin blockchain was designed for moving Bitcoins, not for handling other financial assets. But the technology is open source, inviting experimentation. Innovators are developing separate blockchains known as altcoins. Others are looking to build “spin off” or sidechains that can be “colored” to represent any asset or liability, physical or digital.

Two-way peg to a cryptographer means transferring assets off the blockchain and back again without a 3rd party exchange.

The so-called “Golden Eight” of financial services:

• authenticating identity and value
• moving value
• storing value
• lending value
• exchanging value
• funding & investing
• insuring value & managing risk
• accounting for value

What Wall St. really wants is to be able to quickly, cheaply, and securely process any trade from beginning to end.
The life cycle;

• execution
• netting of multiple trades against each other
• reconciliation

With distributed ledger, traceability, searchability, automatic settlement, and immutable timestamp allows regulators or managers to see what’s happening and to set alerts so they don’t miss anything.

Blockchain is entirely open and permissionless. Permissioned or private blockchains require users to have certain credentials.


New Frameworks for Accounting and Corporate Governance are coming.

Problems with modern accounting:

• Relies on managers to swear their books are in order. Could lead to cronyism, corruption, and false reporting
• Human error
• New rules like Sarabanes-Oxley growing complicated
• Traditional accounting method cannot reconcile new business models, e.g., most audit software allows for two decimal places – useless for micro transactions.

Mastering Bitcoin

Andreas M. Antonpolulos
O’Reilly Media Inc 2015

This book contains a lot of code. I am not a programmer so I will not do it justice in this review. Still I learned a lot as it does a good job of explaining bitcoin and its source code known as forks. He also gets into alt coins which are digital currencies implemented using the same pattern as bitcoin but with a completely separate blockchain and network. There are also a number of protocol layers that can be implemented on top of bitcoin’s blockchain. Meta coins and meta chains are software layers implemented on top of bitcoin. They extend the core bitcoin protocol and add features and capabilities.

Some alternative blockchain implementations are not coins at all. But they use a consensus algorithm and a distributed ledger as a platform for contracts, registration, or some other application.

Some contenders offer a digital currency or digital payment network but without using a decentralized ledger or a consensus mechanism, e.g., Ripple.

Evaluation of alt coins

• Does the coin introduce significant innovation
  
• Is the difference compelling enough to attract users away from bitcoin
  
• Does the alt coin address an interesting niche or application\Can it attract enough miners to be secured against consensus attacks
  
  

Financial considerations:

• Total market capitalization
  
• How many users/wallets
  
• How many merchants
  
• How many daily transactions, (volume)
  
• How much value is transacted daily.
  
  

Blockchain’s decentralized organization and consensus system will significantly reduce the cost of organization and coordination on large scale systems while removing opportunities for concentration of power, corruption, and regulatory capture.

Heads I Win, Tails I Win
Why Smart Investors Fail and How To Tilt The Odds In Your Favor

Spencer Jakab
Portfolio/Penguin 2016

Very good down to earth advise. No stock tips, just attitude tips.
Starts off with two promises;

1. no Algebra or Greek letters
2. he’s not trying to sell anything other than the book, (no subscriptions or newsletters)

Trading Tips:
Ignore the headlines and don’t allow frequent trading to eat up future returns. By the same token don’t be overly cautious and adopt a “set it and forget it” approach.

As far as headlines, WSJ and channels like CNBC see their best traffic on the very worst days for financial markets. Bad news is featured much more prominently than good news.

The market is volatile. Bear markets can be very scary and devastating but can also fantastic opportunities for growth. The volatility of a portfolio is measured in standard deviations – the higher the standard, the choppier the portfolio.

Try to avoid market timing but utilize a faithful re balancing and sometimes go against the flow. Today there is no technical part of investing that a person can do that a computer algorithm cannot do more cheaply and efficiently.

Check out SigFig, Asset Builder, and Anyplace

Also look at full fledged rob investors like Betterment and Wealthfront, (Schwab has something similar.)

Stocks are the only market where people run away when there is a sale and line up at the door when prices have doubled or tripled.

The P/E of a company is important. It denotes how cheap or expensive it is. The Schiller P/E or one cyclically adjusted is better.

A cheap market can get cheaper and an expensive one more expensive for quite a while.

Most index funds own stocks in proportion to their market value, therefore they own more of what just went up in price than what just went down.

Jakab murders the reputations of most well known stock pickers by exposing their history. Most of them were either too early, too late, or too often.

Go for singles and doubles rather than home runs.

Recommended: The Prudent Speculator and AFAM Capital. David Dreman’s book Contrarian Investment Strategies: The Psychological Edge.

Most analysts are horrible stock pickers.

Sell side analysts actually shape the market’s expectations. Their estimates are compiled by services like Bloomberg, Reuters, etc. Every quarter 70% of companies beat estimates, 10-15% are in line, and 15-20% miss. This means that the odds of a company’s stock rising following quarterly results are the same or even slightly lower than for any other day.

Studies at Washington State University based on sports analysts showed that it matters more how emphatic an analyst was rather than how accurate.

Crowdsourcing predictions could replace analysts.

Studies by Tim Courtney and by Vanguard conclude that Morningstar ratings are useless.

Hedgefund strategies mostly just represent market risk. They represent themselves as uncorrelated to the market but they are very much like long/short mutual funds. Very few mutual fund managers display sufficient skill to justify their cost.

7 Habits of Highly Ineffective Investors

1. Overconfidence
   
2. Combine your morals with your money
   
3. Buy whats fashionable
   
4. Reach for yield
   
5. Use exotic products to enhance returns
   
6. Trade frequently
   
7. Use a system
   
   

People who monitor their portfolio daily earn 0.2% less than average, 2X per day 0.4% less. Average monitoring =8X per month.

Markets reward discomfort. Uncertainty sometimes = profit.
Time to buy is when there’s blood in the streets, even if it’s your own.

Don’t let human emotion interfere with your investing. Do look a dividend gift horse in the mouth. Buy good dividends but avoid those that might not be sustainable.

Good:

• S&P Dividend Aristocrats
  
• SPDR S&P Dividend Fund (SDY)
  
• Schwab US Dividend Equity ETF (SCHD)
  
  

Conclusion:

It boils down to 7steps:

1. Know yourself
   
2. Stop zigging when you should zag. Remove need and temptation to make decisions and make as few of them as possible.
   
3. Learn to be cheap and lazy. Investing results are inversely proportional to effort. Low cost passive funds work best
   
4. Don’t confuse luck and skill
   
5. Turn lemons into lemonade. Embrace risk and rebalance on schedule
   
6. Use history. It may not repeat itself but it does rhyme
   
7. Don’t be afraid to ask for help. But only as much as you need.
   
   

Best portfolio:
10% short term government bonds
90% in a very low cost S&P 500 Index Fund

Should we short the euro? Nobel prize winner Joseph E. Stiglitz does not give us any specific investment advise, but he does a very credible job in this new highly recommended book of explaining why the euro isn’t working, why other single currencies, like the USD seem to be working, and what can be done to save the euro.

The problem with a common interest and exchange rate is simple, according to Mr. Stiglitz. When different countries are in different situations, they ideally want different interest rates to maintain macroeconomic balance and different exchange rates to attain a balance of trade. The founders of the Eurozone may have realized this, but they failed to allow for these differences. Instead, they hoped for convergence. Stiglilitz’s Part II titled “Flawed From The Start” explains how criteria-convergence rules were set up to facilitate this. Governments wishing to join the union had to limit their deficits to less than 3% of GDP, and their debts to less than 60% of GDP. All the countries agreed.

The poor performance of the euro are documented in standard metrics both during and before the world financial crises of 2008. Plus there were no strong countercyclical policies in place to ensure a quick restoration. In addition to physical capital destruction, societal capital has also suffered. Take Greece, where Greek debts caused the Troika to force the tearing up of the Greek social contract where pensions are being cut to below subsistence levels inflicting consequences on Greek society as well as their economy.

If they were not tied to the euro, the Greeks could have devalued their currency, encouraging tourism and other trade. The Greek banks could also have lowered interest rates to encourage production, in contrast to the ECB, which raised rates in 2011.

Why is single currency able to work in the US in spite of marked differences among the states and long standing distinction between Wall St. and Main St.

• some states are agricultural states, some are industrial,
  
• some states are helped by a fall in oil prices, some are hurt,
  
• some states are chronic borrowers, some are lenders,
  
  

Mr. Stiglitz states that there are important adjustment mechanisms in the US that enable a single currency to work, that are are not present in Europe:

• People can move easily in the US and are accustomed to doing so. In Europe, the linguistic, cultural, and licensing differences make moving difficult.
  
• In the US it is not so important if one state loses population. It doesn’t matter if jobs move to people, or people move to jobs according to Mr. Stiglitz.
  
• In the US, people are Americans first, and state residents second.
  
• In the US there are more automatic and discretionary policies available to support states in time of need.
  
  

Mr. Stiglitzs’ outlook for the euro is not pretty. He calls the current strategy “muddling through”. It is not working and the central parties committed to the euro are losing ground with more and more countries leaning to regional independence. Saving the Eurozone is arguably much more important than saving the euro. It is in the best interests of Europe and the world, for any European country not to be alienated from its neighbors. If the euro is to be rescued, there must be major reforms whereby the European countries must share the burden of adjustment, perhaps resulting in a kind of a “flexible” euro. If euro reform does not take place, it might be better to adopt a Plan B where the euro is abolished in order to save the Eurozone.