A significant amount of consumption is driven by capital gains on some combination of both stocks and residences,

could be exposed to significant losses.

How significant and disruptive such adjustments turn out to be is an open question, ... shocks should be largely absorbed by changes in prices, interest rates and exchange rates, rather than by wrenching declines in output and employment.

It's hard to tell which assets will be toxic. The best way to ensure that only shareholders and banks feel it is have adequate capital.

At the outset of the creation of the euro in 1999, it was expected that the southern eurozone economies would behave like those in the north; the Italians would behave like Germans. They didn't. Instead, northern Europe fell into subsidizing southern Europe's excess consumption, that is, its current account deficits.

Gains in U.S. stocks and a halt in the yen's rise are both supportive for the market,