Bailout, Italian-style

From Gregory Mankiw's blog:

The WSJ reports:

"The world is bailing out banks and car companies. Italy is coming to the rescue of parmigiano cheese.

In an effort to help producers of the cheese commonly grated over spaghetti, fettuccine and other pastas, the Italian government is buying 100,000 wheels of Parmigiano Reggiano and donating them to charity.

Though demand for parmigiano is strong in Italy and abroad, producers have been struggling for years to make money, putting the future of Italy's favorite cheese at risk."


An economist might suggest letting a few producers fail, so supply shrinks, prices rise, and the remaining producers become more profitable. In fact, that same logic might apply to some other industries as well.

Fear and greed...

The Vix Index reached an all time high of 80.86 on the 20th of November. The Vix Index is a measure of implied volatility backed out from option prices on US stocks. It is commonly referred to as the "fear index", below chart shows why.


I guess a lot of people have been buying puts lately...