EUR/USD is getting a lift after Cali-forn-ia governor Schawtzenagger says his state is n a state of emergency. California has a very pro-cyclical revenue model which pumps spending up when times are good and forces spending to collapse as revenues dry up. It is hard to feel sorry for state governments when they spend like drunken sailors on pensions, etc while the rest of us watch our 401k’s crater.
EUR/JPY is also being helped by a mid-afternoon bounce in the equity markets. The S&P has cut its losses in half and trades now down 1.6%. EUR/JPY is a yen above its lows at 117.25.
