Put reason aside, how would you *feel*?

You meet an employed professional with a $300,000 house, $100,000 in the bank, a nice car, a few (illiquid) Renaissance paintings, and very nice shoes.  His name is Fabio.

He is $60,000 in debt, which is about equal to his yearly income.  An unanticipated ARM reset requires him to pay off that debt at a faster pace than expected, which means he must restrict his consumption.

He threatens to mistreat his longstanding girlfriend Angela, unless she works harder to maintain his previous level of consumption.  Angela refuses to help much, citing a false economic theory in defense of her position.

Fabio’s brother relentlessly attacks Angela’s false theory.  His cousin in Naples claims that Angela is obliged to help because she has benefited from being in the relationship.


Which person am I?

granduncle Papaconstantopoulis.

How would I feel about who? What is the false theory being advanced by Angela?

That she is paying Fabio's debts.

Well, clearly, Angela should dump Fab- oh, I see what you did there.

Angela should reunite with her Austrian ex-boyfriend.

...and then go on holiday in Poland?

...and then have a honeymoon in France?


That was a pretty great group effort. Thanks the four of you for the laugh.

I agree. Angela needs some breathing room here.

Godwin's Law!

What is the 'threat to mistreat'? Have I not been following things? Also what if Angela caused the ARM reset by encouraging the ECB to massively tighten NGDP in 2008?

What if Angel has a $ 100 million dollar chateau, $ 200 million in the bank, a fleet of Porsches, and a museum full of renaissance paintings? And she is ugly as hell?

In next week's episode of this telenovela, we meet Wo Fa Le, a very distant cousin with a $10 billion chateau and $1 trillion in the bank. He just wants a little recognition... as a market economy. He's taken up sports, and is getting better at playing hardball.

But Wo Fa Le has a billion children, many of whom are still poor, and is trying to improve the lot of the poorer children (even while the richer children get very rich) so the poorer children don't revolt.

Unfortunately, Wo Fa Le is a mobster.

What if Angela is only ugly as hell in the first place because of all the stress of having to deal with Fabio's reckless friends Aristotle, Jacque, Ignatio, and Deirdre?

(Sorry, don't know the real leaders' names offhand, just trying to thick of recognizably Greek, French, Spanish, and Irish names.)

Silas: You want George (Papandreou), Nick (Sarkozy), Jose (Luis Zapatero) and Brian (Cowen).

Saving Angela the trouble, the poor mite.

Thanks, but three of those aren't recognizably ethnic.

If Brian isn't recognisably ethnic, then are Irish people not ethnic?

"Brian" doesn't scream "Irish" like "Deirdre" would. There are English, Scots, and Americanized-everything named Brian.

Having lived in Spain for 20 years, I have never met anyone called Ignatio. There are Ignacios out there, but they tend to go by Nacho instead

Angela and Fabio were never compatible in the first place. Angela, while no looker, is highly capable of making a substantial economic contribution to society on her own; she is a woman of great skills, most notably in engineering, and supreme honesty. She will do just fine on her own.

Fabio, on the other hand, comes from a very wealthy family; but as that wealth has been passed down over several generations it has also been squandered. Although Fabio is not as wealthy as his forefathers, he still possesses substantial assets that can be drawn upon if he wishes to rationalize his balance sheet. Perhaps the separation from Angela, and the metaphorical crutch she provided him, will be the necessary catalyst for Fabio to begin generating new wealth rather than live off the wealth provided to him by previous generations.

Perhaps Angela should pursue a man who she is more compatible with like Timo or Pieter...or perhaps Angela and Fabio just need some time apart so that Fabio can get his life straight and Angela can marry the kind of man she deserves...

You might add things like: Angela's brother loaned him the money in the first place, and if she doesn't help him pay the debt, her brother might suffer greatly. Angela didn't just enjoy the relationship, but her income and job situation were materially improved through the years because of the relationship. On top of that, Angela's terrified of breaking up with him, because she doesn't know how long it would take to emotionally recover.

Wouldn't it be easier for Angela to just help her brother directly?

Maybe Angela and Fabio should have gotten married before they decided to co-mingle their finances.


Yep. Thread winner. Outstanding.

Well played, sir.

Is common law marriage recognized? Or are they straddling jurisdictions because they are different nationalities?


I would lose a bit of respect for anyone propagating such a lame allegory.

As long as you've put reason aside.

Racial stereotypes and domestic violence?!

Really, Tyler? Is that your inner economist?

Germany, France and Italy are large, wealthy and powerful countries, not abusive boyfriends abusing their girlfriends.
Please, keep it cool and rational.

But perhaps this post shows what is really driving your coverage of the Euro crisis: pitty emotions.

...large, wealthy and powerful countries

First of all, being geographically "large" means nothing (not that those countries are, particularly, actually). Perhaps you meant "living large"? Russia was a big basket case for a decade or two. Uncle Sam kicked sand in their face over Kosovo among other things, and Putin is still smarting over it.

Second, "wealthy and powerful" is redundant. There is no power without wealth in today's world. When the Soviet Union's wealth evaporated, so did most of its power. This lesson, unlearned, will be painfully obvious to the West only in hindsight.

So what's left from the original statement? "Germany, France and Italy are wealthy." Well, so was Argentina, once. After the... feco-ventilatory intersection event... we will wake up blinking in a brand new era of interesting times.

"But perhaps this post shows what is really driving your coverage of the Euro crisis: pitty emotions."
Precisely. Naturally this is a facepalm-worthy sentiment if you think about it, but it may well be a good explanation of how people are inclined to judge the issue.

C'mon, I expect better of the comments here. The question is precisely, exactly: 'How would you feel?' If you can't distinguish that from 'What (rationally) should she do?' that's your problem, not Tyler's. He clearly can distinguish them, since he did, right at the beginning of the post.

Since humans are imperfectly rational and tremendously influenced by our feelings, theorizing about practical questions while ignoring "how we feel" is recklessly misguided.

I feel like this is a stupid analogy. I feel deeply offended that Tyler thinks there an appropriate comparison to domestic violence here.

Rationally I had a large amount of respect for Tyler, and I can try to convince myself that Tyler didn't mean to compare the nation of Italy to an abusive partner, or use domestic violence to score a cheap point. But I don't feel that way.

But it's not a dumb comment if a sophisticated and cultured European says it:

One unrested EU official snapped: “It’s like a car crash in Naples: there’s two vehicles involved and dozens of people milling around, all with a different opinion about what happened.”

A French diplomat sniffed: “Cameron seemed to think he could come to a wife-swapping party without bringing his wife.”

Brussels-based Irish think tanker Hugo Brady’s take on the Cameron strategy: “If you’re not at the table you’re on the menu.”

A grande dame of the British press pack in Brussels said: “Cameron has f**ked it up, and you can quote me on that. It’s all about the 80 hawks in the Tories, lead by Hague.” One German official joked: “Financial fog in channel, Britain cut off.”


This is an allegory??? I thought MR was doing relationship advice now?

Just wondering why should Fabio and Angela be dependent on one another to maintain each other's consumption level? That said, it probably sucks to be Fabio now.

This appears to commit the twin fallacies of:

1. Fallacy of composition -- assuming that parables about individuals necessarily say something valuable about national economies
2. The informal fallacy of treating positive economics as a morality play in which the imprudent always receive just punishment, irrespective of the consequences for everyone else

Accordingly, isn't the call to "Put reason aside, how would you *feel*?" just a call for sloppy thinking and bad economics?

“Put reason aside, how would you *feel*?” refers to political reasoning as opposed to economic reasoning.

There is also a "fallacy of the fallacy of composition" which is assuming that parables about individuals say nothing about national economies.

(As an aside, much of the instances of the fallacy of composition stop applying if the state does not control its currency).

Fabio is kidding himself about who's going to mistreat who. Angela is a dominatrix.

Well... we have to understand Angela, who may feel that, looking at the unemployment-facts, she still has some unfinished business at her beloved 'Heimat', the place were she was born. No time for Fabio.


I dumped Angela in the end. She screamed quite a bit about how I should give her back all her stuff, but it's in my house and I don't think she's got the stomach to fight for ownership. I might be underwater and sinking fast, but it's pretty hard to foreclose on my house. She could have worked to help me, but now she'll have to work to keep herself off the streets.

I imagine I 'd be one of the labor slaves of Angela, one of the people who are pressed to work hard and harder to finance her multiple liasons with Fabio, José-Manuel, José-Luis, Enda, Loukas... I then would feel rather unhappy, reason aside or not.

Angela, Fabio's brother, and Fabio's cousin are all arguing about irrelevant things. The debt is Fabio's. He must pay it. And he easily has the means, so he will pay it. He should not mistreat Angela.

That's how I would feel.

Of the 20+ comments, no one answered the question posed.

No, they were too busy pointing out the sloppy thinking of a bad allegory. But hey, carry on doing what you're told.

Like many passive-aggressive types, they don't want to discuss the real problems, I think Angela just text messaged Fabio to announce she wants to break up with him or was it her friend with benefits Nigel?

Add at least 1 zero to his debt and you will have something that fits the bill.


If I put reasoning aside I'd genuinely take a moment to look at my life and reset it with people whose with whom relationship investment yields superior happiness gains. I would also ask why my family is forthwith with advice focused on the quality of my interaction with Angela and not when I needed advice on whether to be with someone like Angela. Would definitely restrict consumption of their advice as well.

I'd also dip into the liquidity to but a dog called Gestalt. Then I'd take some time out to watch a late afternoon turn into an evening for a change.

Fabio has to decide if he prefers a good relationship with his girlfriend or a level of consumption that he can't permit anymore. Is restricting consumption so bad? It looks like a shame.

This analogy seemed to end abruptly. Also, "mistreat" is such an obvious placeholder for a better idea that didn't come.

Why can't he just pay off the depth with his 100 grand in the bank?? I know it seems obvious, but why not?

The debt is in dollars but the bank account is in Euros, and Fabio doesn't want to get screwed on exchange rates so he's waiting for the eurozone crisis to resolve.

Because the 'Fabio' who ran up the debt isn't the same as the millions of 'Fabios' with the asset.

I think you've forgotten to add that Angela is crazily uptight about events from nearly 90 years ago (according to some outsiders who have an interest in her life story: Scott, David and Nick). So Angela's pretty set in her ways preventing her from being looser and more free and therefore providing probable material happiness to Fab (and any others she's also seeing as well).

That was a tortured NGDP allegory. Alternatively, I'd like to hear a Roissean analysis. Perhaps it'd involve Fab cutting his losses and finding a Chinese girl instead...

Time to part ways. If they don't, they all deserve each other.

a part from racist judgments, the point is that fabio is a house-painter, and angela took his pencil hostage as an advance and assurance he will pay his debt. unluckly (for him and for angela), without his pencil fabio cannot work and will never pay his debt back. does angela not understand this simple fact - or does she will fabio to be in debt with her for ever?

that's why insisting ONLY on abstract financial stability in a crisis period is foolish. here you have a better explanation of why (you're all fluent in Italian, aren't you?): http://phastidio.net/2011/12/12/eurovertice-molte-domande-poche-soluzioni/

Aren't Italians and Germans the same "race" . What would Hitler have said?

Actually, if you want to get into some vintage racism, the slur "guinea" for Italians comes from the darker Mediterranean complexion, implying that they were Africans.

Godwin's Law. Surprised it took this long.


Dont you see? Its Obama's fault.

I'm reporting you to AttackWatch.

Meantime cousin David says that they are going to hell in a handcart, and please can he get out. So they all shout "boo" and agree to ostracise him. But will he Austriacise himself? Next episode.

Angela and Fabio -- along with a few of their neighbors -- are members of a counterfeiting ring. Angela could help Fabio out if she would only consent to running the printing press. They're all just OGs.

As Fabio, I would feel kind of stupid for getting into such a situation and for living beyond my means in the first place.

As Angela, I think I would feel betrayed and resentful that I would be asked to pay for your mistakes.

As the cousin in Naples, I would feel like Angela is just using Fabio.

You haven't read carefully the post.
Fabio wasn't leaving beyond his means, he had a previous debt comparable to his yearly income (a 60k$ student loan? A 60k$ mortage on the house? Something like 300$ per month in interests over a 5k$ earnings) and he wasn't having problems with it till the bank issue.

Even then, if he was still having his own bank account there wouldn't be any problem: problems started because the account is signed by both him and Angela and he can't use his account money freely to pay the debt. That's why he's asking Angela to help him, otherwise he will have to ask to her to revoke her sign on his account, and that probably would mean a harsh end to their relation.

Reason, aside I feel that Fabio is wrong. In some sense Angela is already probably paying him in some ways. Their relationship dynamics may already be keeping Angela at her reservation utility. Also, it seems like Angela was not expected to work before and therefore there seemed to be an implicit agreement. Angela may have sunk her youthful beauty into the relationship.

Therefore, I feel (with a little thought as well) that Fabio is in the wrong.

I feel frustrated ... Everyone is *wrong*, and elevating a manageable problem to an unmanageable level :-(

Is this intended to be a reflection of US politics?

Sounds like a job for a community organizer.

Fabio and Angela clearly need to be able to lead independent lives if they aren't married, or for that matter don't want to be. But how exactly does society define such life patterns? Do we imagine societal structures in which 'singles' can live in complementary ways with one another if in fact they have no intentions of ever marrying in the first place? What about long term needs that family and government are not the ones expected to meet? How do we envision moving ahead in a 'singles' future? These questions have bothered me for a while. Help!

What did Angela ever see in Fabio in the first place?

It's an arranged marriag.. err relationship.

Angela and Fabio got together for a little crime spree of mass murder a while back. After they got out of the slammer they evolved a co-dependent relationship based on Angela selling Fabio a bunch of crap he used to make himself, which he payed for with money borrowed from Angela.

They met at a bunga bunga party.

bunga bunga +1

So, who was the moron that reset the ARM?

How would I feel? Well. I have debts of my own, dating from long before I started dating my current wife. I make good money and we live fairly comfortably, though my debt burden is a real constraint. My wife is aware of the situation.

I have never considered it my wife's job to cover my debts. Call me old-fashioned, but to my mind my job is to support my wife. Angela should leave.


Now if Angela really doesn't want to leave, and she has a wealthy father (let's call him Marius) who is satisfied Fabio is a) serious about Angela and b) merely illiquid and is well able to take care of Angela, Marius, if he's feeling generous, could re-finance the debt in lieu of a dowry (or, say, in return for a much smaller share of wedding expenses). The offer should be void with funds callable immediately if Fabio calls off the marriage or divorces Angela too soon after getting the money.

Then, Fabio should never hear the end of it from Angela. Ever.

So how would I feel if I met Fabio and he told me about his situation? Whoa, buddy, TMI. We just met.

If Angela believes that she should be treated to a fine dinner and a movie every night they are together, without kicking in, she would make me angry.

If Angela believes that she should pick up the tab from time to time ... but not bail out Fabio for the debt he has run up, I would not be angry with her at all.

If Angela believes that she should be treated to a fine dinner and a movie every night they are together, without kicking in, she would make me angry.

Actually, if the analogy were going to hold, Angela would have loaned Fabio the dinner and the movie.

What Angela will not tell you is that she talked Fabio into the mortgage, and that she keeps loaning him money that then he uses patronizing Angela's shop. If Fabio cuts back in expenses, Angela cannot pay her own debts, because she stops making much money.

So Fabio is an airhead, and Angela is a hypocrite. They sure deserve each other.

Which "false economic theory" is Angela citing?

And in which way can she "help" Fabio?

If you want me to answer how I think Germans, ignorant of the technical details, would feel, I'd say: sure, they're pissed. But here's the problem. The very claim that Angela is going to have to work harder to avoid any sacrifice on Fabio's part is based on the false theory that Angela is pushing. In the real world, Italy is running a primary surplus. As long as that is true, the ECB can purchase Italian sovereign debt in sufficient quantities to bring down Italian rates to, say, German levels, without expanding the monetary supply in the long term. This is because with the primary surplus Italy enjoys, the only new debt issuance it requires is only caused by the interest rate it pays on the debt (which can be controlled if the ECB had the desire and statutory authority to do so). And the interest rate on guaranteed debt should be no greater than the growth rate of the economy, which should be the growth rate of the monetary supply. And going even further, if the ECB does not take this kind of action there is no guarantee (and it is really less likely than not) that Italy can bring the budget in balance without an ECB backstop (even a modest loan is not going to cut it). This is a bank run and if Italy wants to increase their primary surplus in this environment it is not possible for them to do so easily. Any increase in taxes or reduction in spending may depress their economy sufficiently for the effect to actually worsen their financial situation.

I'd be deeply confused about why someone with $100,000 in the bank and $60,000 in debt doesn't just cut the bank a check.

And this is the reason why Tyler Cowen's post is the most Trollish post since a couple of months.
It doesn't point out that the only problem with Fabio's economic situation, as you point out an healthy one, is coming from technical restriction to his wealth due to technicalities in his relationship with Angela, and not from the previous mild debt situation: even with the financial crisis he was having only minor problems and he would be perfectly fine if he could have access to his funds. He had less debt then most of his friends.

Without pointing out that the financial problem is related to their relation, the whole argument is completely out of target.

You need to add a few things to the parable.

For example, I expect Angela has her savings at the same bank as Fabio. And if Fabio defaults on his debt then Angela will lose her savings.

Add this and I may #feel# differently

I'd point out that Fabio's expenses are necessary in order for him to maintain his professional image; if he were to cut back on his consumption he wouldn't get as much work, and his income would fall so far that he'd be even worse off financially rather than better. Angela meanwhile keeps refusing to attend any company functions or otherwise help him drum up any business, which is all he's asking for. It's the least she could do!

My first thought was, "Who owns a $300,000 house full of Renaissance paintings?" Dude's got serious financial priority issues.

And if I were the girlfriend and was asked to go to work to pay this idiot's debt, I'd say "Hey, how about you sell those Renaissance paintings first? I don't care how illiquid they are. Before you beg for others to get you out of debt, clean up your own house. And if you can't sell them, and I have to work overtime to pay your debt, I'll hold them in escrow until you pay me back, since you've shown yourself to be a really crappy financial manager."

I am getting pretty tired of Cowen's refusal to admit that he believes everything he writes about Germany and the euro, instead portraying himself as a devil's advocate, or as a panoptic observer who can see all sides, or as a presenter of emotive arguments underpinned by American racial stereotypes of Italian men.

It's the biggest economic question since the gold standard, bigger than financial market intervention in 2008. Man up and talk about reason.

My first question was the same as others, "Why not pay the bank with the cash".

My second, though, was "Wait, he seems pretty young and committed to living there a long time, so why is his House only 1/5 leveraged? He'd probably be doing much better with a considerably larger mortgage and investing the proceeds, especially if he's living in a country like the US that's going to give him big tax benefits on that interest..."

He has $60,000 in debt but $100,000 in savings? Remind me, what's the problem?

Could be Fabio's aging, and will retire soon, and have to pay for his own retirement?

Well, you certainly put reason aside when you wrote this one Tyler...

I'm just wondering how to avoid getting tangled up in Angela and Fabio's dysfunctional, co-dependent relationship. Fabio reminds me of my unemployed brother, who is currently camping out in the middle of the city instead of developing marketable job skills.

By the way, one of Fabio's cats just inherited $13,000,000.


Well, considering Angela's criminal record I doubt she finds it very attractive being single again.

"Put reason aside."

When did this become a sociology blog?

I come here to learn to reason _better_. To learn, discuss, argue about economics. I can get anti-intellecutal morality fables on any number of AM radio stations during my drive time.

Nothing like a great domestic violence-economics parallel.

Next thing you know Tyler is going to start using Hitler analogies. Oh wait, but I shouldn't take it too seriously b/c he's just asking how I would 'feeeeeel'.

I also love how Angela is just a "longstanding girlfriend," which is hogwash. Much more like a wife, Tyler, and you know it. Bound by supposedly irrevocable legal arrangements, which always involved an assumption of duty and risk. Even if the husband is kind of a bum. But the currency _union_ becomes just a torrid romance in your story, because that makes it easier to indulge in the moralizing.

Let's be fair and make Angie the wife in this little parable. She's kept her own house and her own bank account, but they've been married for years. I know you don't want to tell the story that way, because even in this age of the disposable marriage, many of us remember saying the words, "for better for worse, for richer for poorer, in sickness and in health," and some of us even meant them.

This question implicitly makes a comparison between individuals and nations. This comparison is idiotic because managing nations requires the leadership to make sure the fabric of society remains intact. However, Angela in your story has no requirement to maintain any status quo.
You can improve your story by giving if Fabio and Angela young kids and giving Angela the motivation to see if it is at all possible for her to stay with Fabio for the sake of the kids.

Maybe Angela broke up because the fertility treatment wasn't working and she was blaming Fabio but perhaps both are to blame? It wasn't racism but Angela wasn't too crazy on adopting a baby from N. Africa (there was a large adoption center next to Fabio's flat filled with N. African babies). The baby may cause looks of consternation from her friends and family. Angela really cares what her friends and family think of her.

Angela is not concerned about saving her little microcosm world by adopting babies or giving away her hard earned money to anyone, including her hip, live in the moment, EasyJet generation friend Fabio.

Angela is a pragmatist and realizes there is only so much she can do for Fabio. Angela grew up in harsh conditions, seen a lot of things, heard really bad stories of the past. She has come to the conclusion that you can't give forever. Ultimately, hard work is better than no work. She worked hard and is "self made." Why can't Fabio do the same? She doesn't want to lose him forever, they have so much in common in some ways though, maybe they can get back together later on she hopes in her heart.

Easy: reintroduce slavery, however, democratically legitimised. Or is it lobotomised?

It seems that this story is confounding personal responsibility with the role of the state in order to suggest that there is a problem with taxation, rather than a problem with democracy. When the state is framed as "Fabio", it is assumed that Fabio acts in its own self-interest and makes its own money. However, this is not how the state works. We fund the state to resolve issues of free riders, public wealth, and inequality - and we decide how it does so. In other words, Angela has an active responsibility by choosing this democracy. Perhaps in the past we've made poor decisions - thats completely legitimate! But demonizing the tax system, or attempting to cut and run is not.

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