It was a slow day as far as trading goes and there were no tangible news stories related to the European situation.

The pattern with regards to Europe seems to be an optimistic wave brought on by rumors, only to be grounded by reality as a lack of European consensus becomes apparent.

Rating agency Standard & Poor's had a busy afternoon, downgrading several banks such as Citigroup, Bank of America, and Goldman Sachs after the market had closed.

That most of the rating downgrades were only one notch was the real surprise; bank earnings and business models will be constrained significantly heading into 2012.

Then again, the rating agencies shot most of their credibility away in the 2008 crisis when they demonstrated a lack of foresight during the mortgage debacle when AAA-rated mortgage securities became worthless overnight.

This player attended a very informative discussion facilitated and moderated by television personality Charlie Rose; Harvard Professor Martin Feldstein made some great points.

Feldstein pointed out that the main difference between the U.S. economy and the European economy is the labor market flexibility in the U.S. that allows for greater efficiencies and better allocation of resources.

Workers in the U.S. can relocate with ease and move from one coast to the other to take a new job with few hindrances; in Europe that mobility is simply not there.

Feldstein also drew attention to the cleansing nature of the bankruptcy process in the United States.

Businesses that are saddled with too many union contract obligations and too much debt can simply declare Chapter 11 bankruptcy and essentially start with a clean slate.

American Airlines' recent bankruptcy is a case in point; unable to renegotiate its union contracts the company filed for bankruptcy and will have a better shot at re-organizing its finances.

Bonds for American Airlines are trading higher today than they were a week ago, before the bankruptcy filing.

Feldstein also drew attention to the key role that the housing market will play in any economic recovery.

Importantly, Feldstein expressed great skepticism that a new QE (quantitative easing) program whereby the Fed buys up mortgage securities could help the housing market in a tangible way.

More creative solutions are needed but that may be wishful thinking given election-year gridlock.

Flows will remain light with year-end upon us; Wednesday is month-end.