As an example, consider the different approaches to modeling expectations; some authors favour backward-looking models while others prefer forward-looking models, and a third camp advocates hybrid models. Therefore, model equations may be misspecified in terms of functional form or omitted variables. Additionally, structural breaks have been identified as crucial sources of forecast failure. Finally, data uncertainty might affect models in different ways.
After the difficulties with Northern Rock, it seems the American crisis spilled over into Europe. Is this the case? Or are the problems limited to Deutsche Bank?