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Yearly Archives: 2013

A Coming Golden Age. Really.

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Perhaps the economy is a lot like the weather – if you wait long enough, it has to get better.

As we’ve noted before, income inequality is likely to improve in the US and the rest of the developed world once the postwar “Baby Boom” starts to retire.  With as much as a quarter of the population removed from the labor force, there will be more jobs to go around – perhaps even too many.  Wages are likely to rise and opportunities for employment will be everywhere.

If that doesn’t sound good enough, recent studies have suggested that inflation is likely to be low as the population ages, meaning interest rates will remain low and capital is likely to be plentiful.  It’s starting to sound like this Depression is going to end with a golden age.  Seriously.

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Credit Unions

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Fed up with banks?  You’re hardly alone.  Credit unions have grown dramatically in the last 20 years, fueled largely by high fees charged by commercial banks.  Low rates for ordinary loans are also a big draw.  But for all the growth, not much has been written about credit unions other than the occasional puffy story about how much a consumer can save by ditching their bank.  That’s not to say that the growth has gone unnoticed at all – or indeed that it isn’t creating its own problems that need to be addressed.

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Reasonable Expectation of Privacy?

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The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.
– The Fourth Amendment to the US Constitution

The documents were carefully selected for their ability to illustrate the problem without being sensational or personal.  The exit strategy led to Hong Kong, with a long tradition of free speech but under the control of the US’ one serious non-friend, China.  The leak was given to the Guardian, a non-US publication with a history of defending speech and privacy.  All of this is the work of a methodical mind turning himself over completely to what he believes is simply the right thing to do.

Edward Snowden is a hero, and a very smart one at that.  A petition has already started for a Presidential pardon, and I hope you will sign it.

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The Livin’ is Queasy

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Your daddy’s rich / And your mamma’s good lookin’
So hush little baby / Don’t you cry
Summertime, from Porgy & Bess by George Gershwin

As the school year winds down, summer officially starts.  You wouldn’t know it in the upper Midwest, where a cold rain has drizzled down nearly every day for the last month.  Though a lot of crops didn’t make it into the field on time, it’s really summer.  The thermometer might not say it, but the economic reports do.

Every year at this time there is a small recession, a general slowdown.  It’s why so many financial advisers avoid stocks this time of the year.  But wasn’t this year supposed to be different?  It was.  But it isn’t.  And that has everyone scrambling to explain why things are looking a little bit blue.

They shouldn’t.  This is normal – or normal amplified a bit by general uneasiness for the long haul.

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This Time Really is Different

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The year was 1930.  The greatest depression in US history closed around the nation like a dark shadow.  Congress was desperate to do something that put the nation to work again.  What could do it?  Rep. Willis Hawley (R-OR) and Sen. Reed Smoot (R-UT) had a plan – close down imports and make Americans buy products made in America.  Their plan, the Smoot-Hawley Tariff, raised import taxes on over 20,000 items to about the highest level they had ever been.  Nations around the world responded with their own tariffs, starting with Canada, slashing all trade in and out of the US in half.  Nearly everyone agrees that this made the Great Depression much worse everywhere.

Flash forward to 2013.  Japan returns the Liberal Democratic Party to power on the promise to put the nation to work again.  Their plan?  Not to shut down trade, but to increase it – goosing exports by lowering the value of their currency and making their stuff cheaper.

The situations and the plans are very similar, but the underlying assumption is completely different.  The world has passed from Nationalism to Globalism as the basic driving force.  And that difference is worth thinking through.

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