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Yearly Archives: 2014

New Measures for New Times

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When the first estimate for Gross Domestic Product (GDP) in the second quarter of this year (2Q14) came out, there was reason to cheer. A solid gain of 4.0% seemed to really shake off the fear cause by the figure for 1Q14, revised up to -2.1%. There wasn’t a new recession after all, and growth is back to being robust. Right?

It’s OK, we’re among friends. Your skepticism is justified. The main reason for the fall in 1Q14 was a big drop in health care expenditures, partly due to a revised way of calculating them. The problem is the way we gather this magic figure called GDP, a supposed measure of the total size of the economy. Just before the figure for 2Q14 came out a new measure of the economy, Gross Output (GO), was introduced by the Bureau of Economic Analysis (BEA). It illustrates the problems with GDP, especially as we all focus on jobs as the real sign of economic health.

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World Currency

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Another summer re-run, this one from 2012.  It’s still valid, if more than before, as Russia and other nations work to reduce the influence of the US Dollar.

Imagine a single currency, all around the world.  No more converting between Dollars and Euros and Pounds, the money in your wallet is your ticket to ride anywhere.

Sound like a fantasy?  Throughout history it’s been more or less the standard.  The coins from one era might come from Rome or Madrid or London or Beijing, but one accepted unit of exchange was the norm until very recently.  In many ways, the standard now comes from twelve Federal Reserve banks in paper form, printed with green ink.

But we’re a global society now, with total worldwide trade taking up nearly $8T of the global product of $52T.  Is it time for a new global currency that isn’t subject to the needs and politics of one nation?  More and more, the answer is “yes”.  But getting there, as with anything international, is the hard part.

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Making Predictions

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Can anyone predict the future? Weatherpeople are routinely called on to tell us more than just what happened today- they are supposed to say if it’s going to rain and what temperature we can expect. Sportscasters have moved beyond a blank reporting of the Vegas line, say the Dolphins +4, and are expected to put themselves on the line with a solid call every week.

Not economic reporters. When there’s a lot of money on the line no one is willing to stick their neck out and tell you just what will happen tomorrow. That’s especially strange when you realize that a free market economy is all about balancing risk and reward, which is to say at some point boiling it all down to a solid prediction as to how likely an investment is to come in versus the possible gain from it. Business and economic reporters usually get a pass that the weather and sports people must only dream about. But that’s ridiculous.

Barataria is all about making a prediction and standing by it. Let’s refine that model a bit.

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Tea & Coffee

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Picture yourself in England at the start of Queen Victoria’s reign.  If you have some skills as a part of the growing middle class, things look better every day.  That life comes in part from unskilled workers driven into the growing (and filthy) cities who are more productive than ever before.  The great symbol of the improving standard of living greets you in the morning as a cup of this once luxury beverage, tea.  It comes from China, traded under the barrel of the guns of the Royal Navy through the new colony of Hong Kong.  The latest in technology, the Clipper Ship, brings it to you with great speed and makes it possible to run this enterprise at a distance.   The sun never sets on the British Empire, and tea is both its greatest commodity and emblem of success.

Today, in the waning daze of the American Empire that isn’t an empire, things could hardly be different even as they are the same.  Coffee is the beverage of choice for 54% in the US.   It has always been the workingman’s drink, but it is moving more yupscale – even though 35% of us still drink it black (as it is meant to be, damnit).  It is shipped from tropical, underdeveloped nations in unromantic cargo containers as the second most traded commodity in the world by value ($15B per year), behind only oil.  The nations that produce it are rapidly urbanizing into filthy cities.  The trade is managed over the internet by a cadre of traders and speculators.

History doesn’t repeat, but it rhymes like a street poet hitting a beat.

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Wackos with Guns

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The pictures and stories coming from Donetsk, Ukraine, are horrifying. Bodies flung from Malaysia Air flight 17 have been lying in the fields right where they fell from the sky, rotting in the summer sun for days. Wreckage is everywhere, some of it disturbed in what appears to be looting as much as recovery. How can this happen?

The short answer is that the area is not under the control of any organized or trained government, but held by a group of separatists with guns. Some have been described as “visibly intoxicated” as they fired into the air to shoo off international investigators. It seems ridiculous, but the families – indeed, the entire world – is being held hostage by a few wackos with guns.

That’s the state of the world right now as we all draw much closer. A little bit of chaos in one part of the planet affects everyone – even when the number of people involved is small.

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