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Minneapolis’ New Generation

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Much has been said about the upheaval in the Republican Party. But there may be just as much change happening in the Democratic Party, at least if the Minneapolis City Council election this year is representative of any trends. The generational turnover in the Council has dropped the average age from 52 to 41, by my reckoning, and increased the non-white membership from 1 to 3 of 13 – all of whom are foreign-born.

Is this the future of the Democratic Party? The short answer is yes, but it starts small. Leadership is developed at the local level, and there’s no better place to develop it than the City Council. Minneapolis has a Weak Mayor system, so it’s the council that actually runs things. And not only is the new council much younger, it was generally elected on a platform of social justice and neighborhood development – not downtown.

I may have to stop making fun of our younger sister city.

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Good, Evil, Puzzling, & Stupid

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Every once in a while Barataria has to take a pause from deep economic rumination. It’s time rundown the odd stories that may not have received enough attention elsewhere. There is a lot of news in these chaotic times that smells like it may be important one day but hasn’t quite bubbled up to the level where it hits the mainstream yet. This is just one of those days.

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The “Facts” are Failing

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Back in the 1950s, people who studied complex things like economies felt they were making real progress. The general belief was that by understanding how it all worked we could even things out and usher in a new era of continuous prosperity that would benefit everyone.

Some of the underlying “facts” that were identified at this time have been accepted as simple truths. Growth is always good, and economic growth always flows to workers, making their lives better generation by generation. There’s only one problem lately – some of the “facts” appear to not be as true as they used to be. That means that the underpinnings of modern economic theory are all being questioned and, perhaps, if we don’t keep our eyes open the new era of prosperity will be far more elusive than anyone thought.

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Fed Funds Future Foggy, Fudgy

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The stock market is surging on solid corporate profits. Jobs are being created, if a bit slowly. Should the Federal Reserve continue its policy of Quantitative Easing? The short answer is probably not. But the policy of buying $85B in mortgage backed securities is continuing, at least for the foreseeable future. And with Janet Yellen, the Fed Vice Chair, slated to replace Ben Bernanke in January we have every reason to believe that the policy will continue.

It’s time to examine how the Fed sets their benchmark interest rate, the Fed Funds Rate, and what we can reasonable expect them to do with it in the near future. It shows just how much the Fed is really in charge of the economy – absent a Federal Government that is doing what needs to be done.

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Corporate Profits – A Bad Thing?

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Though the stock market is hitting new highs, many people are less than impressed. It’s commonly believed that the Federal Reserve’s $85B per month spending on mortgage backed bonds is all that is holding things up more than reality. That was backed by the big rally after Bernanke announced the program (aka QE3) would not “taper” in the near future, but continue.

But the truth is that corporate profits are at levels that they have never been before, meaning that there is underlying value in the stock market that is driving the rise. More importantly, corporate profit margins (profit over gross revenues) are also at unknown highs. It points to not only how we get out of the job shortage that is the reason the Fed keeps buying, but also the most obvious ways to close the budget deficit – and gives a little more definition to the boomtimes that probably like ahead in the 2020s.

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