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Economics and commerce, all built from scratch.

The Good, Bad, & Ugly

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Longtime readers know that one of the goals of Barataria is to report on news stories that haven’t made the mainstream nooze yet.  Today we have three that are developing into what may yet be the most important economic and political stories of 2013 – the good, the bad, and of course the ugly.

There has been a lot of good news lately on the economy, even as the rest of the world flounders a bit.  It’s that weakness that makes the potential bad news, especially as the world looks to us as a stable and safe place to park money.  But the ugly story comes out of the place we’re used to being a dim spot, the US Congress, supposedly working on an actual budget for the first time in four years.  Think their inaction could screw things up?  Oh, no – it’s what they are doing that is actually much, much worse.  So here are tomorrow’s stories as the develop today.

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The Managed Depression – Update

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I recently wrote this piece for submission to a mainstream media outlet, but it was rejected.  I’d like to present it here.

Economic health, like personal health, starts with honesty.  When something is wrong a good diagnosis is the first step towards the proper cure and a strong recovery.  Our economy is been deep in what is commonly called a “Great Recession”. That strange term is a substitute for the dreaded word that most of us know is the true condition – a depression.

That “D-word” may be feared, but it should not be.  It simply points to different and more unusual treatment than we are used to.  History will eventually come to know our present economy as what I call a “Managed Depression” – unusual among similar stages in the business cycle in that this one has been carefully managed.

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Jubilee – Cancel Debt!

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There has been a lot of good economic news lately, at least compared to the very bad news of a few years ago.  But that doesn’t mean that there aren’t bad things worth keeping a close eye on – especially those that predict future action by the Federal Reserve.

The velocity of the US Dollar – the number of times per year that money turns over through the economy – continues to drop without an end in sight.  This is a worrying sign because it suggests that most of the economic growth we are seeing comes from money that is being more or less printed by the Fed.  It also suggests that there will be another round of quantitative easing, or even more money printed.  There has to be a better way – and this wouldn’t be Barataria if we didn’t take a stab at how.

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Inequality Becomes Intolerable

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How bad has wealth inequality become in the US?  Thanks to a video that is becoming viral, a new discussion about inequality has fired up – sadly, just after our election cycle.  It takes off from work done 6 months ago by Dan Ariely and Mike Norton, first reported humbly in a simple blog.  But thanks to new graphics and explanation it’s lighting up the ‘net in a way not seen before.

As discussed previously, income and wealth inequality is the best indicator of a future slowdown in economic growth around the world.  More attention to this problem is certainly a good thing.  But the context of how this comes to be and what can be done about it remains elusive.  Let’s take a long view and see where the problem came from – and what can be done about it as we work to set up the next period of expansion that comes after the Managed Depression we are in now.

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DJIA: Yes and/or No

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The Dow Jones Industrial Average (DJIA) keeps setting new record highs.  Does this mean the Managed Depression is over?  The short answer is “yes”, but the long answer is “no”.

The case for a “yes” is that this is based on the solid progress that we have been waiting for, and it’s backed by some strong numbers.  The “no” is that we’re still judging ourselves against either the depths of the worst part of the depression, or in the case of the DJIA a 6-year old record – it should be about 30% higher or more in that time.  But what counts is that this is based on strong corporate profits at least as much as a lack of any other place to put money and the trends should continue – unless the Federal government does something stupid.  Where do you want to put your money on that one?

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