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Opportunity Costs

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I’m too upset by the prospect of a government shutdown to write anything coherent.  It happens.  So I dug through the last time we had this problem potentially looming in 2011 and found this piece.  It’s not only still relevant, but it ties into our recent piece on the Triple Threat of forces on our economic health that no one is really dealing with.  I hope you enjoy this repeat from 31 August 2011.

You can’t have your cake and eat it, too.  It’s a silly old saying with a huge dollop of folk wisdom hidden in the middle of it.  But money spent is sometimes more than just money gone – in an integrated world it’s a choice to make one connection when another one might have been a better choice.

Rather than just measure how much money is going in and out, it might be better to understand what we could buy with the same money.  The technical term for this is “Opportunity Cost”, or what we give up by making the choices we do.

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Gameday in Washingtoon

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Another year, another battle over the budget.  This time the threat is a trifecta, a showdown over shutting down government, defunding Obamacare, and a default on the Federal Debt by not raising the debt ceiling.  The stakes could not possibly be higher – and yet just about no one outside of Washingtoon wants to be in this game in the first place.  How did it get to this?

First of all, this is about the Republican Party and absolutely nothing else.  Boehner and the leadership had to prove their mettle to more vocal Tea Party members if they wanted to have a chance to keep their positions.  But there is little doubt that even if they win the greater party outside stands to lose the most in this game.  For the rest of us, all we can do is hope that nothing stupid winds up happening.

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Bernanke in Charge

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Another Federal Reserve policy meeting, another restatement of the QE3, another big rise on Wall Street.  The breakdown on the Fed’s continuing to buy $85 a month in treasury bills was predictable, if generally wrong and leaving just about everyone to speculate on why, regardless of how plainly the case was made.  Make no mistake about it, though – Ben is still in charge and things are going pretty well in many ways, at least until the showdown on the budget and debt ceiling.

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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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Plain Talk

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Sequestration.  It’s a big word that most people have never heard before.  Constant repetition in the media doesn’t help explain or define it, and the implications of what is pending (barring a last minute deal) are brutal.

The word “sequester” means to “set apart”.  In this case, $108B per year is planned to automatically be set aside from the US Budget, half from the military and half from other discretionary programs (that is, not including Medicade and other entitlements).  This is not a sequestration, it is a meat axe to the budget.

Assuming there isn’t a plan to stop this at the last minute, either by delaying it or passing a real budget for the first time in four years, what we have is the axe.   You’re probably tired of hearing about it by now, but the use of words is important.  The lack of a clear, common talk shows just what this is all about – an inside game that has to stop.  How do we get past it?

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