How Big Are We?

In recent noise about the financial world, much has been made of the relative weakness of the U.S. dollar. A lot of seemingly knowledgeable commentators like to predict that international investors either are already or will soon start to run away from the dollar into some other (not yet existing) international monetary unit.

This graph shows one reason why a move away from the dollar is almost impossible unless we're talking in decades instead of years.

Here's the original link at the Atlantic if you want more detail. One quick takeaway is that the metropolitan New York area has an economy larger than that of Canada. The Los Angeles area economy is almost as large as that of the Netherlands.

When American cities have economies as large as major nations this means that the dollar cannot be replaced as an international monetary exchange in the near term. The entire world simply cannot replace the dollar with Swiss Francs when Chicago, all by itself, is bigger than Switzerland. It's a question of liquidity.

An Interesting - and Stubborn - Fact

Facts are stubborn things. With the recent rise in gasoline prices, it will be the natural tendency of the political class to blame oil companies and seek to demonize them in the public eye. (And based on my conversations on the topic with fellow citizens, they are easy to demonize.)

However ... I ran across this very interesting chart. If you believe that he who controls oil production also influences the price of oil then check out this chart. Who profits the most of increased oil prices? Well, it would appear that the top 13 producers of oil are, in fact, governments and these governments produce 94 percent of the world's oil.

More to Go

Okay, I just sold my house in Kansas City and took a six percent loss from the purchase price two years ago. From what I can tell, I got off easy. It appears that prices still need to fall further to get back to their historic trend lines (reversion to the mean). It seems to me to be inevitable.

Those who know me know that I'm an optimistic type of fellow. (In fact, most of my personal money is in the market in long positions.) However, real estate seems like a good place to stay away from for a while.