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.

Interviews Again

I thought it was time to repeat a couple of oldies but goodies. Here are two interviews I did in 2009 regarding IT and staffing. Take a look.

Investing in the IT Staff - with Gino Macarroni

So You Think You Know What a Recruiter Thinks? - with Diane Plymale

The Road to Serfdom - The Comic Book

I had the great pleasure of reading and re-reading Adam Smith's "The Wealth of Nations" many, many years ago. I may be the only person I know who's actually read he philosophical foundation of Capitalism and free markets.

I continue to run into references to the greatness of Hayek's "The Road to Serfdom". Someday I'll have to read it. In the meantime, for us with short attention spans, here's the comic.

Best Drummer Since Ginger Baker?

Maybe not ... but he certainly wins on style points.

More Stubborn Facts

Here are the results of last year's Cash for Clunkers program. I haven't watched it closely but it seems that the federal tax credits for a home purchase expired at the end of May. I know there was a flurry of buying

as that credit expired. Then I read an article that home sales will plummet. I suspect the federal tax credit did the same thing in the housing market as it did in the used car market, just pulled sales from the future.


I suspect the housing market will recover to normal levels soon.

Facts are Stubborn Things

According to one Hillary Clinton, "The rich are not paying their fair share" of taxes. The top five percent of wage earners pay more than 54 percent of income taxes. She seems to bright not to know the truth so I wonder why she said that.

Crowding Out

Crowing out was a term I became familiar with in the 80-81 recession where Paul Volcker saved the future. The tenet is that government spending crowds out private spending. In other words, there are only so many dollars in the world and when the government spends them, they are not there for private enterprise to spend.

It's a simple concept and almost intuitively true. It also doesn't matter if we're talking about dollars taxed today or dollars borrowed against the future. There is a finite pool of capital (current or borrowed against the future) and private enterprise gets the leftovers.

Now, here's evidence that this is also a short-term phenomenon. If other research backs this up, this pretty-much blows Keynesianism out of the water.

The entire study is here.

I'm Starting to Like This Guy

Gov Christie calls S-L columnist thin-skinned for inquiring about his 'confrontational tone'

Four Ways

There is a good argument to be made that the financial regulation changes moving through Congress now are best set aside for a few years. We do not yet know enough to know if we're doing the right thing. Too bad Congressmen and women do not have to take the political equivalent of the Hypocratic Oath - First Do No Harm.

Here's an interesting discussion of the federal government's complicity (if not outright fault) in abetting the Crash of 2008.

Despotic Bureacracy

Here's a very interesting take on a subject I've been reading about since I was a little boy. I particularly like the quote referring to the American Revolution where one of the sparks was that King George had "erected a multitude of New Offices, and sent hither swarms of Officers to harass our people and eat out their substance."

If I can ever find it, I'll post a link to a video I once saw of a 60s-era Ronald Reagan giving a brilliant speech on the same topic.

The Oligarchy

I hear and read more talk about Corporatism these days - but that may be the effect of the observer distorting the evidence. Power Line has an interesting post about a new American Oligarchy. What Power Line is calling the Oligarchy and I call Corporatism, I've also heard called the Washington-Wall Street Nexus.

So, here I risk sounding like a wingnut but it's hard for me to overemphasize how corrosive these structures are to truly free markets and free peoples. Here's hoping that in the near future this topic is discussed more often and openly.

The Kudlow Creed

Even Jonah Goldberg Agrees with Me!

The answer to capitalism is more capitalists.

Confusing Wall Street with Capitalism

At minute 6:50 of this video, they ask the very relevant question: Are Republicans confusing Wall Street with Capitalism. The answer is yes, but then many people do.

Want a VAT, Lose the Income Tax

George Will has been in the pundit business for a long, long time. I think the world according to Obama (and the later Bush years for that matter) is bringing out his best. Will is getting better with age.

There is now a lot of buzz about a Value Added Tax (VAT) similar to those used in Europe and Canada. George has a great take down and then raises the ante: Want a VAT, Ditch the Income Tax.

For a prior admiring post on Will, check this out.

Also, here's one of my previous remarks on the topic.

Battling Lack of IT Understanding

After spending literally decades working to align IT with business, I am slowly coming around to this opinion: The business holds equal responsibility for misalignment with IT.

Yes, it is the director's or CIO's responsibility to align with the business but there are also many senior business managers who show no interest in reaching back across the aisle. Here are some more thoughts on the matter.

Even Ron Paul Agrees With Me

I've stated a few times that what we have in America is not Capitalism but Corporatism. Apparently, now former presidential candidate, Ron Paul agrees with me too.

Here are my previous posts on the topic.

Corporatism Redeux

Corporatism is Self-Defeating

It's Not What You Think

Corporatism is Not Capitalism

What To Do If You Kiss Your Sister

See more funny videos and funny pictures at CollegeHumor.