Who is better off on average (In terms of per capita GDP)? The people who live in Belgium or the people who live in New Mexico?
It’s in some ways a weird map. “Lego” is number one in Utah. “Burt’s Bees” is number one in North Carolina. This data, according to the attached article, comes from 2 weeks ago.
Image: Mint Press News
War is fundamentally crony. There is death and destruction and despair for most, but for some people, companies, and governments there is money to be made too. Sometimes very big money indeed. The conflict in Syria is an example. It’s not really about religion and terrorism. (Though these are hugely important factors.)
We have said in the past that the real economic “run for the hills” moment is the moment the dollar loses world reserve currency status. If that were to ever happen all sorts of things would cascade. Interest rates would shoot up. Our debt would become unmanageable. All sorts of dollar denominated assets would decrease in relative value. It would be a colossal mess.
This is unlikely to happen anytime soon. Though “dollar hegemony” has eroded somewhat since the 2008 Crash,
Robert Shiller, not always our favorite economist here, is warning that the stock market is looking particularly bubbly. This isn’t a huge story except that talk of a bubble is now coming from one of the accepted shamans of Keynesianism. Shiller also called the tech bubble and housing bubbles accurately. His book Irrational Exuberance is a classic.
Cheap money feels good initially. Nearly everyone is happy when central banks open the floodgates (or helicopter doors) and cash spills into the economy. Hooray! Money! Why is it here now instead of yesterday? Who knows? Get while the getting’s good. Look, the stock market’s rising – whoopee! Monetary tequila. Bottoms up!
But the morning, the aching, head thumping morning always comes after such a binge.
“All I know is Ben Bernanke was tending bar. Goldman Sachs was buying me drinks.
Government is inherently crony. That is its nature. It has an inherent tendency toward corruption. Crony entropy. Like water flowing downhill.
In Greece we see a relatively poor crony state languishing on the rocks while the Germans pick at its liver. And we pity the place. Yes, they’ve gotten themselves into this mess, but Brussels (and Berlin) are being stupid about things.
Not because they won’t give Greece another bailout. They are dying to give Greece more money truth be told.
There was a time when people in the West looked at the developing world and dismissed the corruption exhibited there as a disease of lesser economies. Nigeria, Belarus, Egypt, Brazil, all were (and are) chock full of insider dealing and bribery. In the West however we held ourselves to a higher standard. We had “clean” economies.
It wasn’t Wyoming or North Dakota. Idaho it looks like you get to stay. Arkansas you’re in too.
I look at it this way. Put yourself in the shoes of whoever makes the call to announce to the public that Ebola is now a problem which people need to concern themselves with in the United States.
We agree that this is very possible. Government is so large, so out of control, so unaccountable, and so expensive it is indeed likely to collapse one day. Less in a dramatic heap of rubble and more of a slow rusting rot. But perhaps a dramatic heap.
Soon to be London?
The big pharmaceutical companies have done very well in the crony department over the last decade. Medicare Part D was a giant gift to pharma, then the “donut hole” fill of Part D in 2010 meant even more money for the drug companies. Big Pharma in many respects is a government contractor. A quarter of its revenue comes from Medicare, Medicaid, and various other government programs. But now one of the giants is leaving for England lured by lower tax rates.
They’re in good company. The banking cronies here fear Bitcoin too.
To paraphrase David Stockman – The world’s central banks have not suspended the market mechanism. They can kick the can, they can lie, they can move assets around on balance sheets, they can even call debts assets. But in the end there is no free lunch.
Nuclear power is highly subsidized.
To paraphrase the anchor, – If a nuclear reactor melts down in your neighborhood and the government says “don’t worry about it” get the heck out of there as fast as you can.