GDP IS DOWN -- OR UP -- Consumers are spending more, but government is spending less and firms reduced their inventory investments, according to the latest estimate from the federal Bureau of Economic Analysis. As a result, U.S. Gross Domestic Product (GDP) growth rate slowed to 2.6 percent in the fourth quarter of 2013, down from 4.1 percent in the third quarter. An earlier survey put the fourth quarter growth rate at 2.4 percent.
MORE MONEY? -- Personal income in February increased 0.3 percent, the government reported. So if consumers have more money, will they continue their spending trend that showed in fourth quarter GDP? And does this mean that recovery is well established, so the Federal Reserve can ease back more on its stimulus? Meanwhile, conservatives will use this data to support their demand that government spending be cut even further. The danger is that monetary and fiscal support will be pulled too soon, sending the country back into recession. It's happened before, most notably in 1937, just as the U.S. was recovering from the Great Depression.
ILLINOIS BLUES -- The Federal Trade Commission said it's okay for the state legislature to repeal a law that bans auto sales and leases on Sunday. Illinois State Sen. James Oberweis asked for the opinion. Who knows how many old Sunday blue laws are still on the books scattered around the country.
TWO-SPEED ECONOMICS -- Europe has been trying to cope with wide variations in economic health among its various member nations, but that phenomenon showed up in America long ago. Compare the industrial Northeast with the agricultural South and Midwest in the 19th Century. More efficient energy technology and lower labor costs enabled many manufacturers to move from New England to the South in the early 20th Century. Later, the invention of air-conditioning brought many office buildings to the South. Combine all these factors and the two-speed variation closed somewhat.
Over time, something similar could happen within the European Union, but that will depend largely on whether economic nationalism can yield to proposals for the greater good.
ENERGY BOOM -- Oil and gas findings in the American Great Plains are fueling a population boom in that region, according to the U.S. Census Bureau. Six of the ten fastest-growing metro areas were within or near the Great Plains, the bureau said. These were Odessa, Midland and Austin, in Texas, as well as Fargo and Bismarck in North Dakota, and Casper, Wyoming. For the twelve months ended July 1, 2013, seven areas in or near the Great Plains, with populations of between 10,000 and 50,000 grew by 10 percent or more, the Census Bureau said. By comparison, larger metropolitan statistical areas, with populations of 1 million or more, grew by just 1 percent.
Friday, March 28, 2014
Wednesday, March 26, 2014
Currency Conundrum
What would happen if half the states in the U.S. issued their own money? And a dollar issued by one state had to be exchanged for the currency of another state while traveling or making interstate purchases?
It can't happen, of course, since the federal government is the only entity able to issue money. But in the early years of the republic, it did happen, until the federal government took full control of the money supply, over-ruling the ability of states and local banks to issue currency.
The concept is relevant today because about half the nations in the European Union subscribe to a single monetary unit -- the euro -- to be used by all in the group. Of the 28 countries in the EU, just 16 -- a bit more than half -- have converted to the euro as a universal currency, usable and accepted in each country.
Some nations -- Denmark, for example -- tied its currency to par with the euro even as the Scandinavian countries have had a longstanding agreement to link their currencies for ease of trade. Historically, Ireland too set its pound to be equal to the British pound when it achieved independence, but that ended when Ireland joined the EU and adopted the euro. Britain, however, has not yet adopted the euro.
Moreover, the issue is complicated by the lack of a central bank with enough authority to bail out or shut down troubled smaller banks. There is, of course, the European Central Bank, but for now it can only act on major banks, although there's a move afoot to strengthen ECB controls.
Meanwhile, the ECB can and does regulate the number of euros in circulation, telling each member country in the euro zone how many euros it can produce. The problem, however, is that nations in economic trouble can't inflate their currencies to gain an advantage in international trade. In addition, tariffs and import quotas are also banned among EU members. (More fun? Each nation has some discretion as to what to print. In Ireland, for example, the highest denomination printed is the 50 euro note, while Germany prints more 500-euro notes than all the other member nations combined.)
This monetary control issue was confronted as early as 1990, when a common currency unit was being discussed.
"Without a central institution, the system would therefore incorporate a strong incentive for countries to 'free ride' at the expense of their neighbors, i.e. to expand money supply ... excessively at home without bearing the full associated inflation costs." (One Market, One Money, in "European Economy," No. 44, October 1990, from the EU. http://ec.europa.eu/economy_finance/publications/publication7454_en.pdf)
So there must be central control of the money supply. However, when one region falls into dire economic straits, there is responsibility for others in the union to help. And because of centuries-old rivalries, that's not as available in Europe as it could be. For that matter, it could be better within the U.S. as well.
In North America, a Free Trade Act (NAFTA) reduces barriers to international commerce between the U.S., Canada and Mexico, but each country retains its own monetary unit and government. Within the U.S., each state has its own government, but interstate commerce is regulated by the federal government, which also controls the money supply.
The U.S. is one nation, while the EU, with an economy of similar size (about $16 trillion) remains a collection of 28 separate and independent nation-states.
After independence from Britain, the U.S. tried a confederation form, but that didn't work out very well, so a new Constitution was prepared that set up a stronger central government, even as individual states retained a level of independence.
However, the concept of states' rights -- what the Declaration of Independence in 1776 referred to as "free and independent states" -- remains strong in some regions in America, more than 200 years after the Constitution was adopted. And while a war in the 1860s established the supremacy of the federal government, there are still many who do not accept that.
So to a large extent, the European Union faces a similar issue. The EU has tumbled many trade, commerce and employment, as well as travel barriers throughout Europe just as the U.S. did more than 200 years ago. There are still, however, many cultural as well as language issues that stand in the way of full European political unity.
One thing is clear: Forced unity through war and domination of one group over all the others is not the answer. It has been tried before, and only led to death and destruction. That way madness lies.
Monetary and commercial unity is possible, through immense cooperation, but political unity is less likely. As well try to unify the U.S. and Canada. The offer of statehood was made more than 200 years ago, but Canada rejected it.
So to achieve a more perfect trade union, regions -- cultural, linguistic and monetary -- must give up some political independence. Even among the 13 American colonies that joined themselves together for a new nation, there were many differences despite having shared a common language and a common currency as subordinates of the British crown.
Political, cultural, linguistic and economic differences and suspicions may yet forestall closer ties in Europe, even to the extent of collapsing the European Union.
Perhaps it's possible that the U.S. and Canada will form "one nation, indivisible," even as the many nations of Europe collaborate for closer monetary and political ties.
But it's not likely.
It can't happen, of course, since the federal government is the only entity able to issue money. But in the early years of the republic, it did happen, until the federal government took full control of the money supply, over-ruling the ability of states and local banks to issue currency.
The concept is relevant today because about half the nations in the European Union subscribe to a single monetary unit -- the euro -- to be used by all in the group. Of the 28 countries in the EU, just 16 -- a bit more than half -- have converted to the euro as a universal currency, usable and accepted in each country.
Some nations -- Denmark, for example -- tied its currency to par with the euro even as the Scandinavian countries have had a longstanding agreement to link their currencies for ease of trade. Historically, Ireland too set its pound to be equal to the British pound when it achieved independence, but that ended when Ireland joined the EU and adopted the euro. Britain, however, has not yet adopted the euro.
Moreover, the issue is complicated by the lack of a central bank with enough authority to bail out or shut down troubled smaller banks. There is, of course, the European Central Bank, but for now it can only act on major banks, although there's a move afoot to strengthen ECB controls.
Meanwhile, the ECB can and does regulate the number of euros in circulation, telling each member country in the euro zone how many euros it can produce. The problem, however, is that nations in economic trouble can't inflate their currencies to gain an advantage in international trade. In addition, tariffs and import quotas are also banned among EU members. (More fun? Each nation has some discretion as to what to print. In Ireland, for example, the highest denomination printed is the 50 euro note, while Germany prints more 500-euro notes than all the other member nations combined.)
This monetary control issue was confronted as early as 1990, when a common currency unit was being discussed.
"Without a central institution, the system would therefore incorporate a strong incentive for countries to 'free ride' at the expense of their neighbors, i.e. to expand money supply ... excessively at home without bearing the full associated inflation costs." (One Market, One Money, in "European Economy," No. 44, October 1990, from the EU. http://ec.europa.eu/economy_finance/publications/publication7454_en.pdf)
So there must be central control of the money supply. However, when one region falls into dire economic straits, there is responsibility for others in the union to help. And because of centuries-old rivalries, that's not as available in Europe as it could be. For that matter, it could be better within the U.S. as well.
In North America, a Free Trade Act (NAFTA) reduces barriers to international commerce between the U.S., Canada and Mexico, but each country retains its own monetary unit and government. Within the U.S., each state has its own government, but interstate commerce is regulated by the federal government, which also controls the money supply.
The U.S. is one nation, while the EU, with an economy of similar size (about $16 trillion) remains a collection of 28 separate and independent nation-states.
After independence from Britain, the U.S. tried a confederation form, but that didn't work out very well, so a new Constitution was prepared that set up a stronger central government, even as individual states retained a level of independence.
However, the concept of states' rights -- what the Declaration of Independence in 1776 referred to as "free and independent states" -- remains strong in some regions in America, more than 200 years after the Constitution was adopted. And while a war in the 1860s established the supremacy of the federal government, there are still many who do not accept that.
So to a large extent, the European Union faces a similar issue. The EU has tumbled many trade, commerce and employment, as well as travel barriers throughout Europe just as the U.S. did more than 200 years ago. There are still, however, many cultural as well as language issues that stand in the way of full European political unity.
One thing is clear: Forced unity through war and domination of one group over all the others is not the answer. It has been tried before, and only led to death and destruction. That way madness lies.
Monetary and commercial unity is possible, through immense cooperation, but political unity is less likely. As well try to unify the U.S. and Canada. The offer of statehood was made more than 200 years ago, but Canada rejected it.
So to achieve a more perfect trade union, regions -- cultural, linguistic and monetary -- must give up some political independence. Even among the 13 American colonies that joined themselves together for a new nation, there were many differences despite having shared a common language and a common currency as subordinates of the British crown.
Political, cultural, linguistic and economic differences and suspicions may yet forestall closer ties in Europe, even to the extent of collapsing the European Union.
Perhaps it's possible that the U.S. and Canada will form "one nation, indivisible," even as the many nations of Europe collaborate for closer monetary and political ties.
But it's not likely.
Tuesday, March 25, 2014
Scammer Grammar
One clue that can identify an internet scam is poor grammar or spelling. Many of the schemes are hatched and spread from regions where English is a second language, and learned poorly, at that. So when you get an email message offering a freebie if you clink on a link and answer a few questions, take a look at the spelling and grammar, keeping in mind the adage, "If it sounds too good to be true, it probably is."
Example: A pitch just came in the email saying you can "recieve" a free gift certificate to "JC Penny," just for replying to the pitch.
Beware: That pitch violates two rules ingrained in students' heads in elementary school.
Rule No. 1: "i before e, except after c, or when e sounds like a, as in neighbor and weigh."
Rule No. 2: Spelling counts, so get the name right. The American retail chain is JC Penney, spelled with two e's.
Moreover, the first warning was the opening, which said, "Thank you for your patronage at JCPenny." There are no stores by that name within many miles of this residence, and it has been several decades since anyone in the family lived anywhere near such a store.
Conclusion: No matter how enticing the freebie might seem, delete the message without reading further.
Example: A pitch just came in the email saying you can "recieve" a free gift certificate to "JC Penny," just for replying to the pitch.
Beware: That pitch violates two rules ingrained in students' heads in elementary school.
Rule No. 1: "i before e, except after c, or when e sounds like a, as in neighbor and weigh."
Rule No. 2: Spelling counts, so get the name right. The American retail chain is JC Penney, spelled with two e's.
Moreover, the first warning was the opening, which said, "Thank you for your patronage at JCPenny." There are no stores by that name within many miles of this residence, and it has been several decades since anyone in the family lived anywhere near such a store.
Conclusion: No matter how enticing the freebie might seem, delete the message without reading further.
Monday, March 24, 2014
Hyphen Nation
A failed bank system is not the same as a failed-bank system.
How many adjectives can modify a noun? In English, there is no limit. After four, however, the phrase becomes clumsy, so it behooves the careful writer to break it up. Meanwhile, there are occasions when a hyphen must be used to avoid confusion, as in the above example. This clarifies that the first deals with a failed system, and the second deals with failed banks.
The important thing to remember, however, is to use a hyphen only when necessary to clarify. Otherwise, the phrase looks clumsy. And when there are multiple modifiers, such as in "big red round ripe juicy apple," not only are multiple hyphens unnecessary, but their use only paints a foolish phrase.
Moreover, when there is little or no likelihood of confusion, avoid inserting a hyphen. Example: "Small business owner." If, in fact, the business owner's height is relevant, say so in another sentence.
Don't get hyphen-happy. Over-punctuation is worse than none at all.
On a related issue, -ly adverbs, such as newly elected, partly completed, recently enacted, never take hyphens. Why? Because they are adverbs, not adjectives. Adverbs are used mostly to modify verbs, and since there is no confusion as to what they modify, especially when only two words are involved, there is no need to hyphenate.
Don't believe me? Check any style book, going all the back to Strunk & White's "Elements of Style," first published about a hundred years ago and still one of the best. That manual states flatly that -ly adverbs "never take a hyphen."
How many adjectives can modify a noun? In English, there is no limit. After four, however, the phrase becomes clumsy, so it behooves the careful writer to break it up. Meanwhile, there are occasions when a hyphen must be used to avoid confusion, as in the above example. This clarifies that the first deals with a failed system, and the second deals with failed banks.
The important thing to remember, however, is to use a hyphen only when necessary to clarify. Otherwise, the phrase looks clumsy. And when there are multiple modifiers, such as in "big red round ripe juicy apple," not only are multiple hyphens unnecessary, but their use only paints a foolish phrase.
Moreover, when there is little or no likelihood of confusion, avoid inserting a hyphen. Example: "Small business owner." If, in fact, the business owner's height is relevant, say so in another sentence.
Don't get hyphen-happy. Over-punctuation is worse than none at all.
On a related issue, -ly adverbs, such as newly elected, partly completed, recently enacted, never take hyphens. Why? Because they are adverbs, not adjectives. Adverbs are used mostly to modify verbs, and since there is no confusion as to what they modify, especially when only two words are involved, there is no need to hyphenate.
Don't believe me? Check any style book, going all the back to Strunk & White's "Elements of Style," first published about a hundred years ago and still one of the best. That manual states flatly that -ly adverbs "never take a hyphen."
Sunday, March 23, 2014
Spock's Dillemma
Language is not logical. Logic uses language to express its concepts, but language itself is not logical.
Many folks insist on following the fallacy that a double negative makes a positive. However, while that phenomenon happens among speakers of English more often than it should, the truth is that only in mathematics does a double negative result in a positive. In speech, it serves only for emphasis. Moreover, in some languages -- French and Spanish, for example -- double negatives are required. "Ne ... pas" in French, or "No hay nada" (There is nothing) in Spanish. The English equivalent, "There ain't nothing," is frowned on not because of its mathematical contradiction, but because it's considered a "lower class" expression.
Otherwise, some may use the expression, "I am not unhappy," but that doesn't necessarily mean the speaker is in fact happy. Nor does it connote sadness. It could at best be construed as neutral, or accepting of a situation.
Many folks insist on following the fallacy that a double negative makes a positive. However, while that phenomenon happens among speakers of English more often than it should, the truth is that only in mathematics does a double negative result in a positive. In speech, it serves only for emphasis. Moreover, in some languages -- French and Spanish, for example -- double negatives are required. "Ne ... pas" in French, or "No hay nada" (There is nothing) in Spanish. The English equivalent, "There ain't nothing," is frowned on not because of its mathematical contradiction, but because it's considered a "lower class" expression.
Otherwise, some may use the expression, "I am not unhappy," but that doesn't necessarily mean the speaker is in fact happy. Nor does it connote sadness. It could at best be construed as neutral, or accepting of a situation.
Demographic Destiny
The labor force is changing, and no longer reflects economic needs in the way it used to. But as economic needs change, so does the makeup of the labor force. Moreover, this is especially true of the long-term unemployed.
For example, the demographic composition of the work force is different. The Baby Boom generation is nearing retirement, and many are already in the ranks of the long-term unemployed. As they age, their chances of re-entering the work force and getting a job are declining. Result: that cohort of the work force is thinning, even as the work force as a whole is increasing.
"Even in good times, the long-term unemployed are on the margins of the labor market, with diminished job prospects and high withdrawal rates," said three Princeton University economists in a new study. Moreover, those in this group "exert little pressure on wage growth or inflation," the study said. It was written by Alan B. Krueger, Judd Cramer and David Cho of Princeton, and was published by the Brookings Institution.
Separately, the U.S. Labor Department said the labor force -- the number of people working or looking for work -- "has gone through substantial changes in size and demographic composition over the last half of the 20th Century." But after the wave of women and those in the Baby Boom generation began to recede, through retirement and other factors, growth in the labor force is declining. It's still growing, however, and is expected to total 163.5 million by 2022, the government report said, for an annual rate of 0.5 percent.
Moreover, the labor force is becoming increasingly diverse even as it grows. Reason: Immigration and increased participation by minority groups.
A century ago, agriculture took up much of the labor force in America, and then manufacturing took the lead. More recently, the service industry hired more workers than other fields. Now, technology leads the way, demanding higher skills and more education than was needed in agriculture or manufacturing.
However, even technology geeks need food, clothing and shelter. And the next time your car engine conks out, try asking a computer whiz or a surgeon to fix it.
Moral: The more complex the economy, the more support it will need from farmers, mechanics, plumbers, electricians and carpenters. Technology enables more efficient production, but this calls for more knowledgeable workers at all levels.
And the longer a person is unemployed, the less likely that person is to find a good job. Therefore, Krueger, Cramer and Cho conclude, "the long-term unemployed are an unlucky subset of the short-term unemployed."
This is not to say they are unimportant. It does mean, however, that short-term unemployment is a better predictor of inflation and wage growth than the overall unemployment rate, the authors said.
For example, the demographic composition of the work force is different. The Baby Boom generation is nearing retirement, and many are already in the ranks of the long-term unemployed. As they age, their chances of re-entering the work force and getting a job are declining. Result: that cohort of the work force is thinning, even as the work force as a whole is increasing.
"Even in good times, the long-term unemployed are on the margins of the labor market, with diminished job prospects and high withdrawal rates," said three Princeton University economists in a new study. Moreover, those in this group "exert little pressure on wage growth or inflation," the study said. It was written by Alan B. Krueger, Judd Cramer and David Cho of Princeton, and was published by the Brookings Institution.
Separately, the U.S. Labor Department said the labor force -- the number of people working or looking for work -- "has gone through substantial changes in size and demographic composition over the last half of the 20th Century." But after the wave of women and those in the Baby Boom generation began to recede, through retirement and other factors, growth in the labor force is declining. It's still growing, however, and is expected to total 163.5 million by 2022, the government report said, for an annual rate of 0.5 percent.
Moreover, the labor force is becoming increasingly diverse even as it grows. Reason: Immigration and increased participation by minority groups.
A century ago, agriculture took up much of the labor force in America, and then manufacturing took the lead. More recently, the service industry hired more workers than other fields. Now, technology leads the way, demanding higher skills and more education than was needed in agriculture or manufacturing.
However, even technology geeks need food, clothing and shelter. And the next time your car engine conks out, try asking a computer whiz or a surgeon to fix it.
Moral: The more complex the economy, the more support it will need from farmers, mechanics, plumbers, electricians and carpenters. Technology enables more efficient production, but this calls for more knowledgeable workers at all levels.
And the longer a person is unemployed, the less likely that person is to find a good job. Therefore, Krueger, Cramer and Cho conclude, "the long-term unemployed are an unlucky subset of the short-term unemployed."
This is not to say they are unimportant. It does mean, however, that short-term unemployment is a better predictor of inflation and wage growth than the overall unemployment rate, the authors said.
Thursday, March 20, 2014
Security vs Freedom
You can have tight government-run security or you can have the Bill of Rights. You can't have both.
Keep all things in balance. -- Druid proverb
Those who defend government surveillance in the name of security should remember that in doing so we all lose some freedom of expression.
Free speech means you can say whatever you like, as long as you agree with me. -- Prof. Hans Offerduff.
"I love it when they're stupid." -- Detective Lenny Briscoe of TV's 'Law & Order.'
A member of the new Ukraine Parliament committee on free speech reportedly joined a gang of men to beat up a TV news chief in Kiev because the station broadcast what the MP called "Russian propaganda." The TV station maintains it was simply reporting events.
The gang videoed the thrashing and posted it online.
INDEPENDENCE VOTING -- The latest claim from Russia is that if the Crimea referendum on leaving Ukraine is illegal under international law, then so also are upcoming votes on Scotland leaving the UK and Catalonia leaving Spain.
Keep all things in balance. -- Druid proverb
Those who defend government surveillance in the name of security should remember that in doing so we all lose some freedom of expression.
Free speech means you can say whatever you like, as long as you agree with me. -- Prof. Hans Offerduff.
"I love it when they're stupid." -- Detective Lenny Briscoe of TV's 'Law & Order.'
A member of the new Ukraine Parliament committee on free speech reportedly joined a gang of men to beat up a TV news chief in Kiev because the station broadcast what the MP called "Russian propaganda." The TV station maintains it was simply reporting events.
The gang videoed the thrashing and posted it online.
INDEPENDENCE VOTING -- The latest claim from Russia is that if the Crimea referendum on leaving Ukraine is illegal under international law, then so also are upcoming votes on Scotland leaving the UK and Catalonia leaving Spain.
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