Some Thoughts on the Euro & the ECB

So apparently the world as we know it is in the process of ending. Euro Doom has finally arrived and we are all screwed. I don't believe that is happening. The ECB must intervene. World events have gone beyond politics to a point at which politicians are throwing themselves in the way of this just to fix it at the cost of their own careers.

This is not the end, it must not be the end.

More Thoughts on Banking

To clarify my post from yesterday a little I would like to say that my thinking does not stem from any feeling that free banking should be a human right. My mindset comes more from that if it were free it would make the world more efficient and remove impediments to doing business.

I think Republicans are misguided in their "over-regulation" crusade and should focus more on regulations that give the edge to specific actors in the market, government sponsored monopolies is what I'm thinking of. I for one would love to see more players in the bank seen, especially players that have a history of driving down costs for consumers.

Some Thoughts on Banking

I don't necessarily know where this post is coming from in terms of what spurred it but take it for what you will.

My thinking is starting to drift towards splitting the financial sector in two; one side being heavily driven by profit and investment, with the other being centered on basic banking services. I think the first needs profit in order to operate at peek efficiency, why else would you lend someone money who you dont know unless it was to make a return on your investment? The second however is should be more centered around defraying costs, not making money.

Think of the alternatives to bank accounts and the costs that it would incur if we did not have them (or people were priced out of having them). As a result people would have to carry and store more cash (possibly in a shoe box or under their mattress). One would assume that they would not carry their thousands of monies on their person for fear of losing it or it being stolen, and if that were the case they would probably be less likely to make large purchases as well as to make impulse decisions. If debit cards do anything they make it easier for someone to spend money (as well as for retailers to take money) so why would someone who is looking to turn a profit want to take that tool out of a consumers hand? By instituting fees and pricing out the "un-banked" you are inhibiting consumer spending.

I see two alternatives to our current system of banks leaching off of consumers.

1) Governments get into the game in order to lower the use of cash as well as spur spending, while I think this would be a great idea I don't foresee this being something that will ever happen, maybe in small wealthy nations but even then I assume currency is used very infrequently to begin with (rich people use rewards based Credit Cards).

2) Major retailers (like WalMart) get into the game and offer money losing accounts simply to get you in their stores or lower their operational costs (I can see Amazon getting in to this or Apple). You all ready see this with specific banking institutions who offer free basic services on the chance that you may use their other services For instance Charles Schwab offers a great banking service for free on the condition that you open a free investor account with them, they don't force you to use it but if you want to it is there.

I haven't quite wrapped my head around my exact feelings on this matter but I'm getting there. To me it makes sense in the same way that Google does everything in it's power to get you to look at more pages on the internet. The more pages you look at the more ads they can put up, the easier it is for you to manage and spend your money the more you are going to spend it. Banks are in this scheme just middle men, they are a barrier between the consumer and the retailer, and I don't think they are going to be in the way much longer. 

Some Thoughts on the TPP FTA

First off why is this article in this weeks Economist the first time I have ever heard of the Trans-Pacific Strategic Economic Partnership? There is a chance that it might become a big deal this month with an APEC meeting taking place, and it would be an even bigger deal if Japan were to enter into negotiations. Without Japan it does not look like it would be all that interesting due to the fact that most of the countries involved have a standing free trade agreement with the US, the notable exception of course being Vietnam and New Zealand. Opening up to another English speaking country would obviously be worth more to New Zealand and the US than a non-English speaking country of the same standing. Vietnam I would assume would benefit greatly from becoming even cheaper than it is to US firms in regards to China (which may force the US and China to finally work out their problems).

The big fish though, is Japan. Tying the 1st and 3rd largest economies together would be nothing short of fantastic and may entice China to join the club or at least play a bit more fairly.

I don't claim to know anything about FTA or trade in general but I really want to learn more about trade deals.

Some Thoughts on Romney's Economic Thoughts

I would like Mr. Romney to explain how tax cuts that benefit business and the all ready wealthy will help our economy? The problem is that the driving force of the American Economy (ie the consumer) is heavily in debt. While lowering taxes in the long run is a good thing (as long as it is done in an efficient way) in the short term none of that will matter if Americans are still unable to spend on goods. By freeing them from that debt you open up their ability to spend again, which benefits business as well as shareholders. Where as his plan only benefits business and shareholders (but I would argue the other way would benefit them far greater).

From there one is better able to reform the tax code by lowering rates and broadening the base. Admittedly I would love to see Romney's end goal but I think how he gets there will never work.


Here is the Charlie Rose interview that spurred this.

Some Thoughts on the 10th Amendment

With the "introduction" of Rick Perry into the GOP race for the Presidency has come the debate pertaining to his "ideas". One of his so called "ideas" is that the 10th Amendment is supreme and lays most of the federal government unconstitutional. Now besides the fact that the 10th Amendment is at odds with this clause, this clause and this clause, or that the 10th has basically been dead since the Civil War, and forgetting the fact that Perry used to be a Democrat, rule by the 10th is a really really really bad way to govern.

Imagine if each state had their form of Social Security as Perry insinuates they should. Think of the redundant costs and overlapping pensions. Or think about how much this would restrict movement between states for employment. There are certain things that are better done on a large and national scale, such as currency, defense, entitlements, pensions, etc. Unfortunately the founding fathers did not have the foresight to write them all into the Constitution, hence why they wrote in escape clauses such as Necessary and Proper and the Commerce Clause. But it appears that Rick Perry sees something that he likes and just runs with it and he will be damned with the facts and contradicting arguments.

Some Thoughts on Social Security

In this weeks Businessweek there is a short interview that Tom Keene Had with former Reagan OMB Director David Stockman. There is really nothing knew in it; he advocates means testing and outright stripping of benefits for the rich. It's just that it hit me; how is treating Social Security like the large part of the budget it is (and not the so called trust fund it is perceived to be) and eliminating its payouts to high earners not a political win for both sides? It would preserve the benefits for those that need it while "taxing" the rich (both Dem talking points). While at the same time it "reigns in entitlement spending" for Conservatives. Throw in slightly lower taxes for the rich (not as much as this change would save) or an increase in the retirement age by a year and I don't see how this could not look good for both sides.

It's the creative ideas and true compromises that will win the day. This isn't a benefits cut that Democrats would hate (you could sell it as a revenue creator) and this isn't a tax increase (hell you could sell it as a spending cut paired with a tax cut if you were so inclined). I really hope this is something the super committee takes a look at.