The Independent Market Observer

The Ties Between Politics and Economics

September 16, 2014

For many, the study of economics goes back to the eighteenth-century urtext, The Wealth of Nations, by Scottish economist and philosopher Adam Smith. Notably, Smith and his contemporaries did not study economics, but political economy. At the time, there was no notion that economic behavior could be analyzed separately from its context, the political environment. The different governmental structures made the impact of government on human behavior absolutely impossible to separate—the ties between politics and economics were inextricable. To put it another way, it would be like considering the health of the brain while ignoring that of the heart.

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Norway: Big Mountains, Big Government, Big Oil

June 9, 2014

Greetings from Norway!

After a great three days in Oslo, we’re on the train stopped at Ål on our way to Flåm, up in the fjord country. Based on my time here so far, Norway is a wonderful place: the people are nice, the scenery spectacular, and the weather terrific (at least this time of year).

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Market Thoughts for January 2014 Video

January 7, 2014

http://www.youtube.com/watch?v=_mx57subjTU

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10/7/13 – The Europeanization of American Politics

October 7, 2013

I hate writing about politics, I really do. But, as we’ve seen repeatedly over the past couple of years, politics is now economics, and, therefore, it behooves us to get to grips with what that means for our country—and our investments.

One of the driving memes about Obamacare has been that it socializes a large section of the economy. The Republicans use this as an argument against, while the Democrats by and large see it as a feature, not a bug. The destination on the horizon, for both, is a more European polity. That means slower growth and stagnation for the Republicans and more social justice for the Democrats—in any event, a more European-style economy.

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10/3/13 – No News from DC, Some Good News from Main Street and Europe

October 3, 2013

Since there’s really no movement in the DC stalemate, I thought I’d highlight some good news today. I continue to keep an eye on the government, and the risk grows daily. At the same time, though, it’s important to remember that there is life beyond the Beltway (for those who don’t know, that’s the highway surrounding Washington, DC) and that the real economy is actually doing pretty well. Even as DC stares and Wall Street trembles, Main Street has some news to be glad about.

1. Initial jobless claims remain quite low, at 308,000.

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9/20/13 – The First Question

September 20, 2013

You may have noticed a relatively new feature on the blog, “Ask Brad” (on the right side of the page). The first question that came in was a good one from Tim Bourdon, who wrote: “You mentioned that we are in better shape now than five years ago, but Europe is still in a much riskier position. If their market falls apart, are we strong enough to withstand that?”

This is a good question because it cuts to the core of how much risk has actually been reduced, post-financial crisis. The real danger, in 2008 and 2009, was that the financial markets around the world would seize up as banks refused to lend to each other. That would have led to a cascading series of defaults as banks, unable to get their money back from where they had lent it, would in turn be unable to pay their creditors. A downward spiral would result, bringing down the whole system. Europe was a key part of this, and it is this risk that I highlighted in my earlier post.

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9/9/13 – No News Is Good News?

September 9, 2013

My expectation, moving into September, was that all the economic issues that had been pretty much left alone during the summer would resurface. The debt ceiling, the situation in Europe, China—all would move back to the front pages.

Boy, was I wrong. Looking at today’s papers, I find no stories about economic problems on the front pages—none. The lead story is Syria, which makes sense. There’s also a story, in both the New York Times and the Wall Street Journal, with a retrospective of the financial crisis. Old news.

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