The past week has been interesting, with lots of developments. Rather than trying to cover just one, I thought we should look at several of the most important.

Looking for new news today is hard. There are a lot of good economic stories—Europe’s economy has started to grow again, initial unemployment claims have come in at a six-year low, consumer borrowing has picked up again, among other stuff—but I’ve written about that several times over the past couple of weeks.

I could talk about the drop in the stock markets this morning or the uptick in interest rates, but I’ve also covered those topics multiple times lately, most recently yesterday. No doubt I’ll return to them again in the next couple of weeks—maybe even tomorrow, depending on how the market closes today.

I wrote last Friday about the return to political economy, and one of the points I raised there was the breakdown of the consensus on the right form of government, the economy, and the relationship between them.

One of my major themes last year was the return of political economy. This is the discipline that Smith and Ricardo, among others, invented, and it was called that because they understood very clearly the relationship between politics and what we now call economics. The notion of considering them independently would have seemed nonsensical.

The other day, a Commonwealth colleague of mine who works outside of the investment groups asked about a point I had made a couple of years ago—that Washington, DC, had become the financial capital of the United States, in addition to the governmental capital. “Is that still the case, post-crisis?” he wanted to know.

I believe it is, and for reasons that extend beyond those that obtained in the crisis. While DC has largely exited the banking system and the auto industry, the role of the government in the economy has only grown. Part of this is politically driven, and therefore subject to debate, but part is structural, reflecting a growing change in how the economy works.

I woke up in Maine this morning with the sun shining and Jackson running into my room as I read the papers. We spent yesterday at the beach, with quite a bit of the time devoted to searching around a large tide pool. We found lots of crabs, small lobsters, starfish, eels, hermit crabs, and, of course, tons of snails, all hiding in and around rocks and seaweed.

I wrote on July 3 that the U.S. is the only continental power with voluntary economic integration. By that, I meant that the fiscal transfer mechanisms have been in place for a long time and are generally accepted. Few people know, for example, how much their state pays to the federal government versus how much it receives. It has come up in the past, of course, usually in stressed economic times, but it has never become a long-term political issue.

As I’ve written several times, taxes have to go up, and when they do, it will be done in a stealth manner, without specifically calling it a tax increase, or by using some other justification.

We’re seeing exactly that right now in the form of Internet sales taxes. Just yesterday, the Senate approved a bill that would allow states to force large online retailers to collect sales tax, even if they have no operation in that jurisdiction.

I’ve been at the Goldman Sachs investor conference yesterday and today, listening to and learning from a group of very smart people. Among the smartest were Alan Simpson and Erskine Bowles, the cochairs of the commission that brought us the Simpson-Bowles (or Bowles-Simpson) budget plan. Unexpectedly, they were also the funniest, which, given their dire message, was a relief.

At Commonwealth’s National Conference last year, I gave a fairly detailed presentation on the budget problems we faced, noting that I believed any solution would eventually converge to something close to the Simpson-Bowles plan.

I was in Virginia late last week, speaking to a group of clients, and had a couple of interesting conversations that are worth expanding on here. To start off, we talked about what the U.S. is actually spending its money on, and how and whether it made sense to cut. This is a slightly different take on the spending discussion than you normally see. Typically, the discussion is based on the assumption that spending is more or less set; the issue is how to cut, rather than whether cuts make sense.