Predicting Future Exchange Rates

Nobody can reliably predict future exchange rates or else they would be incredibly rich because you could earn billions of dollars by being able to predict even miniscule movements in exchange rates.  There are many professional exchange rate traders who do try to predict them, and perhaps some can eke out profits, but they can only do so at significant cost in researching real events that could drive future exchange rate prices and beating everyone else to identify those events.  Many professional traders lose vast fortunes on the exchange rate market and about 3/4 of small traders lose their shirts according to the Wall Street Journal (pay-wall). 
But that doesn't mean that foreign exchange futures are useless to small businesses. The very fact that small businesses cannot predict future exchange rates is what makes the futures market useful for them.  That is because business can sometimes predict their future needs for foreign exchange accurately and they can reduce their own future risk by buying the currency futures now.  For example, if you are sure you will need to buy $20k of French cheese next summer, why not lock in your exchange rate now so that you can predict your future costs better?  Othewise, the price of French cheese will fluctuate with the exchange rate.  By fixing your exchange rate, you have one less variable to worry about and can focus on the business of how to profit from all that cheese.  Hopefully that is what your competive advantage is, not foreign exchange speculation.  Indeed, if you don't buy foreign exchange futures, and you know that you will need to order French cheese in the future, then you have unconsciously decided to become a foreign exchange speculator.  If the Euro drops, you will make more money, but if it rises, you could still lose your shirt on the cheese. 

Cost Disease of Services

Derek Thompson at The Atlantic examines the cost disease of services:

[The] National Journal [had a] special report on the rise and fall and rise of manufacturing. The spectacular graphic compares employment by sector in 1947 and 2007 and its most important lesson is a whopper. Manufacturing and agriculture employed one in three workers just after World War II. Today, those sectors employ only one in eight.

Where did all the making-stuff and growing-stuff jobs go? They went into services.

...The big story about American jobs in the post-war period is this: The manufacturing/agriculture economy shrunk from 33% to 12%, and the services economy grew from 24% to 50% [plus government, food services, energy and mining, and construction have all stayed about the same]. ...as manufacturing and agriculture got more efficient, they required fewer American workers, while the services industry (which had slower efficiency gains since it has more person-to-person work) required more employees to keep up with the rising demand for consulting, nurses, teachers, computer technicians, and so on. This isn't a sad story, or a happy story. It's just what's happening...

Closing thought: Why isn't anybody talking about the tragic decline of agriculture? [Agriculture's] share of workers has fallen by 80 percent in the last 60 years. Nobody seems to think that's much of a tragedy, but we do consider it tragic that manufacturing has lost 60 percent of its share over the same period. Are we being hyperbolic about the decline of manufacturing...? 

Update: ...Manufacturing jobs have declined as a share of the economy. But manufacturing hasn't declined as an industry. It's grown. By a lot. ...Output has sextupled.

Culture, Not Economics, Determines Immigration Politics

Immigration has raised the wages of US-born workers.  Moneybox:

Via Dylan Matthews, the Hamilton Project has the great summary chart (above) comparing the findings about the short-term economic impact of immigration from two major studies by economists.  I'm more of an Ottaviano-Peri man than a Borjas-Katz man because I believe in complementarity, the idea that immigrant workers increase the demand for skills (English language competence, for example) that even 'unskilled' U.S.-born workers have.

What it also shows you is that the actual economics of immigration are totally irrelevant to the political debate. The voters most likely to oppose high levels of immigration are precisely the people who Borjas and Katz say benefit from it economically. Meanwhile, immigration supporters and especially Spanish-dominant Latinos often feel the negative wage impact of immigration, since that's where complementarity plays the least role. In other words, if the immigration issue were about economics, then you'd see white working-class voters clamoring for amnesty and open borders while SEIU and MALDEF emphasized the need to secure the border before taking any further steps.

Of course you don't see that at all...

Kevin Drum explains the politics further:

John Tanton, the founder of FAIR, the nation’s oldest and most influential immigration restriction group... tried to preach an anti-immigration message based on economic and conservation grounds. But it didn't work. Chris tells us what did work:

Crisscrossing the country, Tanton found little interest in his conservation-based arguments for reduced immigration, but kept hearing the same complaint. “‘I tell you what pisses me off,’” Tanton recalls people saying. “‘It’s going into a ballot box and finding a ballot in a language I can’t read.’ So it became clear that the language question had a lot more emotional power than the immigration question.”
Tanton tried to persuade FAIR to harness this “emotional power,” but the board declined. So in 1983, Tanton sent out a fundraising letter on behalf of a new group he created called U.S. English. Typically, Tanton says, direct mail garners a contribution from around 1 percent of recipients. “The very first mailing we ever did for U.S. English got almost a 10 percent return,” he says. “That’s unheard of.” John Tanton had discovered the power of the culture war.
The success of U.S. English taught Tanton a crucial lesson. If the immigration restriction movement was to succeed, it would have to be rooted in an emotional appeal to those who felt that their country, their language, their very identity was under assault. “Feelings,” Tanton says in a tone reminiscent of Spock sharing some hard-won insight on human behavior, “trump facts.”

Cultural insecurity and language angst are the key issues here. It doesn't matter if they're rational or not.

 How much of general globalization opposition is also due to cultural issues rather than economic ones? 

The reason immigration benefits native workers is that they are more complimentary for native workers rather than substitutes which makes native workers more productive.  The same is true for capital goods.  If robots make your labor more productive, then they will raise your wage, but if they are substitutes for your labor, then they will lower your wage.  Immigration has increased the supply of dishwashers and busboys which has let native-born Americans move up to higher-paid employment as waiters, chefs, and making kitchen equipment.  Moneybox:

The research that really changed my thinking on this is ably covered in this great Heidi Shierholz did for EPI back in February 2010. Note that EPI is the premiere labor-liberal think tank in Washington and hardly a hotbed of apologism for the top one percent. The basic point here is that the old CW on low-skill immigration is that it raised real wages for high-skill workers but lowered them for low-skill workers. The key methodological advance comes from realizing that a very large share of low-skill workers in the United States are themselves immigrants. Since restricting low-skill immigration for the sake of low-skill immigrants is a little perverse, it's helpful to distinguish between the impact on immigrant workers and native-born workers.

Here's what they found:

One key finding here is that if you look at typical native-born working class Americans—folks with high school diplomas but no college degree—they win out thanks to immigration. And even if you restrict your attention to U.S.-born high school dropouts they win under most scenarios.

The losses from increased labor market competition are very real but they're concentrated among other immigrants. That's because it's all about complements. An increased supply of dishwashers and busboys increases the value of modestly educated people with complementary skills. To return to the restaurant, a waiter or a bartender needs to be able to speak English. In a world with no immigrants "can speak English" isn't much of a skill but when low-skill immigrants rush in suddenly it is. The people who lose out are the other workers who can't speak English, or who have specialized taco-making skills, or otherwise are extremely similar to new immigrants.

To Trade Is Human

Updated at Medianism.org

The Wall Street Journal summarized the work of some economic historians who argue that trade was the reason that puny humans took over the world: Evolution and Creativity: Why Humans Triumphed:

Nothing seems to explain the sudden takeoff of the last 45,000 years—the conversion of just another rare predatory ape into a planet dominator with rapidly progressing technologies. Once “progress” started to produce new tools, different ways of life and burgeoning populations, it accelerated all over the world, culminating in agriculture, cities, literacy and all the rest. Yet all the ingredients of human success—tool making, big brains, culture, fire, even language—seem to have been in place half a million years before and nothing happened. Tools were made to the same monotonous design for hundreds of thousands of years and the ecological impact of people was minimal. Then suddenly—bang!—culture exploded, starting in Africa. Why then, why there? The answer lies in a new idea, borrowed from economics, known as collective intelligence: the notion that what determines the inventiveness and rate of cultural change of a population is the amount of interaction between individuals….
Scientists have so far been looking for the answer to this riddle in the wrong place: inside human heads. Most have been expecting to find a sort of neural or genetic breakthrough that sparked a “big bang of human consciousness,” an auspicious mutation so that people could speak, think or plan better, setting the human race on the path to continuous and exponential innovation.  But the sophistication of the modern world lies not in individual intelligence or imagination. It is a collective enterprise. Nobody—literally nobody—knows how to make the pencil on my desk ...let alone the computer on which I am writing…
We tend to forget that trade and urbanization are the grand stimuli to invention, far more important than ...individual genius. It is no coincidence that trade-obsessed cities—Tyre, Athens, Alexandria, Baghdad, Pisa, Amsterdam, London, Hong Kong, New York, Tokyo, San Francisco—are the places where invention and discovery happened. Think of them as well-endowed collective brains. Trade also gave way to centralized institutions…
Agriculture was invented where people were already living in dense trading societies….
Go even further back and you find the same thing. The explosion of new technologies for hunting and gathering in western Asia around 45,000 years ago, often called the Upper Paleolithic Revolution, occurred in an area with an especially dense population of hunter-gatherers—with a bigger collective brain. Long before the ancestors of modern people first set foot outside Africa, there was cultural progress within Africa itself, but it had a strangely intermittent, ephemeral quality: There would be flowerings of new tool kits and new ways of life, which then faded again….
Trade is to culture as sex is to biology. Exchange makes cultural change collective and cumulative. It becomes possible to draw upon inventions made throughout society, not just in your neighborhood. The rate of cultural and economic progress depends on the rate at which ideas are having sex.
Dense populations don’t produce innovation in other species. They only do so in human beings, because only human beings indulge in regular exchange of different items among unrelated, unmated individuals and even among strangers. So here is the answer to the puzzle of human takeoff. It was caused by the invention of a collective brain itself made possible by the invention of exchange.
Once human beings started swapping things and thoughts, they stumbled upon divisions of labor, in which specialization led to mutually beneficial collective knowledge. Specialization is the means by which exchange encourages innovation: In getting better at making your product or delivering your service, you come up with new tools. The story of the human race has been a gradual spread of specialization and exchange ever since: Prosperity consists of getting more and more narrow in what you make and more and more diverse in what you buy. Self-sufficiency—subsistence—is poverty….
This theory neatly explains why some parts of the world lagged behind in their rate of cultural evolution after the Upper Paleolithic takeoff. Australia, though it was colonized by modern people 20,000 years earlier than most of Europe, saw comparatively slow change in technology and never experienced the transition to farming. This might have been because its dry and erratic climate never allowed hunter-gatherers to reach high enough densities of interaction to indulge in more than a little specialization.
Where population falls or is fragmented, cultural evolution may actually regress. A telling example comes from Tasmania, where people who had been making bone tools, clothing and fishing equipment for 25,000 years gradually gave these up after being isolated by rising sea levels 10,000 years ago. Joe Henrich of the University of British Columbia argues that the population of 4,000 Tasmanians on the island constituted too small a collective brain to sustain, let alone improve, the existing technology.
The oldest evidence for human trade comes from roughly 80,000 to 120,000 years ago, when shell beads in Algeria and obsidian tools in Ethiopia began to move more than 100 miles from the sea and from a particular volcano respectively. (In recent centuries stone tools moved such distances in Australia by trade rather than by migration.) This first stirring of trade was the most momentous innovation of the human species, because it led to the invention of invention. Why it happened in Africa remains a puzzle, but Steve Kuhn and Mary Stiner of the University of Arizona have argued that for some reason only Africans had invented a sexual division of labor between male hunters and female gatherers—the most basic of all trades….
The process of cumulative innovation that has doubled life span, cut child mortality by three-quarters and multiplied per capita income ninefold—world-wide—in little more than a century is driven by ideas having sex. And things like the search engine, the mobile phone and container shipping just made ideas a whole lot more promiscuous still.

The article also talks about Neanderthals:

Neanderthals are now known to have had brains that were bigger than ours and to have inherited the same genetic mutations that facilitate speech as us. Yet, despite surviving until 30,000 years ago, they hardly invented any new tools, let alone farms, cities and toothpaste. The Neanderthals prove that it is quite possible to be intelligent and imaginative human beings (they buried their dead) yet not experience cultural and economic progress.
Further proof that exchange and collective intelligence are the key to human progress comes from Neanderthal remains. Almost all Neanderthal tools are found close to their likely site of origin: they did not trade. In the southern Caucasus, argues Daniel Adler of the University of Connecticut, it is the “development and maintenance of larger social networks, rather than technological innovations or increased hunting prowess, that distinguish modern humans from Neanderthals.

Our ancestors (Homo sapiens) displaced Neanderthal man (Homo neanderthalensis) despite our competitors having larger brains and much stronger bodies.  They had tools and speech and buried their dead.  Jason Shogren argues that the only advantage our ancestors had over Neanderthal man is that Homo sapiens was much more inclined to trade:

SINCE the days of Adam Smith and David Ricardo, advocates of free trade and the division of labour, …have lauded the advantages of those economic principles. Until now, though, no one has suggested that they might be responsible for the very existence of humanity. But that is the thesis propounded by Jason Shogren, … For Dr Shogren is suggesting that trade and specialisation are the reasons Homo sapiens displaced previous members of the genus, such as Homo neanderthalensis (Neanderthal man), and emerged triumphant as the only species of humanity.
Neanderthal man has had a bad cultural rap over the years since the discovery of the first specimen in the Neander valley in Germany, in the mid-19th century. The “caveman” image of a stupid, grunting, hairy, thick-skulled parody of graceful modern humanity has stuck in the public consciousness. But current scholarship suggests Neanderthals were probably about as smart as modern humans, and also capable of speech. If they were hairy, strong and tough—which they were—that was an appropriate adaptation to the ice-age conditions in which they lived. So why did they become extinct?
Neanderthals existed perfectly successfully for 200,000 years before Homo sapiens arrived in their European homeland about 40,000 years ago, …. But 10,000 years later they were gone, so it seems likely that the arrival of modern man was the cause. The two species certainly occupied more or less the same ecological niche (hunting a wide range of animals, and gathering a similarly eclectic range of plant food), and would thus have been competitors….  according to Dr Shogren’s paper in a forthcoming edition of the Journal of Economic Behaviour and Organisation, it was neither cave paintings nor better spear points that led to Homo sapiens‘s dominance. It was a better economic system.
One thing Homo sapiens does that Homo neanderthalensis shows no sign of having done is trade. The evidence suggests that such trade was going on even 40,000 years ago. Stone tools made of non-local materials, and sea-shell jewellery found far from the coast, are witnesses to long-distance exchanges. That Homo sapiens also practised division of labour and specialisation is suggested not only by the skilled nature of his craft work, but also by the fact that his dwellings had spaces apparently set aside for different uses….  Only in the case of the trading and specialisation variables did they allow Homo sapiens an advantage: specifically, they assumed that the most efficient human hunters specialised in hunting, while bad hunters hung up their spears and made things such as clothes and tools instead. Hunters and craftsmen then traded with one another.
According to the model, this arrangement resulted in everyone getting more meat, which drove up fertility and thus increased the population. Since the supply of meat was finite, that left less for Neanderthals, and their population declined…. the presence of a trading economy in the modern human population can result in the extermination of Neanderthals even if the latter are at an advantage in traditional biological attributes, such as hunting ability.

Both trade and technology finally had an enduring expansion during the “upper paleolithic explosion” about 40,000 years ago. The above reading argues that it was due to population density.  Haim Ofek’s book argues that this was due to the invention of money.  He argues that this was the time when there was a blossoming of symbolic expression like sculpture and cave paintings.  Money is nothing more than a symbolic representation of value and so a culture that widely engages in symbolic artistic representation may also ‘get’ the idea that rare beads are worth trading for food or stone blades.

Globalization and Illegal Markets

Despite the war on drugs, the price of cocaine dropped in half in Europe between 1990 and the early 2000s.  The same technological advances that have increased global trade have also benefitted global criminal networks as a recent conference discussed:

“I WAS a child kidnapped from India. Then I was sold into Canada and then my final destination was the United States”, says Rani Hong, the head of the Tronie Foundation, an anti human-trafficking group. Ms Hong’s horrific experience was just one of the disturbing stories recounted at a conference in Los Angeles recently which gathered together experts who have studied various forms of illicit networks.
...The meeting was the brainchild of Google Ideas, a small unit inside the internet giant that calls itself a “think/do tank”. ...The irony is that those running illicit networks tend to be early adopters of new technologies. “The reality is that many of these tools are already empowering people for good and for ill,” says Mr Cohen. Drug smugglers, for instance, have been using GPS signals from phones to track the movements of their teams and to steer them away from police. This is a headache for the forces of law and order, but there are upsides to the mobile revolution too. For instance, when a drug kingpin is finally collared, cops may be able to unravel an entire smuggling network simply by accessing the data that are in the kingpin’s mobile phone.
The aim of the meeting in Los Angeles was to spur new thinking about how the mobile internet and other technologies can be used against traffickers and at the same time to showcase a few projects already under way. One of these is a computer model that shows the legal trade in various kinds of arms between different countries. ...Google was able to build a tool that can be used by, say, investigative journalists and others trying to work out if particular shipments of arms seem dodgy or not.
Another initiative, which has been championed by INTERPOL, the world’s largest international police organisation, involves the creation of a Global Register in digital form that will allow police forces and consumers to verify the origin of products using a mobile-phone app that can read a special bar code on their packaging. Ronald Noble, the head of INTERPOL, reckons this will eventually make it tougher for, say, producers of counterfeit pharmaceuticals to get their fakes into legitimate supply chains.

Several Latin American presidents have completely reversed their position about drugs and declared that the technological advances that have boosted globalization have also made it impossible to stop the international drug trade.  As president Calderón of Mexico said:

"[E]ither the United States and its society, its government and its congress decide to drastically reduce their consumption of drugs, or if they are not going to reduce it they at least have the moral responsibility to reduce the flow of money towards Mexico, which goes into the hands of criminals. They have to explore even market mechanisms to see if that can allow the flow of money to reduce. If they want to take all the drugs they want, as far as I’m concerned let them take them. I don’t agree with it but it’s their decision, as consumers and as a society. What I do not accept is that they continue passing their money to the hands of killers."
Not so long ago these comments would have been unthinkable. Cast your mind back to 1998, when the UN Drug Control Programme (since absorbed by the UN Office on Drugs and Crime, or UNODC) held a session on the “world drug problem” entitled: “A Drug-Free World: We Can Do It”. Since then it has become painfully clear that, so far at least, We Cannot Do It. Since 1998 global consumption of both cannabis and cocaine has risen by about 50% and opiate consumption has nearly trebled, according to the UNODC’s own figures.
Mr Calderón’s comments sum up what seems to be a growing consensus: stopping or even seriously reducing drug consumption has so far proved impossible, so it is time to focus on ways of making that consumption less harmful. That sort of thinking has been fashionable for a long time on the demand side, with innovations such as needle exchanges and methadone replacement now common in many rich countries. The next step is to explore legal ways of managing the supply side, as Colorado and Washington have recently voted to do.
Sitting presidents such as Juan Manuel Santos of Colombia and Otto Pérez Molina of Guatemala are pushing for a rethink.

I would argue that it is possible to stop the drug trade, but the cure is worse than the disease.  For example, we could impose the death penalty for possession.  Iran executed over 500 people for drugs in 2010 and 2011.  China does not publish official statistics, but Amnesty International has estimated that they have executed a similar number for drug offenses.   But even these countries have rarely been able to stomach killing citizens for illegal drugs and the vast majority of people who are caught with illegal drugs escape executions.  

Chinese Currency Manipulation

Both political parties have been demonizing China for our economic woes, but it does not make much sense anymore. Wonkblog:

1) What you’re saying when you say you want to put an end to global currency manipulation is that you want a weaker dollar. That’s what currency manipulation is: An effort by other countries to artificially strengthen the dollar in order to make their currency — and thus their exports — comparatively cheaper. But if we want to weaken our dollar, we could just, you know, weaken the dollar.
2) China is not the world’s worst currency manipulator, or even particularly close to it. Singapore is worse than China. Taiwan is worse than China. These days, Switzerland and Japan are arguably worse than China. ...Here’s a list...
3) China is getting much better. They’ve allowed their currency to rise substantially in recent years. ...China’s ”current account peaked at 10.7 percent of GDP in 2007. This year, it looks like it’ll only be 2 percent.” It seems a bit weird to intensify the pressure on China, and to try and publicly humiliate them, at the exact moment when they’re doing what we’ve been asking them to do. As economist Nicholas Lardy told NPR, ”there was a very good case for the [U.S.] to take action against China five years ago, but not now.”
4) Calling someone a “currency manipulator” doesn’t trigger some magical process that leads to them no longer manipulating their currency. On its own, its nothing but an international insult. But if you follow through, then it’s a first step towards slapping tariffs on Chinese goods. But then China can begin slapping retaliatory tariffs on our goods....

The 'weak' renminbi was a significant drag on the United States for at least a decade, but in 2007 when Chinese currency manipulation was a serious drag on the US economy, globalization was relatively popular and The World Is Flat was a NYT bestseller. Krugman adds:

Since [2007], two big things have happened: relatively high inflation in China, and some appreciation of the renminbi against the dollar. As a result, the real exchange rate of China against the United States (based on consumer prices), has appreciated significantly:

At the same time. China’s surplus has come way down:

So this is an odd time to be making confrontation over China’s currency a centerpiece of your economic policy — unless, of course, it’s just bluster aimed at making voters think you’re tough.

As China's exchange rate has risen, its current account (trade) surplus has dropped, and it has been sending less savings abroad. 

Note that Krugman mislabeled his first graph the "China/US real exchange rate."  It is a graph of the value of the Chinese currency, so it should be labeled the "Chinese real exchange rate vs. US$".  The "China/US" rate would be the value of the US dollar because that is in the denominator, but Krugman isn't thinking of it as a fraction, but as something like a hyphenated word.

Currency Union, "Welfare", and Inequality

 The US is much more of a welfare state than Europe is in some ways.  For example, one reason the US works as a monetary union, but Europe does not is because the US constantly bails out Mississippi and Missouri as Derek Thompson explains:

The euro zone has Greece. The United States has Mississippi. Or Missouri.

The difference between the U.S. and Europe is that when the Greek economy "pulls a Mississippi" (or perhaps I should say, when Mississippi "pulls a Greece"), the EU and the U.S. have 180-degree opposite reactions. Over here, we calmly write checks to Mississippi in the form of Medicaid and unemployment insurance, no questions asked. Europe has no comparable "Peripheraid" for its weak peripheral states. Instead, it has chaos.

Michael Cembalest, the JP Morgan analyst and author of the my favorite new chart about monetary unions -- it's not a crowded field, admittedly -- passes along another clever graph which shows fiscal transfers (don't worry, that's just another word for money) between the rich California-Connecticut-Illinois-New Jersey-New York quintuple and poorer states like Tennessee. If similar, seamless transfers existed in the EU, the rich north would have to send to Portugal and Greece at least an additional 30 cents for every dollar they paid in taxes, year after year after year.

When you hear commentators say, "the euro zone must begin to transition toward a fiscal union," what they are saying, in human-speak, is that the Europe needs to be more like the United States, with balanced budget laws for its individual members and seamless fiscal transfers from the rich countries to the poor, to protect the indigent, old, and sick, no matter where they reside.

The Germans call this sort of thing "a permanent bailout." We just call it "Missouri."

 This is why the US actually has less inequality than Europe does as a whole.  We transfer money from rich states to poor states.  Europe transfers much more money from rich to poor individuals within their states, but they have very few transfers from rich states to poor states and that makes Europe much more unequal than the US.  Moneybox:

One very interesting point that James Galbraith makes in his newish book Inequality and Instability is that if instead of looking at Finland then Spain then Germany then Greece all as separate countries but instead look at "Europe" as an integrated marketplace with perfect capital mobility and legal labor mobility then it's even more unequal than the United States:

And when you do that, when you take what had been isolated labor market situations and bring them into direct interaction with each other, you have to measure the inequality on the new basis, on the new foundation. And nobody had done that. And what we found was that in fact when you do that, European inequality, taking into account the differences that exist between, let’s say, Germany and Poland or between Norway and Portugal, is actually larger in wages than it is in the United States.

Galbraith melds this into a policy argument that will be very controversial, but I think it would be helpful for people with all different kinds of political perspectives to just consider this isolated fact more clearly. Further analytic issues fall out of it quite clearly. Europe the collection of separate low-inequality places has generally high taxes and generally high levels of income redistribution. But Europe the collective has extremely low taxes and almost no income redistribution.

Below is a map from The Economist of what states subsidize what other states.  The map would be much more dramatic if it had county detail.  For example, I think I remember reading that San Francisco alone subsidizes about what the entire state of Kentucky absorbs.   New Mexico, Mississippi and West Virginia have all gotten well over 10% of their annual state incomes from subsidies coming from the green states over the decades.  Puerto Rico has been getting the most: almost 15% of its income from net federal transfer payments.  That may be why they do not want to revolt against 'taxation without representation'.  


The European Union is an unwieldy currency union because it is surprisingly heterogeneous and that is because it has little political union and almost no fiscal transfers.  Derek Thompson

Compared across more than 100 factors measured by the World Economic Forum Global Competitiveness Report, from corruption to deficits, JP Morgan analyst Michael Cembalest calculates that the major countries on the euro are more different from each other than basically every random grab bag of nations there is, including: the make-believe reconstituted Ottoman Empire; all the English speaking Eastern and Southern African countries; and all countries on Earth at the 5th parallel north.

And here is your tweetable fact: A monetary union might make more sense for every nation starting with the letter "M" than it does for the euro zone.

If you find yourself wondering, as I did, how the 50 states within the U.S. would compare across this measure of dispersion, remember that the nice thing about the United States is that baked into the first word of our name is not only a monetary union (i.e.: we all use dollars) but also a fiscal union. If Mississippi has a bad year (or decade, or century), Washington doesn't debate whether we should force the state to raise taxes or cut spending to become more competitive. We just keep paying it Medicaid, which is basically a transfer from rich Americans to poor Americans, many of whom live in Mississippi.