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Recent Posts

Disasters Can Happen

This Market’s Ready to Implode

Economyby MN Gordon Economic Prism

Until about this time last month, the world was practically flawless. Stocks were on the march. They were generally moving onward and upward as the Fed had ordained them.

New Fed Chair, Janet Yellon, was finding her way too…completing the tapering work that Bernanke began. Despite a minor stumble of words it appeared she’d be able to hold the paper money charade together for at least a while longer. But then something slipped.

At first no one noticed. By the time people caught on to what was going on, the growth and technology stocks in the NASDAQ had cracked. Then the broad S&P 500 faltered. What to make of it?

David Winters, manager of Wintergreen Advisors fund, believes the recent drop in stock prices is a buying opportunity. “You can get filet mignon for chuck prices,” (Read More....)

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Give Trains a Chance

bridge-186109_640by MN Gordon Economic Prism

Chinese exports and imports slipped in March. According to trade data from Beijing released Wednesday, exports declined 6.6 percent from this time last year. Moreover, imports dropped 11.3 percent.

If you can believe it, China’s first quarter GDP rose just 7.3 percent. That’s its slowest growth rate since 2009. While this may be red hot growth in many countries, in China this is cause for alarm.

In China, 8 percent GDP is considered necessary to create enough jobs for the tens of millions of migrants flooding from the country to the city. Likewise, this growth and creation of jobs are thought to be necessary to prevent massive social unrest. Some, however, believe a slowdown for China will ultimately help the economy.

Last month, Mei Jianping, professor of finance at the Cheung Kong Graduate School of business, explained why a slowdown is inevitable. (Read More....)

. . . → Read More: Give Trains a Chance

How to Be Richly Rewarded Following the Big Crash

Stock Market Crashby MN Gordon Economic Prism

Something utterly unforeseen and unexpected is taking place. Recent highfliers of Wall Street’s technology space are now dropping like flies. Can you believe it?

Take Facebook, for instance. On February 19th, the top social media service bought text messaging application, WhatsApp, for $19 billion. Shares of Facebook closed out that day at $68.06. We noted it as a possible signal of a market top…calling it the Mark Zuckerberg Indicator.

At first it appeared Facebook would continue its march onward and upward. But on March 10th, stock shares peaked at $72.03. Since then, they’ve dropped 21 percent…falling into the statistical bear market range.

However, Facebook’s not the only technology company whose stock is flaming out. Not by a long shot. Many others are slumping over like a half empty commercial grade flour sack.

For example, Tesla Motors, Twitter, and Netflix (Read More....)

. . . → Read More: How to Be Richly Rewarded Following the Big Crash

The End of the World: The Sequel

WarningGuest Post J. Vanne

Almost 48 million souls are on food stamps today in Obama’s America, with around 100 million adults not working. The real unemployment rate, the U6, is around 12.6% (hello, Jimmy Carter years!) while true unemployment, as reported by Shadowstats, recently showed a real unemployment rate of 23.2% - very close to the Great Depression rates. Meanwhile, the young – many of who voted for Obama – are now saddled with $1 trillion in student debt, that they cannot get rid of, short of renouncing their citizenship and moving to Mongolia. The Obama administration has arguably done more to destroy the financial well-being (which results in destroyed careers, damaged relationships, un-started marriages, and a hundred other social ills) of this country than any other political movement, war or disaster this nation has seen or experienced throughout its almost 250 year history.

You are 25 years old. Or perhaps 35. You have no career (or real career) to speak of. You have little to no money, and an equal or perhaps lesser amount of hope for the future. You (Read More....)

. . . → Read More: The End of the World: The Sequel

Forecasting for Dummies

Investmentsby MN Gordon Economic Prism

Peter Zoellner is Head of the Banking Department at the Bank for International Settlement (BIS). He holds a PhD from Vienna University of Economics and Business Administration. Over the weekend, he told the ACI Financial Markets Association congress in Berlin that the dollar’s share of central bank reserves may fall by 10 to 15 percent in the years’ ahead.

Yet not to worry about a thing, assures Dr. Zoellner. The reduced use of the dollar by central banks as foreign exchange reserves won’t threaten its world reserve currency status. This is a remarkable insight, indeed.

“It could happen that the percentage will go slightly down with the reserve currency from between 65 and 70 maybe to between 50 and 60 percent,” said Dr. Zoellner. “But the relative dominance of the United States dollar I do not believe that this will change for the next 10, 20 years.”

So (Read More....)

. . . → Read More: Forecasting for Dummies

How to Achieve Honest Banking

Honest Banking Practicesby MN Gordon Economic Prism

Today we take pause from the markets to bring you a brief review of new research by economists at the New York Federal Reserve. On Tuesday, they published a special Economic Policy Review series. It includes 11 research papers, providing analysis of the big banks.

One of their key findings: The five largest banks, which include Bank of America and JPMorgan Chase, enjoy a “too-big-to-fail” advantage in financial markets. The study also found that large U.S. banks can borrow at about 0.31 percent less than smaller banks. Why is that?

The Fed’s research didn’t identify the exact reason. But, perhaps, the big banks can borrow more cheaply because investors know the U.S. government would bail them out in a financial crisis. While the Fed economists didn’t give this reason, they did note that the big banks can take bigger risks.

“The new research (Read More....)

. . . → Read More: How to Achieve Honest Banking

The End of Carte Blanche Bailouts

Pixabay Bailouts, USA Debt, by MN Gordon Economic Prism

There’s a forthcoming crisis developing. Stocks have run up over the last five years to new highs. Many find this cause for celebration…we find it cause for alarm.

Somewhere along their travels, stocks drifted out of orbit from the real economy. In short, the economy reclined while the stock market boomed. Of course, no one quite knows what’s going to happen next.

Stocks could continue to rise. They could drift sideways. Or they could slowly slide down from their highs. But like an out of control satellite we have a feeling stocks could very quickly burn up and disintegrate.

The conventional wisdom from Wall Street is that with the Fed still goosing the markets with $55 billion a month and a federal funds rate at practically zero the market will remain inflated. Prices can’t dramatically fall, goes the popular delusion. Naturally, we have some reservations.

We understand the logic and the massive put the Fed has under the market. All the cheap (Read More....)

. . . → Read More: The End of Carte Blanche Bailouts

Islam

IslamGuest Post Peter Wood

If you want to accuse me of writing a racist article I can only say that I am not biased against Muslims but I am opposed to Europe, the traditional home of Christianity, becoming part of a greater Muslim empire. Neither do I have a problem with Islam but rather I have a problem with Islam becoming the dominant religion within Europe. My article is based on the work of Patrick J Buchanan (source for the NPI report: Patrick J. Buchanan,

The Way Our World Ends). You can read it here:

http://buchanan.org/blog/pjb-the-way-our-world-ends-985

Patrick Buchanan is one of the leading conservative journalists in the USA and a former presidential candidate. I have neither read nor heard of him being accused of racism. His article is based on a report by the National Policy Institute in Atlanta, Georgia, USA. The NPI is a renowned and respected academic research institute and their report is supported by a 2007 UN world population survey. I doubt that anyone thinks that the (Read More....)

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