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Recent Posts

Disasters Can Happen

From Bad to Worse in a Big Way

Oil From Pixabayby MN Gordon

Economic Prism

Just when it appeared that a $50 per barrel floor had been put under the price of oil, something unexpected happened. The price of oil dropped over 2 percent to about $48.74 a barrel. What’s more, it could fall much, much further…

“A rally in crude-oil prices halted last week after U.S. data showed that domestic crude inventories are at their highest in about 80 years,” explained the Wall Street Journal.

In other words, not since 1935 – the middle year of the Great Depression – has there been such a glut in U.S. oil. Moreover, a weekly report from Morgan Stanley remarked that forthcoming U.S. data on supply and drilling are “likely to appear ominous.” From what we gather, this most likely means the supply glut will steepen.

Naturally, when there’s an oversupply of something, the price must drop to equilibrate demand. How much further it must drop no one really knows. But we surmise the price of (Read More....)

. . . → Read More: From Bad to Worse in a Big Way

The End of the New Paradigm

Moneyby MN Gordon

Economic Prism

There is a pleasant mist in the air which conceals the depths of the disorder with earnest efficiency. Cavernous divergences exist between the financial economy and the real economy. Yet only the crankiest will speak of them.

The union in Europe was temporarily saved last Friday. Investors the world over cheered the relief. The DOW and S&P 500 closed out the week at record highs.

The big news was that the Greek bailout will be extended four more months. The fact that Greece will never pay back its creditors doesn’t matter for now. The clever program of extend and pretend has been preserved.

This is how things work in 2015. The world economy roles round and down with remarkable precision, borrowing massive amounts of digital monetary credits into existence and spending them. Certainly, this can’t go on forever.

The more duct tape and safety pins that are used to hold things together… The more money creation that occurs to temporarily paper things over… The greater destruction the final financial blowout will ultimately (Read More....)

. . . → Read More: The End of the New Paradigm

The Sickness that Never Ends

Moneyby MN Gordon

Economic Prism

It’s a wacky and wild world out there. We don’t know what to make of it anymore. The tried and true has disappeared from common circulation like pre-1965 quarter dollars. What remains is a lot of claptrap.

For example, we’ve noticed numerous reports lately explaining why eating piles of bacon is good for us. What’s more, just this week we came across an article telling us that putting a scoop of butter in our coffee each morning makes for a healthy breakfast. Apparently the added oil slick fills you up so you don’t need to eat much for lunch.

Huh? Perhaps these are healthy diet choices for those eager to have a myocardial infarction. We’ll stick to black coffee and a granola bar.

Of course, nowhere is the prevalence of humbug greater than the world of money. For only in the money realm do you hear things as idiotic as the popular notion that spending money – even borrowed money – makes you wealthy. Similarly, only (Read More....)

. . . → Read More: The Sickness that Never Ends

The Perfect Time to Save for a Rainy Day

Disaster and Other Estimations for 2015- Picture Credit Pixabay

by MN Gordon

Economic Prism

Today we gaze back to the past so we can peer forward to the future. What does yesterday tell us about today? What does today tell us about tomorrow?

For example, eleven year ago the global economy was in the euphoric stage of what ended up being an epic property bubble. It was a magical time in the United States. The sun smiled brightly on its inhabitants even on the stormiest of days.

Money appeared from the heavens in the form of a fantastical new acronym – MEW. Mortgage equity withdrawal, courtesy of inflated housing prices, showered the lowly homeowner with an abundance of cash. Mortgage brokers and real estate agents alike were getting rich. The zenith of humanity had arrived.

Naturally, a pocket full of free cash must be spent in any and all ways possible. Some MEW recipients bought additional real estate not to live in, but on (Read More....)

. . . → Read More: The Perfect Time to Save for a Rainy Day

Dock Worker Shakedown and You

Ports Pixabayby MN Gordon

Economic Prism

The fog was especially thick one morning last week. Visibility was greatly constrained. The fog horns bellowed in the darkest hour before dawn while we stirred from our splendid slumber.

Here in Long Beach, the frenetic movement at the mammoth Port of Los Angeles / Port of Long Beach complex has stalled to a peculiar standstill. Offshore, in the near waters between San Pedro Bay and Catalina Island, are an abundance of container ships. They drift about…waiting for resolution to the latest labor dispute.

If you’ve never driven through Terminal Island and up and over the Gerald Desmond and Vincent Thomas Bridges you are missing out on quite a site. The ports are the gateway for over 40 percent of U.S. containerized imports. The lineup of containers and cranes, and semi-trucks and railcars is too expansive to take in from a single vantage point.

Yet this vast lineup is backing up and filling in the Pacific Ocean. Ship loading and unloading activities were suspended last (Read More....)

. . . → Read More: Dock Worker Shakedown and You

China’s Concrete Problem

Chinaby MN Gordon

Economic Prism

There’s always something fascinating going on when it comes to the economy. Take China, for instance. According to the International Monetary Fund, and the notion of purchasing power parity, they’re the world’s largest economy.

Nonetheless, they’ve started the year off in a rut. For example, China’s exports fell 3.3 percent in January from a year ago. But that was nothing. Imports dropped 19.9 percent.

“The slide in imports is the sharpest since May 2009,” explained Reuters, “when Chinese factories were still slashing inventories in reaction to the global financial crisis. The dismal trade performance will increase concerns that an economic slowdown in china – originally considered a desirable adjustment away from an investment-intensive export model toward one based on domestic consumption – is at risk of derailing.”

Here at the Economic Prism we didn’t know China’s economy was still at risk of derailing. (Read More....)

. . . → Read More: China’s Concrete Problem

Leading the Next Economic Downturn

Economic Collapse, Credit Crunch, Markets, Stock Marketsby MN Gordon

Economic Prism

Markets went haywire again this week. The DOW flipped and flopped like a fish out of water. Something spectacular is heading this way…you can just feel it.

U.S. government debt has now eclipsed $18.1 trillion. Tack on the debts of households, businesses, and state and local governments, and the total U.S. debt jumps to $59.2 trillion. Personal debt alone, which includes mortgage, student loan, and credit card debt, now stands at over $16.7 trillion.

These numbers are significant. They’re astounding to. Not only for how ginormous they are. But, more so, for what they imagine to life.

In particular, these massive debts produce a mirage of prosperity. They also produce an abundance of false demand. This, in turn, conjures an abundance of productivity that otherwise wouldn’t exist.

Millions of people wake up each morning to do jobs that are made possible only by cheap money or inflated prices. Sometimes they require just one or the other. (Read More....)

. . . → Read More: Leading the Next Economic Downturn

What Groundhog Day Means for Stocks

Ground Hog Day Stock Marketby MN Gordon

Economic Prism

Something remarkable happened this week. The price of oil didn’t go down. It did the opposite…it went up.

For one reason or another, no one really knows, this was construed as bullish for stocks. Perhaps rising oil prices mean there’s robust demand. Maybe, despite a 5th straight month of declining U.S. factory orders, the economy is still grinding upwards. Who really knows?

What we do know is that on Tuesday, the DOW jumped over 300 points. There was plenty of good cheer to go around indeed. All 30 of the DOW stocks closed higher than they opened. Then, yesterday, the DOW jumped another 211 points. Has there ever been a more glorious time to be alive?

Here at the Economic Prism we recommend you enjoy the upswing while it lasts. The lightheaded and dizzy feeling it provokes is fun for sure. But, alas, it will be followed by a stumble and crash. That’s how these things always go.

Certainly (Read More....)

. . . → Read More: What Groundhog Day Means for Stocks

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