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Disasters Can Happen

Morons At Large

Caution Of The Timesby MN Gordon, Economic Prism

Up here, near the face of Tahquitz Peak, the summer twilight lingers a little longer. The evening sunshine bends through the tall shady pines and sweet smelling cedars, basking on Idyllwild…the splendor mile high Southern California mountain village. We breathe deeply and exhale gradually. Time slows to the soft rhythm of Strawberry Creek as it meanders through town.

The kids return to school next week. Back to crowded classrooms and common core curriculum. What could possibly be worse? But, at the moment, we’re not ready for them to close the door on summer just yet.

You’re only a kid once. Why not stretch the summer break out to the last moment possible? Plus, the outdoor classroom on Ernie Maxwell Scenic Trail provides far more instruction than a classroom ever could. Time, gravity, hydrology, ecology, limitations, consequences…you name it, it’s all right here.

Obviously, there are certain rote learning fundamentals that are best suited to the classroom. Like reading, writing, and (Read More....)

. . . → Read More: Morons At Large

Fire and Brimstone

Crisisby MN Gordon Economic Prism

Here’s a demoralizing fact. Your paycheck has been shrinking for 5 years. We wish we were making this up…but we’re not…

According to MarketWatch, “Since the Great Recession ended five years ago, the amount of money Americans earn each hour after adjusting for inflation has actually fallen. And that largely explains why the U.S. economy is growing just 60 percent as fast as it normally does.

“Hourly wages have risen about 10 percent overall since June 2009, to $24.45 an hour. But over the same span they’ve slipped 0.3 percent in “real” or inflation-adjusted terms. That means most families are just treading water.”

This, in a nutshell, explains the frustrations the average American worker is faced with these days. They’re working harder than ever. But they are earning less.

It feels like running in ankle deep sand down a hot dry beach that never ends. Terrible amounts of time and energy are traded for a (Read More....)

. . . → Read More: Fire and Brimstone

What A Remarkable Time To Be Alive

Price Fixingby MN Gordon, Economic Prism

Naturally, we’re disappointed. We’d hoped top Fed head  would say something significant from the idyllic setting of Jackson Holy, Wyoming. Namely, we tuned in for a hint of when the federal funds rate, which has been pressed firmly to zero for nearly six years, would be increased.

But, alas, we didn’t hear anything noteworthy. Rather, we heard a lot of hot air. What follows is a selection of several of Yellen’s choice excerpts.

“At the FOMC’s most recent meeting, the Committee judged, based on a range of labor market indicators, that ‘labor market conditions improved.’ […] Nevertheless, the Committee judged that underutilization of labor resources still remains significant.

“Given this assessment and the Committee’s expectation that inflation will gradually move up toward its longer-run objective, the Committee reaffirmed its view ‘that it likely will be appropriate to maintain the current target range for the federal (Read More....)

. . . → Read More: What A Remarkable Time To Be Alive

Janet Yellen’s Big Surprise

Federal Reserveby MN Gordon Economic Prism

More evidence was offered over the weekend validating our prediction for 2014. If you recall, at the beginning of the year we gazed deep into our crystal ball and saw a vivid image of the earth not getting warmer…but cooler. So far this guess has been right on the money.

“Pittsburgh is dealing with one of the coldest summers in history, and it’s having an effect on the trees,” reported CBSPittsburgh. “Friday morning temperatures fell into the 40s in Western Pennsylvania.

“Meteorologists say these cold temperatures are leading to trees changing colors in the middle of August. ‘“This is extraordinary for August, and certainly is a reflection of the prevalence of cool weather,’ KDKA Meteorologist Dennis Bowman said.”

Of course, we bring up our prediction of global cooling to pat ourselves on the back. We (Read More....)

. . . → Read More: Janet Yellen’s Big Surprise

Whirlwind Economics

Economyby MN Gordon, Economic Prism

Things may be looking up for the unemployed working stiff. After years of competing for scarce jobs with stagnant wages something extraordinary may be happening. If you can believe it, opportunity has finally come for the unemployed.

According to the Labor Department’s recent monthly Job Openings and Labor Turnover Survey, the number of unemployed workers competing for each open job fell to a six-year low in June. The number of unemployed job seekers per open job fell to 2.02 in June,” reported Reuters, “the lowest level since April 2008. The ratio was at 2.14 in May and is now below the average from 2002 to 2006.”

On top of this, the number of job openings is at its highest level in over 13 years. In addition, the rate of hiring hasn’t been better for over 6 years. If these labor market improvements continue, wage growth should pick up too.

“Dallas Fed analyst Alan Armen, in a research articled dated Friday, forecast a (Read More....)

. . . → Read More: Whirlwind Economics

Knockdown Drag Out Slugfest

Warning Economic Woesby MN Gordon Economic Prism

Blows are being taken on the chin and dished out to the gut as daily prices wildly soar or crash. Last week, for instance, the DOW jumped and dived several hundred points before finishing up about where it started. Here we go again.

Down. Up. Up. Down. Up. The stock market’s bouncing around like two boxers in a slugfest. So far the judge’s score cards report a draw.

What to make of it. Is the bull dead? Or is the market searching for a new toe hold to spring upward and onward?

Here at the Economic Prism we have our money on the bear. We see a slow growth economy that never really recovered from the Great Recession. At the same time we see a stock market that’s been over inflated by radical monetary policy.

Extreme interventions into capital markets have pushed up assets and ballooned the accounts of the wealthy. The wage earner has been left behind…median income is still below where it was in 2007.

A Losing Proposition

Eventually this divergence (Read More....)

. . . → Read More: Knockdown Drag Out Slugfest

Up In Smoke

Coins by MN Gordon Economic Prism

Earlier this week we said the bull market is cooked. We even offered several reasons why…including various historical indicators. Of course we don’t really know for certain.

Quite frankly, no one does. But there are many fine fellows out there who are more qualified on the subject than we are. Moreover, we’re always open to considering contrary perspectives. Especially when they have a track record that shows they know what they are talking about.

For example, about the time we said the bull market is cooked, Wharton Professor Jeremy Siegel told CNBC “the bull market is not over.” What? Not over? How could that possibly be?

“I still think the big bull is taking control of the market,” said Siegel. “Surely there might be a correction – we always have corrections in a bull market. I actually don’t think this is going to be one of them, but if it does happen, I think it’s going to be a great buying opportunity.”

Certainly, following a (Read More....)

. . . → Read More: Up In Smoke

The Bull Market is Cooked

Honest Banking Practicesby MN Gordon Economic Prism

Several cracks in what was thought to be a granite foundation supporting the stock market were revealed last week. The S&P 500 fell 2.67 percent between weeks open and close. For the month of July, the S&P 500 finished down 1.63 percent…its first monthly loss since January.

Many reasons were given for the selloff. The Argentine debt saga, the joint US and EU sanctions on Russia, and the prospect the Fed will raise rates were some of the most popular. Here at the Economic Prism we have some reservations…these developments should have hardly been a surprise for investors.

Rather, we believe stocks fell for a much simpler reason. We believe they fell because that’s what they must do. Remember, the stock market goes up…and it also goes down.

After going up without interruption for the last five and a half years it is long overdue for the downside. How much downside? No one really knows.

But it will likely be much, much more than (Read More....)

. . . → Read More: The Bull Market is Cooked

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