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Disasters Can Happen

The Muted Delight of the Forthcoming Recession

Economic Collapse Picture Credit Pixabayby MN Gordon

Economic Prism

One week down.  Fifty-one more to go.  No doubt, this has been a wild start to the New Year.  We expect many more to follow.

For example, on Monday, Chinese investors overloaded the Shanghai Stock Exchange.  An abundance of traders hit the sell button in unison and nearly shorted out the sell side circuit.  By early afternoon the breakers had tripped to prevent a full market meltdown.  Here are the particulars, as reported by Bloomberg

“The worst-ever start to a year for Chinese shares triggered a trading halt in more than $7 trillion of equities, futures and options, putting the nation’s new market circuit breakers to the test on their first day.

“Trading was halted at about 1:34 p.m. local time on Monday after the CSI 300 Index dropped 7 percent.  An (Read More....)

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Who Will Be President and Other Hunches for 2016

2016

by MN Gordon

Economic Prism

The Metaphysical Approach

The New Year is here.  The slate’s been wiped clean.  New hopes.  New dreams.  They’re all accessible.  They’re all within reach.  No doubt, 2016 will be the year you get everything you deserve in life.  But what else will happen?

Today we squint our eyes and peer deep into the crystal ball.  There, at the center of the orbuculum’s refractive light, we scry visions of what’s to come in the year ahead.

Will stocks go up or down?  What about gold?  Are we destined for World War III?  Who will be the next President of the United States?

These are the questions – and more – we intend to answer.  Obviously, clairvoyance via crystal gazing is more art than science.  But so is taking a charted wave pattern and extending resistance and support lines out into the future.

Remember, past performance is no guarantee of future results.  Thus, we’re eschewing common forecasting techniques for a metaphysical approach.  But before we gaze into (Read More....)

. . . → Read More: Who Will Be President and Other Hunches for 2016

The Exhilarating Romp to DOW 30,000

Moneyby MN Gordon

Economic Prism

The stock market appears to have resumed its upward trajectory.  The S&P 500’s back above its 200 day moving average.  In fact, the S&P 500’s less than 50 points from its all-time high of about 2,131.

Soon the brief panic in August and September will be nothing more than a mere blip on the price chart.  A convenient toehold where stocks dug in, coiled up, and then sprang to a new record level from.  Buy the dip aficionados will point to it for validation and self-satisfaction.

By all accounts, stocks are nearly as expensive as they’ve ever been.  No matter how you slice and dice it – be it the Shiller’s Cyclically Adjusted Price (Read More....)

. . . → Read More: The Exhilarating Romp to DOW 30,000

Amplified Losses

Ben Bernanke,Fed’s balance sheet,economic implosion,Bernanke, Obama, Congress, recession,Marxism-LeninismAmplified Losses

by MN Gordon

Economic Prism

Federal Open Market Committee meetings are always a spectacle.  The forthcoming FOMC meeting, scheduled for September 16 and 17, should be particularly endearing.  For despite the Fed’s claim to provide transparency the upcoming policy announcement is cloudier than pollywog stew.

All year the Fed has hinted they’d finally lift the federal funds rate from near zero.  Yet with each FOMC meeting the Fed has pushed back the decision.  Until three weeks ago, the September FOMC meeting was to be the historic date of a small, incremental rate increase.

But that was before the stock market shuttered and rapidly dropped 12 percent.  In late August, at the moment of maximum (Read More....)

. . . → Read More: Amplified Losses

Good Riddance

Money Stock Market CrashBy MN Gordon

Economic Prism

High-risk investing is rewarded with higher returns when the financial tide is rising.  The vast sea of liquidity hides the hazards and perils of a rock bottom reef.  Madmen and lunatics get rich.  But when the tide turns…watch out…

“You only find out who is swimming naked when the tide goes out,” remarked Warren Buffett back in 2001.  Since mid-May the DOW is down nearly 2,000 points.  At this rate, the receding tide will soon expose a multitude of skinny-dippers.

What we mean is, a big hedge fund or pension fund will soon be caught with its pants down.  Perhaps it will be billionaire David Einhorn.  His Greenlight Capital hedge fund is already down nearly 15 percent in 2015.  While it’s still too early to tell if Einhorn’s swimming naked…the water line has dropped significantly.

But it’s not just the high risk hedge funds with something to hide.  (Read More....)

. . . → Read More: Good Riddance

The Perfect Storm Bearing Down Upon Us

Stock Marketby MN Gordon

Economic Prism

The barbarous relic wasn’t the only thing that got smashed last week. Commodities did too. On Thursday copper fell nearly 2 percent, to its lowest level since 2009.

Iron-ore prices also dropped. Oil did too…falling below $50 a barrel. Still, commodity prices could fall even further.

According to Morgan Stanley, the ongoing oil slump could be the worst crash in more than 45 years. The rationale is simple to follow. In short, at this point in an oil price decline cycle, production would have tapered back and, hence, supply would have dropped.

A reduction in supply would be the precursor to a price recovery. Yet this time around, even though oil prices have fallen, supply has increased. This is completely illogical.

Following the price collapse earlier this year, U.S. production has leveled off. This is what one would expect. But, for whatever reason, OPEC production hasn’t decreased or even been flat. Instead, it has increased from roughly 30.5 million barrels per day in January to over 32 (Read More....)

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The Barbarous Relic takes a Beating

Stock Market Crashby MN Gordon

Economic Prism

Fantasies, failings, fraud, and folderol. These are the elusive straws we grasp for when contemplating the marvels of modern day money. There’s little hope we’ll ever come up with a solid handful we can pull ourselves up by.

Still, we continue to mull things over like a freshman math major mulling over Fermat’s Last Theorem. With a little luck we may eventually have a breakthrough. Where to begin?

President Nixon’s dirty deed in 1971 is as good an entry point into the review as any. Recall that seizing the unique opportunity of the breakdown of Bretton Woods, Tricky Dick severed the last vestiges of gold backed money and stiffed the world unconditionally.

No longer could foreign governments redeem the dollars they acquired through trade for gold. The world’s currencies became wholly the fiat – paper money – of governments. Since then currencies have floated like anchorless buoys, rising and falling on a sea of surging (Read More....)

. . . → Read More: The Barbarous Relic takes a Beating

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