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Disasters Can Happen

An Abundance of Idle Trucks

by MN Gordon

Economic Prism

An Abundance of Idle Trucks

The popular economic theme being reported by the popular press still remains.  That the economy is grinding higher.  That growth is improving, albeit slowly.  That blue skies are just over the horizon.

Naturally we have some misgivings.  As far as we can tell, business is not humming along.  Earnings are stagnant.  Profits are slim.  Moreover, corporate reductions in force (RIFs) are being executed with the imprecise targeting of a sledge hammer.  Even Google’s laying off staff.

Most notably, if the economy were (Read More....)

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To The Class of 2014

Graduation Class of 2014by MN Gordon Economic Prism

Commencement season is here. Though no trade school or remedial academy invited us to address their graduates, we won’t let that get in the way. What follows, free of charge, are several observations, opinions, and suggestions, we’ve prepared for this year’s graduating class…

Congratulations! Now that you’ve successfully completed your academic studies you will begin your real world education at the school of hard knocks. All of you are enrolled. Some of you will be up to the challenge.

You will quickly discover that what you learned in college has ill prepared you for your next endeavor. What’s more, the world you’ve been told you are entering – an abundance of opportunity and high paying jobs – only exists in fragments, if at all. On top of that your elders have stacked the deck against you…you’ll be paying for their retirement and yours.

Where to begin?

First off, the school of hard knocks is not a four year program. You have your (Read More....)

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Peddling Loans and Lies to Kids

Price Fixingby MN Gordon Economic Prism

There’s nothing like an abundant flow of money and credit to push prices out of whack. Borrowing from tomorrow to buy today has the effect of boosting demand. Prices must rise to equilibrate the boost in demand.

But prices can never quite equilibrate when the supply of money and credit keeps expanding. On the flipside, the amount of debt supporting the price increases must also run up. Before long the price structure becomes so distorted that it’s nearly impossible to pay for near anything with cash.

Take housing, for instance. In most cities it’s impossible to buy a bad house in a decent neighborhood with cash. An abundance of credit has pushed house prices well above what a middle class income earner (Read More....)

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Economic Recovery? Is That Really The Case?

by MN Gordon

Economic Prism

Something rather inconvenient is going on.  Quite frankly, we don’t like it one bit.  Despite all the assurances of robust economic recovery, the opposite appears to be happening.

The economy isn’t climbing up.  It’s slipping back.  In fact, last week we received two new data points confirming the slippage.  The first being Friday’s jobs report…

Net jobs growth in 2013 has averaged more than 200,000 a month thus far.  But when the bean counters at the Labor Department tallied them up for July, they ran out of beans at just 162,000.  What’s more, the new jobs to count aren’t the type of jobs that grow the economy.  They are the types that (Read More....)

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Seeing Through the Mirage

by MN Gordon Economic Prism

Buried far below the headline’s reporting Apple’s quarterly earning’s report Tuesday evening was a most curious headline…

Picture- Model Anna Besova

“Lance Armstrong sued by U.S. for post office sponsorship funds.”  CNN.com offers the particulars…

“The Justice Department late Tuesday formally filed its case against Lance Armstrong and his company Tailwind Sports for millions of dollars that the U.S. Postal Service spent to sponsor the cycling team.

‘“The USPS paid approximately $40 million to sponsor the USPS cycling team from 1998 to 2004,’ the court document says.

“The government said it was intervening to recover triple the amount of the sponsorship funds under the False (Read More....)

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Strategic Default on Home Mortgage: Savvy or Cynical?

The recent extension of the Mortgage Debt Relief Act of 2007 was passed with nary a peep from the media. Perhaps, after five years, most people consider this bill to be old news; but looking forward to its new 2013 extension, this bill is going to be a heck of a problem for the President (whoever he may be) as the fiscal cliff approaches once again.

What is the Mortgage Debt Relief Act?

Created in response to the housing crisis, the bill exempted homeowners from paying federal income taxes on any mortgage debt cleared by the government. A drop in home value or a decline in the owner’s personal finances qualifies homeowners for debt forgiveness up to $2 million for couples (Read More....)

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The Wicked Borrow And Do Not Repay?

Up until very recently in history, not paying your debts was considered a shameful act. But now, the act of defaulting on mortgages, credit card bills, and other loans is actually celebrated (and encouraged) by many. What’s wrong with this picture?

I generally do not like to cherry pick Bible verses out of context, because doing so doesn’t always reflect the message accurately. However I think Psalm 37:21 is one where we can do that:

“The wicked borrow and do not repay, but the righteous give generously”

Do I think all people who borrow and not repay are wicked? Absolutely not! Obviously, having catastrophic medical bills, becoming disabled, and many other extreme scenarios are understandable reasons as to why someone wouldn’t be able to pay their debt. So I am not referring to those situations in this post.

Rather what I am referring to are people who intentionally and willingly game the system. They incur debt (often recklessly) and feel no obligation to keep paying. Here are a couple examples which you actually see encouraged by mainstream (Read More....)

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