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Disasters Can Happen

The One Thing that Will Change Everything

by MN Gordon

Economic Prism

“There are more things in heaven and Earth, Horatio, than are dreamt of in your philosophy.” – William Shakespeare, Hamlet

Ticking Time Bomb

The American populace counts down to Election Day with impatient intent.  Will their party man occupy the White House come January 21, 2017?  Or will their party woman occupy a federal prison cell?

These are questions that only the good wisdom of time can answer.  Here at the Economic Prism we watch with indifferent curiosity.  We don’t think either candidate’s worthy of high office.  But we’re eager to know the election (Read More....)

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Prepare for the Unthinkable

by MN Gordon

Economic Prism

Red Ink

Growth and profits mask a variety of problems.  They hide business inefficiencies and the money suck of corporate administrivia.  They also conceal unproductive staff.

But most of all growth and profits obscure the extreme value subtracting forces of bloated management teams.  During good times it is unclear what these smug fellows do.  During bad times it is lucidly clear that most of them ain’t worth a darn.

When the profits inevitably recede, the senior executives, with their silly 24 point project reviews and cumbersome project execution requirements, appear lost.  They’re left exposed, with their pants down, and without a clue in the world as to what business it is they’re actually in.  What the heck have they been doing all this time?

Where does the money come from?  How is it spent?  Over (Read More....)

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Visions of Tomorrow from the Permanently High Plateau

Moneyby MN Gordon

Economic Prism

Somewhere, someone first said “bull markets don’t die of old age.”  We suppose this throwaway phrase was first uttered in a time and place much like today.  That is, in the midst of a protracted bull market where stock prices had detached from the assets and earnings of companies their shares represent claim to.

Presumably, it was used as rationale for why stock prices should go higher.  Quite frankly, we don’t know why anyone would ever say such baloney.  But it likely makes the person who emits it feel content about their place in the (Read More....)

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Down Goes the Hopes and Dreams of Three Generations

Economic Collapse Picture Credit Pixabayby MN Gordon

Economic Prism

A Sucker’s Deal

The yield on the 10-Year Treasury note’s accelerating its descent toward zero.  The last we checked the yield was at about 1.56 percent.  But in every practical sense, for income investors, a yield of 1.56 percent may as well be zero.

For example, at that rate, if you gave the government $1,000, you’d earn $156 over the next 10 years.  That comes out to just $15.60 per year.  As far as we can tell, that’s a sucker’s deal.

What’s more, it’s likely inflation will significantly erode the buying power of the initial principle.  Using the government’s own highly understated (Read More....)

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Even Death Won’t Save Us

money-256319_960_720by MN Gordon

Economic Prism

Rubbernecking at the economic train wreck of central planners is not without hazard.  A strained collar and dry eyes, for instance, are common perils.  So, too, is the lasting grimace of disbelief that comes with the rollout of each zany scheme to save us from ourselves.

Etched forehead lines and nighttime bruxism are several of the secondary effects.  Not owning shares of Amazon is another.  Though, over the long term, this will likely be an advantage.

Certainly, gawping at the present execution of monetary and fiscal policy in America is not without some benefit.  A healthy suspicion is garnered of politicians and public officials.  This, at the very least, relieves us from voter’s remorse.  Since we didn’t vote for President Obama we don’t have to live with the soiled conscious that most surely befalls those who (Read More....)

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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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Joe Sixpack’s Painful Plight

Joe Sixpack’s Painful Plightby MN Gordon

Economic Prism

This week brought forward new evidence that the economy’s slipping and sliding backwards.  On Tuesday, for example, the Institute for Supply Management reported a 48.6 Purchasing Manager’s Index reading for November.  A PMI reading below 50 means manufacturing activity is not expanding; rather, it’s contracting.

Moreover, the 48.6 PMI is its weakest mark since June 2009.  Indeed, a measurement of manufacturing activity that recalls Great Recession era frailty is not indicative of a healthy economy.  To the contrary, it suggests the economy is softening over like a bowl of mashed potatoes.

Like the decline in corporate profits reported last week by the Department of Commerce, the strong dollar also seems to be the popular offender for the decline in manufacturing activity.  Obviously, the strong dollar makes U.S. manufactured goods less competitive globally.  It also widens the trade deficit and subtracts from (Read More....)

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