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Recent Posts

Disasters Can Happen

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....)

. . . → Read More: Down Goes the Hopes and Dreams of Three Generations

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....)

. . . → Read More: Even Death Won’t Save Us

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....)

. . . → Read More: The Muted Delight of the Forthcoming Recession

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....)

. . . → Read More: Joe Sixpack’s Painful Plight

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

Connecting the Dots on Employment and Inflation

Unemploymentby MN Gordon

Economic Prism

One principal conundrum of the extreme monetary policies of the last eight years is on the subject of consumer price inflation. Expansion of the money supply is, by definition, inflation. Yet how come, following a quadrupling of the monetary base, consumer prices are flat?

The last we checked the CPI weighed in at just 0.2 percent in March. This certainly doesn’t seem like the great currency devaluation is under weigh. In fact, the dollar index is up 20 percent over the last year.

Obviously, there’s been massive asset price inflation. Since the market bottom on March 9, 2009, the S&P (Read More....)

. . . → Read More: Connecting the Dots on Employment and Inflation

Skeletons in the Closet

Caution Of The Timesby MN Gordon

Economic Prism

Just when the mainstream press thought they had a solid theme to report, something unexpected happened. No one quite knows what’s going on for sure. But the economy’s popular storyline appears to be drifting off plot.

The general consensus since late last year has been that the U.S. economy is moderately improving while the world’s other major economies – Japan, China, and Europe – are becoming weak like an over breaded meat loaf. Until a few weeks ago things were rolling forward according to script.

The presumed strength of the economy was finally pushing the Fed to raise the federal funds rate (Read More....)

. . . → Read More: Skeletons in the Closet

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