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Disasters Can Happen

Why We Are All Doomed

Warning Economic Woesby MN Gordon

Economic Prism

Second quarter GDP, as reported in by the Bureau of Economic Analysis on August 28, grew at an annualized rate of 4.2 percent. This follows up a 2.1 percent decline in the first quarter. Just what is it that turned things around from one quarter to the next?

According to the BEA report, “this upturn in the percent change in real GDP primarily reflected upturns in exports and in private inventory investment, accelerations in personal consumption expenditures (PCE) and in nonresidential fixed investment, and upturns in state and local government spending and in residential fixed investment that were partly offset (Read More....)

. . . → Read More: Why We Are All Doomed

Stock Market Shangri-La

Stock Market Sept 2013by MN Gordon Economic Prism

The big news early in the week was that Larry Summers – the man so smart he lost hot breakfasts for Harvard and $2 billion of the university’s operating funds – withdrew his name from consideration for the next Federal Reserve Chairman.  The stock market loved the news.  The S&P 500 jumped a combined 13 points on Monday and Tuesday.

By Wednesday the relief of not having Summers tinkering around with monetary policy had been cast aside.  All eyes were recalibrated on current Federal Reserve Chairman Ben Bernanke, and his forthcoming (Read More....)

. . . → Read More: Stock Market Shangri-La

Coming Uncorked

By MN Gordon, Economic Prism

On Tuesday something incredible happened.  The Dow closed above 15,000 for the first time ever.  What a joy to be alive and bear witness to the great miracle of our time.

Whereas just 100 years ago the new marvels were flying machines and bucolic indoor plumbing…these days we have iPads and Dow 15,000.  Without question, iPads are quite marvelous.  Without question, Dow 15,000 is quite grotesque.

Without question, extreme government price fixing of money has blurred the line between real economic growth and the illusion of economic growth.  Often times it’s difficult to tell the difference.  Yet sometimes the difference becomes crystal clear as misallocations of capital reach extremes…

Consider the dot com bubble of the late 1990s.  Or the housing bubble of the mid-2000s.  These first appeared to be reflections of real economic growth.  Later it became crystal clear they were illusions of economic (Read More....)

. . . → Read More: Coming Uncorked

On Price Distortions and Landmines

By MN Gordon, Economic Prism

Former Federal Reserve Chairman Alan Greenspan told CNBC on Friday that the Dow’s new highs and 10-day run were not the result of “irrational exuberance.”  On cue, the Dow took a 25 point nose dive…closing out the day with its first loss since March 1.

If you recall, during the early part of the stock market bubble up period of the late 1990s, Alan Greenspan asked if irrational exuberance was at work.  On December 5, 1996, while speaking at the American Enterprise Institute, Greenspan asked…

“How do we know when irrational exuberance has unduly escalated asset values, which then become subject to unexpected and prolonged contractions, as they have in Japan over (Read More....)

. . . → Read More: On Price Distortions and Landmines

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