Paper Lanterns

There are numerous explanations for just what in the heck is going on with the economy.  Some are good.  Many are bad.  Today we’ll do our part to bring clarity to disorder…

Several backward looking economic fundamentals show all is well.  Third quarter gross domestic product increased at an annual rate of 3.5 percent.  And the unemployment rate, if you exclude something called discouraged workers, is just 3.7 percent – a near 50 year low.  By these metrics, the economy’s never been better.

Still, it doesn’t take much snooping around to uncover what’s really going on.  For cracks in the economy’s foundation are transforming from minor hairline fissures to full blown surface fractures at about double the rate that Imperial Valley mud volcanoes are consuming Union Pacific Railroad tracks.  These full blown surface fractures will further multiply as the planet approaches the next financial crisis.

At the moment, for example, the auto manufacturing and housing sectors are breaking down.  Last week, General Motors announced they plan to cut 14,000 jobs and close five factories.  What in the world’s going on? Continue reading

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The Zealous Pursuit of State Sponsored Wealth Destruction

The lifecycle of capital follows a wide-ranging succession.  It is imagined, produced, consumed, and destroyed.  How exactly this all takes place involves varying and infinite undulations.

One generation may produce wealth.  While the next generation burns through it.  Various facets of a person’s capabilities, understanding, industry, and character can determine if they’re producers or consumers.  The most determinant facet of this, however, is how one approaches their unique circumstances.

The July 21, 2014, edition of Forbes Magazine documented the Stroh family’s methodical rise and swift disappearance from the beer brewing business.  The print edition of the article titled, How to Blow $9 Billion, began with the following summation:

“It took the Stroh family over a century to build the largest private beer fortune in America.  And it took just a few bad decisions to lose the entire thing.”

What worked for the Stroh family was taking a long time horizon.  Wealth was built by incrementally acquiring and growing a loyal and devoted regional customer base.  What didn’t work for the Stroh family was its debt financed acquisitions of Schaefer and Schlitz, and the costly bid to become a national brand. Continue reading

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How To Give Thanks Like Socrates

Ordinary ideals of Americana range as far and wide as the North American continent.  The valued conviction of one American vastly differs from that of another.  For example, someone from the Mid-Atlantic may have little connection with someone from the Midwest.  Their connection with Cascadia may be even less.

Next door neighbors often find their similarities to be sparse.  One may celebrate adventures in mysticisms.  Another may find inspiration sitting in a college football grandstand.  While a third struggles to free himself of the orthodox hobgoblins that suffocate his soul.

In the midst of this, the fake news media recites the story of the national struggle with delicate and excruciating regularity.  They frame all happenings from the locus of the two party political system…any diverging views are carefully sifted out.  What’s reported is only what the story script editors allow to pass through their single micron particulate filters.

We are told a never ending Marxian tale of the evil rich exploiting the noble poor. Continue reading

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The Intolerable Scourge of Fake Capitalism

All is now bustle and hubbub in the late months of the year.  This goes for the stock market too.

If you recall, on September 22nd the S&P 500 hit an all-time high of 2,940.  This was nearly 100 points above the prior high of 2,847, which was notched on January 26th.  For a brief moment, it appeared the stock market had resumed its near decade long upward trend.

Chartists witnessed the take out of the January high and affirmed all was clear for the S&P 500 to continue its ascent.  They called it a text book confirmation that the bull market was still intact.  Now, just two months later, a great breakdown may be transpiring.

Obviously, this certain fate will be revealed in good time.  Still, as we wait for confirmation, one very important fact is clear.  The Federal Reserve is currently executing the rug yank phase of its monetary policy.  As the Fed simultaneously raises the federal funds rate and reduces its balance sheet, credit markets are slipping and tripping all over themselves. Continue reading

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