Donald Trump’s Plan for Economic Salvation

Posted on November 11, 2016 by MN Gordon

trumpOne of the unspoken joys in life is the rich pleasure that comes with bearing witness to a career politician – a shrew no less – as they fail spectacularly.  Tuesday night served up one of these unique experiences with sumptuous fare.  No doubt, the world is a better place because of it.

Make of it what you will.  Donald Trump’s upset over Hillary Clinton is a repudiation of the entire Washington status quo.  This is something to celebrate, whether you like Trump or not.

There are an abundance of dime a dozen political pundits, all who are way more qualified than we are, working overtime to slice, dice, and pontificate on the outcome.  We’ll leave further interpretations and opinions up to them.  Instead we’ll return to where we left off last week.

If you recall, we mentioned the possible commencement of a reversal in the long term credit market cycle.  Namely, that since bottoming out in July the yield on the 10-Year Treasury note has been rising.  We don’t know if it will last or not. Continue reading →

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The One Thing that Will Change Everything

Posted on November 4, 2016 by MN Gordon

“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 outcome, nevertheless.

The real noteworthy thing taking place today, that’ll have a real impact to your life, has nothing to do with who will be the next President.  That’s merely a diversion.  Rather, the real noteworthy thing taking place today – at this very moment – has everything to do with the ticking time bomb beneath the U.S. and world economy.

Indeed, we’re talking about interest rates.  If you haven’t noticed, they’ve been going up as of late.  In fact, they have been going up quite a bit. Continue reading →

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Meddling with Markets for Work and for Pleasure

Posted on October 28, 2016 by MN Gordon

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 improving there’d be demand for raw materials and new construction equipment to fabricate it into stuff.  This doesn’t appear to be the case at the moment.

Earlier this week, for example, Caterpillar CEO Doug Oberhelman remarked that, “Economic weakness throughout much of the world persists and, as a result, most of our [Caterpillar’s] end markets remain challenged.  In North America, the market has an abundance of used construction equipment, rail customers have a substantial number Continue reading →

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Prepare for the Unthinkable

Posted on October 21, 2016 by MN Gordon

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 time, and in the absence of a watchful eye, the rising tide of growth gradually submerses the answers to these questions.

Then, when the answers are needed most, it is too late.  While management was busy developing mindless risk management protocols and clumsy 9 step workflow approval processes the answers had drowned. Continue reading →

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