China’s Spectacular Reckoning

Posted on April 17, 2015 by MN Gordon

China's Spectacular ReckoningChange is constant.  You can count on it.  Earlier this week, for instance, it was revealed that China’s economy is growing at just 7 percent annually.  The Middle Kingdom’s GDP hasn’t been this slow since 2009…during the midst of the global financial crisis.  What’s going on?

For perspective, 7 percent GDP growth in the United States or Europe would be outstanding.  In fact, the GDP for both economies are slipping and sliding around 1 percent.  But in China 7 percent GDP growth is a signal that the sky is falling.

‘“We are facing a complicated international situation and increased downward pressure on the domestic economy,’ the National Bureau of Statistics said on Wednesday.

“The government has been using targeted easing measures to give the economy a boost and ensure the growth target is reached so that it can achieve another target: the creation of at least 10 million new jobs this year.”

Yikes!  Continue reading →

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The Economic Motherboard is Now Fried

Posted on April 14, 2015 by MN Gordon

Economics is a boring and tedious trade to the casual observer.  All the monthly report outs on GDP, employment, manufacturing, inflation, among other indexes, are a dull waste of time.  What decisions could one possibly make to improve their lot in life from these reported data?

Should you buy more toothpaste because the CPI went up 0.2 percent last month?  Should you stay at your current job because GDP growth is slowing?  Obviously, this information is useless for making a reasoned decision.

Plus, in addition to the government’s nonsense economics reports, the blathers of the leading economic policy makers are near incoherent.  “Just because we removed the word ‘patient’ from the statement doesn’t mean we are going to be impatient,” said Fed Chair Janet Yellen last month when asked about the Fed’s strategy for raising the federal funds rate.  Certainly, this is the type of utterance that, upon hearing it, reduces an individual’s mind and sucks from their soul. Continue reading →

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Skeletons in the Closet

Posted on April 7, 2015 by MN Gordon

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 after six plus years of being zero bound.  June of this year was broadly thought to be the magic time when Janet Yellen would finally pull the trigger.  But things rarely go as man – or woman – ordains them.

“Jove does not give all men their heart’s desire,” observed Homer, some 2,750 years ago.  Homer probably didn’t have central bank intervention into credit markets in mind when he made this remark.  If he had, he would have laughed with the gods at the vanity of it. Continue reading →

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