The Sickness that Never Ends

It’s a wacky and wild world out there.  We don’t know what to make of it anymore.  The tried and true has disappeared from common circulation like pre-1965 quarter dollars.  What remains is a lot of claptrap.

For example, we’ve noticed numerous reports lately explaining why eating piles of bacon is good for us.  What’s more, just this week we came across an article telling us that putting a scoop of butter in our coffee each morning makes for a healthy breakfast.  Apparently the added oil slick fills you up so you don’t need to eat much for lunch.

Huh?  Perhaps these are healthy diet choices for those eager to have a myocardial infarction.  We’ll stick to black coffee and a granola bar.

Of course, nowhere is the prevalence of humbug greater than the world of money.  For only in the money realm do you hear things as idiotic as the popular notion that spending money – even borrowed money – makes you wealthy.  Similarly, only in the world of money would you hear highly respected individuals contend that a destructive hurricane is good for the economy. Continue reading

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The Perfect Time to Save for a Rainy Day

Today we gaze back to the past so we can peer forward to the future.  What does yesterday tell us about today?  What does today tell us about tomorrow?

For example, eleven year ago the global economy was in the euphoric stage of what ended up being an epic property bubble.  It was a magical time in the United States.  The sun smiled brightly on its inhabitants even on the stormiest of days.

Money appeared from the heavens in the form of a fantastical new acronym – MEW.  Mortgage equity withdrawal, courtesy of inflated housing prices, showered the lowly homeowner with an abundance of cash.  Mortgage brokers and real estate agents alike were getting rich.  The zenith of humanity had arrived.

Naturally, a pocket full of free cash must be spent in any and all ways possible.  Some MEW recipients bought additional real estate not to live in, but on spec…with the sole intent of flipping for a profit to the greater fool.  Others covered their countertops with Italian granite.  Vacation cruises were also a popular way to put MEW to good use. Continue reading

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Dock Worker Shakedown and You

The fog was especially thick one morning last week.  Visibility was greatly constrained.  The fog horns bellowed in the darkest hour before dawn while we stirred from our splendid slumber.

Here in Long Beach, the frenetic movement at the mammoth Port of Los Angeles / Port of Long Beach complex has stalled to a peculiar standstill.  Offshore, in the near waters between San Pedro Bay and Catalina Island, are an abundance of container ships.  They drift about…waiting for resolution to the latest labor dispute.

If you’ve never driven through Terminal Island and up and over the Gerald Desmond and Vincent Thomas Bridges you are missing out on quite a sight.  The ports are the gateway for over 40 percent of U.S. containerized imports.  The lineup of containers and cranes, and semi-trucks and railcars is too expansive to take in from a single vantage point.

Yet this vast lineup is backing up and filling in the Pacific Ocean.  Ship loading and unloading activities were suspended last weekend.  The number of ships anchored and waiting to enter the ports jump from 20 to 31. Continue reading

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China’s Concrete Problem

There’s always something fascinating going on when it comes to the economy.  Take China, for instance.  According to the International Monetary Fund, and the notion of purchasing power parity, they’re the world’s largest economy.

Nonetheless, they’ve started the year off in a rut.  For example, China’s exports fell 3.3 percent in January from a year ago.  But that was nothing.  Imports dropped 19.9 percent.

“The slide in imports is the sharpest since May 2009,” explained Reuters, “when Chinese factories were still slashing inventories in reaction to the global financial crisis.  The dismal trade performance will increase concerns that an economic slowdown in china – originally considered a desirable adjustment away from an investment-intensive export model toward one based on domestic consumption – is at risk of derailing.”

Here at the Economic Prism we didn’t know China’s economy was still at risk of derailing.  Didn’t their economy derail some time ago?  Any economy that used 6.6 gigatons of cement between 2011 and 2014 is effectively FUBAR. Continue reading

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